nasscom in partnership with BCG has released the key findings of the report, titled “AI Powered Tech Services: A Roadmap for Future Ready Firms; AI & GenAI’s Role in Turbocharging the Industry”. The report was launched at a curated BCG-nasscom industry leadership roundtable on the sidelines of the Nasscom Technology & Leadership Forum 2024
India’s AI market growing at CAGR 25-35% is projected reach ~$17 billion by 2027 with AI/ML capabilities, including GenAI, emerging as the top category of IT spend expected to be made by IT Buyers in 2023. This growth is fueled by multiple factors which include increasing enterprise tech spending, India’s growing AI talent base and a significant increase in AI investments.
Globally, investments in AI have seen 24% CAGR since 2019, with 2023 seeing close to $83Bn invested. The majority of this was made in horizontal AI applications in data analytics, GenAI, and ML algos & platforms. Notably around 93% of the investments made by Indian tech services & made-in-India product players focus on digital content, data analytics & supply chain.
With increasing enterprise tech spending, technology service providers are developing a wide array of innovative AI-based services and solutions, expanding their offerings beyond traditional IT services. This includes the development of proprietary AI & GenAI platforms, tools for automation, data analytics solutions, and bespoke AI applications for specific industry verticals such as healthcare, banking & finance, and retail.
India today has the 2nd highest installed talent base with 420,000 employees working in AI job functions. India also has the highest skills penetration with 3 times more AI skilled talent than other countries. The country ranks among the top 5 nations with a 14 times growth in individuals skilled with AI in the last 7 years. As the investments in AI continues to increase, the demand for AI talent in India is also expected to grow at 15% CAGR till 2027. The technology industry in India is already seeing more than 15% growth in AI/ML jobs over the past 12 months with positions such as AI engineers growing at 67% year on year. Recognizing the importance of human capital in the AI journey, leading firms have invested heavily in upskilling and reskilling their workforce in AI and related technologies, with some organizations allocating $1Bn over the next 3 years dedicated to upskilling.
Speaking at the launch, Debjani Ghosh, President, nasscom, said, “Indian tech companies, with the advent of Generative AI, are expanding their portfolios beyond traditional IT and business process management to include AI-driven analytics, intelligent automation, and personalized customer interactions. These companies are not just adopting AI; they are redefining their service offerings, creating more value for their clients, and setting new industry standards. Accelerating this journey will require massive scale investment on AI skilling, investments in ethical & secure AI development practices & governance frameworks and a fundamental shift towards a human-centered approach, prioritizing transparency and human oversight.”
At the industry roundtable, Rajiv Gupta, MD and Senior Partner, BCG, said, The exponential growth of India’s AI market underscores the country’s crucial role in driving global innovation. This is seen in all aspects – investments within India, use cases across a range of industries, and growth and scale of talent we are seeing in India. Indian companies are starting to keep pace with the growth of AI and the Tech sector is creating future-ready organizations with dynamic and evolving Centers of Excellence driving the AI agenda.
To further understand the industry perspective on the development and deployment of AI, nasscom and BCG conducted a survey with over 65 respondents across larger tech, mid-tech, BPM and GCC companies. According to the survey, in terms of capabilities and investment, 70% of the respondents have well defined frameworks for financing use cases. Further, more than 70% companies have AI partnerships in place predominantly with GenAI & cloud partners.
Companies have onboarded dedicated AI leaders & have strong CXO leadership buy in on the AI agenda. According to the survey, over 68% of the respondents have dedicated executives leading AI initiatives. Further, more than 58% of respondents have senior leadership committed to AI initiatives.
With increasing focus on AI governance, a large majority of players have instituted bespoke AI governance frameworks with oversight from functional stakeholders. Companies have established dedicated AI steering committees which convene at frequent intervals on topics regarding, Funding & investments, Security/IP/regulatory compliances, Results monitoring of Pilot use cases, use case prioritization for client production and Assess outcomes of client offerings etc.
On the people front, 90% of the top 25 providers have made large-scale Gen AI skilling commitments. Around 80% companies are proactively working to incorporate new AI specific roles across the organization and ensure necessary upskilling for existing workforce. These roles include, Chief AI Officer, Ai Architect, AI/ML Governance Specialist, AI Ethics & Compliance Officer, to name a few.
As technology companies in India look to further their AI agenda, they need to focus on three key imperatives to accelerate their AI journey:
Developing Client-Centric Go-to-Market Strategies: Understanding the client’s willingness to experiment and pay for AI solutions is crucial for delivering high-value, scalable offerings.
Bridging the Skills Gap: A structured approach to enhancing technical and business acumen among all teams is essential for leveraging AI and GenAI use cases effectively.
Rethinking Operational Models: Adapting delivery structures and fostering multi-departmental collaboration will be key to sustaining innovation and growth in the rapidly changing tech landscape.
