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GenAI and automation to propel India’s AI market to $17 billion by 2027: nasscom-BCG report

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AI market

The global artificial intelligence (AI) market is set for rapid expansion, projecting a robust Compound Annual Growth Rate (CAGR) of 25-35% by 2027. According to a joint report by nasscom and the Boston Consulting Group (BCG), India is set to contribute significantly to this growth, with the domestic AI market expected to reach USD 17-22 billion by 2027. In the fiscal year 2022-23 alone, India witnessed AI investments totaling up to USD 4 billion, with a focus on private investments within the country.

Key sectors driving AI investments in India include technology and healthcare verticals, as well as data analytics and digital content horizontals, which have emerged as major recipients of funding. The flourishing AI market has contributed to a noteworthy development in the broader Information Technology (IT) sector, surpassing export growth in 2023 for the first time. This surge is attributed to increasing enterprise tech spending, a burgeoning AI talent pool in India, and a substantial uptick in AI investments.

The rise in enterprise tech spending has prompted technology service providers to diversify their offerings, extending beyond traditional IT services. Proprietary AI and GenAI platforms, automation tools, data analytics solutions, and bespoke AI applications tailored to industry verticals such as healthcare, banking and finance, and retail are now part of the expanding portfolio, as outlined in the report.

As AI investments continue to escalate, there is a parallel surge in demand for AI talent in India, expected to grow at a CAGR of 15% until 2027. The tech industry has witnessed growth in Artificial Intelligence/Machine Learning (AI/ML) job opportunities in the past 12 months, with roles like AI engineers experiencing a remarkable 67% year-on-year growth. Presently, India has the third-largest AI talent pool globally, with an anticipated demand ranging from 1.25 to 1.35 million by the year 2027.

Recognizing the critical role of human capital in the AI journey, leading firms have committed substantial investments for upskilling and reskilling their workforce in AI. A significant portion of these investments is dedicated to training employees, supporting startups, and enhancing capabilities in emerging technologies. Last year, Wipro announced a $1 billion investment in AI over three years. Recently, Microsoft also announced the ADVANTA(I)GE INDIA initiative as part of Microsoft’s Skills for Jobs program, to provide AI skills to 2 million individuals in India by 2025 and equip the Indian workforce with the essential skills needed for the future.

Debjani Ghosh, President of nasscom, emphasized the transformation of Indian tech companies with the advent of Gen AI, expanding their portfolios to encompass AI-driven analytics, intelligent automation, and personalized customer interactions. These companies are redefining their service offerings, creating additional value for clients, and setting new industry standards.

To scale their AI portfolios, Indian tech service players must focus on key imperatives, including understanding client experimentation versus payment preferences, developing account-specific Go-To-Market (GTM) strategies, offering platform-based accelerated soft launches, and ensuring that delivery, sales, and pre-sales teams are proficient in technically and consultatively selling AI solutions. Furthermore, rethinking the operating model with broader organizational representation and prioritization methods for use cases will be essential for sustained growth in the evolving AI landscape.

Image by Freepik

Read next: Top 5 AI trends to look out for in 2024

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