Foreign Institutional Investors (FIIs) have offloaded roughly Rs 17,000 crore worth of Indian IT stocks in February amid growing concerns about artificial intelligence (AI)’s potential to disrupt the industry, as per the data from National Securities Depository Limited (NSDL).The foreign investors sharply decreased their shares in Indian IT firms throughout February, with selling almost Rs 11,000 crore worth of IT shares in the first half of the month, the data showed, adding that there were further outflows of around Rs 5,993 crore as the selling continued in the second half.This came after FPI sold Rs 1,835 crore worth of IT stocks in January, as per the NSDL data.As the IT services sector adapts to changing demand patterns and technical advancements, this pattern emphasises caution among international investors.Karan Rijhsinghani, Director & Head – Product & Advisory, Atom Privé Financial Services, said the selling reflects a mix of global macro concerns and sector-specific shifts rather than a single trigger. The immediate backdrop has been heightened geopolitical uncertainty linked to the Gulf crisis.“The selling does not signal a structural exit from the sector. Indian IT companies still derive over 70 per cent of their revenues from global markets, and any stabilisation in the US and European technology spending cycle could quickly revive institutional flows. In the near term, foreign investors are likely to remain selective, favouring companies with strong digital capabilities and resilient deal pipelines while broader sector volatility persists,” he said.Riyank Arora, Associate Vice President – HNI & Derivatives, Hedged.in, feels that the recent selling can largely be attributed to global risk aversion triggered by the escalating Gulf crisis and rising geopolitical uncertainty. Foreign investors typically reduce exposure to export-oriented sectors during such periods as currency volatility and global demand concerns tend to increase.“Investors may consider focusing on fundamentally strong mid-tier IT companies such as Coforge and Intellect Design Arena, which continue to show resilient growth prospects and strong technical setups,” he added.Jeet Chandan, Group MD, BizDateUp, thinks the near term, volatility may remain high, especially if the Gulf crisis prolongs and oil stays elevated. That said, this looks more like a de-risking phase than a structural exit from quality Indian IT. Large-cap IT could stabilise once geopolitical fears cool and visibility on US demand improves.Navy Vijay Ramavat, Managing Director, Indira Securities, said the selling is not only about geopolitics. The bigger issue is that growth in the IT sector has already been muted for some time, and hiring has also been slowing down. This has made foreign investors increasingly cautious about the sector’s outlook.“This looks like a structural shift rather than a short-term phase. AI is reshaping how technology services are delivered globally. In such moments of big change, some companies adapt and evolve while others struggle to keep up. How the Indian IT sector looks in the coming years will depend on how quickly companies reinvent themselves,” he added.