Infosys to TCS, HCL Tech: Nifty IT crashes over 3% - Why are IT stocks under pressure in trade today?

Indian IT stocks witnessed heavy selling pressure on Tuesday, 12 May after OpenAI unveiled a massive new AI-focused venture aimed at helping enterprises deploy artificial intelligence systems at scale, raising concerns over the future growth prospects of traditional IT service providers.

The Nifty IT index plunged 3.3% to the day's low of 28,351 during early trade, making it one of the worst-hit sectoral indices on Dalal Street.

Among frontline technology stocks, Persistent Systems dropped 4.25%, while Tata Consultancy Services declined 3.9%, Infosys fell 3.7%, and Coforge slipped 3.23%.

Other major IT counters also remained under pressure. HCL Tech, Tech Mahindra, L&T Tech, LTIMindtree Wipro, and Mphasis also lost over 2.5% each.

The sharp fall came after OpenAI announced the formation of OpenAI Deployment Company, also called DeployCo, which will focus on helping businesses integrate AI tools into real-world operations. The company is being launched with more than $4 billion in initial investment and is reportedly valued at around $10 billion before funding.

The ChatGPT-maker has tied up with 19 investment firms, consultancies and system integrators for the venture. Private equity giant TPG will act as the lead investor, while Advent International, Bain Capital and Brookfield have joined as co-lead founding partners.

Other investors include Goldman Sachs, SoftBank and Warburg Pincus. Consulting giants Capgemini, Bain & Company and McKinsey & Company are also part of the initiative.

OpenAI acquisition strategy adds to Street anxiety

The latest development has intensified concerns that AI-native firms could increasingly compete with traditional IT outsourcing companies in areas such as consulting, software deployment and enterprise digital transformation.

OpenAI said the newly formed entity would use the capital to rapidly scale operations and acquire companies that can accelerate enterprise AI adoption.

“The next stage of enterprise AI will be defined by how effectively businesses can deploy this technology into real-world use cases,” OpenAI said.

The company added, “As models become more capable, businesses can apply AI to larger, more important parts of how they operate.”

DeployCo has already announced its first acquisition — London-based AI consulting and engineering company Tomoro. The deal will bring nearly 150 AI engineers and deployment specialists into OpenAI’s ecosystem. Financial details of the acquisition were not disclosed.

Why OpenAI’s deployment push matters

OpenAI said the new venture focuses on helping businesses deploy AI systems effectively across real-world operations, rather than just building advanced AI models.

The company said it was founded as both a research and deployment organisation, adding that the real impact of AI comes from helping enterprises use the technology “safely, effectively, and at scale.”

OpenAI revealed that more than one million businesses have already adopted its products and APIs. Based on these deployments, the company believes the next phase of enterprise AI growth will depend on how efficiently organisations integrate AI into daily workflows and operations.

“The next stage of enterprise AI will be defined by how effectively businesses can deploy this technology into real-world use cases,” OpenAI said.

Founded in 2023 alongside OpenAI, Tomoro works with major global brands including Mattel, Red Bull, Tesco and Virgin Atlantic.

The announcement comes just days after rival AI firm Anthropic launched a separate $1.5 billion AI services platform backed by investors such as Blackstone and Goldman Sachs, signalling intensifying competition in the enterprise AI deployment space.

Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.