New Delhi: Indian technology companies are facing fresh pressure as investors continue to sell shares over concerns that the industry is not moving fast enough in the global race for artificial intelligence. The shift in investor behaviour comes at a time when markets around the world are rewarding companies that show strong AI capabilities and long term potential in the new technology cycle.
Over the past several months, foreign institutional investors have pulled billions of dollars from Indian equities, with a large share of the selling concentrated in the information technology sector.
Analysts say the main reason is that India’s biggest IT firms are still heavily dependent on traditional outsourcing and maintenance services, while global competitors are making faster progress in building and deploying advanced AI solutions.
Reports indicate that major Indian companies have not yet demonstrated strong earnings growth from AI related services, which has affected market sentiment. At the same time, corporate clients in the United States and Europe are diverting tech budgets toward automation and AI driven projects, reducing spending on legacy contracts that Indian firms rely on.
Market data shows that the IT index has been one of the weakest performers this year. Investors are increasingly choosing markets such as Taiwan and South Korea, where semiconductor and AI hardware companies are driving strong growth. By comparison, India still lacks large listed firms that offer a direct AI trade opportunity.
Industry experts warn that slow adaptation could make Indian IT companies less competitive in the coming years. Many firms are now trying to retrain staff, hire specialised engineers and invest more in research and development. However, these efforts are still at an early stage.
Despite the current challenges, domestic institutional investors continue to support the market, helping limit sharp declines. Analysts believe that the long term outlook for India remains positive due to strong demand for digital services. Still, they say the sector needs to show clear progress in AI adoption and innovation to regain investor confidence.
As global markets adjust to rapid technological changes, the performance of Indian IT companies in building new AI focused products and solutions will be closely watched in the months ahead.