Wednesday morning turned into a nightmare for global stock markets. As soon as trading began, a wave of heavy selling swept through the IT sector, triggering turmoil from Wall Street to Dalal Street. Hundreds of billions of dollars in market value were wiped out within hours.
The cause was neither fears of a recession nor concerns over rising interest rates. Instead, the shock came from a technology update—the launch of Claude Cowork by AI company Anthropic.
Analysts have now coined a new term for the fallout: “SaaSpocalypse”, describing an existential crisis for software-as-a-service (SaaS) companies.
What Is Claude Cowork and why did it shake markets?
Anthropic, best known for its Claude chatbot, launched 11 new open-source AI plugins for Claude Cowork at the end of January.
Claude Cowork is an agentic AI assistant that goes beyond answering questions. With user permission, it can read files, draft documents, manage folders and complete multi-step tasks. The plugins are designed for professional use cases across sales, marketing, finance, data analysis, customer support and product management.
However, it was one specific feature that rattled investors the most—the legal workflow plugin.
Why the legal AI plugin spooked investors
The legal plugin is capable of automating tasks such as contract review, NDA verification, compliance checks and legal briefing. Anthropic has clearly stated that the tool does not provide legal advice and that all outputs must be reviewed by a licensed attorney.
Despite this disclaimer, markets reacted sharply. Investors feared that if AI could handle such complex workflows, the demand for expensive legal software and subscription-based platforms could decline significantly.
The real fear: AI owning the workflow
According to market experts, the real concern is not AI’s technical capability but its business model shift.
Until now, AI companies primarily sold models, while software firms built products and workflows on top of them. Anthropic’s move signals a shift toward direct ownership of workflows, meaning tasks traditionally handled by platforms such as Thomson Reuters, Salesforce and DocuSign could be performed directly by AI.
Jefferies summed it up succinctly: earlier, AI acted as a helper—now, it is becoming a replacement.
OpenAI vs Anthropic in the enterprise AI race
Reports suggest that Anthropic is rapidly gaining ground in the enterprise AI market. Nearly 80 per cent of its business now comes from corporate clients.
Claude Code has reportedly reached USD 1 billion in annual recurring revenue (ARR) within just a few months. The company is also said to be preparing a funding round at a valuation of USD 350 billion.
Fears of layoffs return to the IT sector
Alongside the market sell-off, concerns over job security have resurfaced. Social media discussions suggest fears of fresh layoffs in the Indian IT sector.
While companies such as TCS and Infosys have made no official announcements, hiring momentum remains slow. Zoho founder Sridhar Vembu also hinted that AI is bursting a bubble inflated by excessive marketing and a lack of real innovation.
Warning sign or new opportunity?
Anthropic’s update highlights a broader shift: AI is no longer just a feature—it is becoming a standalone business. For software companies, there may be little room to hide.
Still, some experts believe the reaction reflects short-term panic rather than long-term reality. While AI can perform tasks, they argue that human oversight will continue to be essential. According to them, only IT companies that quickly adapt to an AI-first model will be able to survive—and thrive—through this disruption.
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