Recent projections indicate that the GenAI market is expected to double every other year for the next 10 years and ultimately exceed USD 200 billion by 2032
Nasscom estimates India’s artificial intelligence market to touch USD 17 billion by 2027, growing at an annualised rate of 25 -35 per cent between 2024 and 2027
Generative artificial intelligence (GenAI) will be hitting headlines again in 2024 after the yearlong buzzword ‘ChatGPT’ raised expectations of business leaders regarding the usefulness of AI in delivering operational and business values.
While the buzz was created during late 2022, year 2023 proved to be an inflection point for AI with the OpenAI’s wildly popular Chatbot becoming one of the fastest-growing web platforms of all time – so much so that ‘ChatGPT’ was named a “word of the year”.
It has disrupted, if not revolutionised yet, how we interact, work, and develop new ideas, automate creative and imaginative tasks faster than anticipated. Above all, this has been opening doors to innovative services and business models for various organisations.
The results, often indistinguishable from those generated by humans, make GenAI a valuable tool in gaming, entertainment, and product design industries. It emulates human behaviours and even devises innovative solutions autonomously.
It is, however, yet to be seen as a growth catalyst.
With GenAI rapidly reshaping the business landscape, approximately 69 per cent overall impact is expected in business services (including IT, legal, consulting, outsourcing, rental, etc.), financial services, transportation and logistics, education, retail trade and healthcare. It can be observed through improved employee productivity, enhanced operational efficiency and personalised customer experiences. The IT sector also stands to gain significantly by developing GenAI platforms and tools.
Recent projections indicate that the GenAI market is expected to double every other year for the next 10 years and ultimately exceed USD 200 billion by 2032.
STUDIES & FORECAST
Organisations flock to GenAI tools to improve processes and productivity, expecting a ‘significant, if not transformative’ impact.
A recent Lenovo study revealed companies in the Asia Pacific are planning to increase AI spending by 45 per cent in 2024 compared to 2023. Chief information officers (CIOs) across India (28 per cent) and Korea (33 per cent) lead in GenAI investments, followed by ASEAN+ (11 per cent), Australia & New Zealand (2 per cent), and Japan (2 per cent). It also noted a massive shift in CIO priorities from last year with AI topping the list.
However, there is a difference in how business leaders and CIOs are approaching AI technologies. Business leaders want to prioritise GenAI to enhance customer experience and drive outcomes, while CIOs express cautious optimism, according to the report.
The ‘CIO Playbook 2024 – It’s all about Smarter AI’ report, which surveyed 900 CIOs, including 150+ in India, found that 84 per cent of CIOs are already using AI to bolster their security frameworks with 14 per cent planning more investments.
In India, GenAI is being used for risk management and fraud detection in the banking, financial services, and insurance (BFSI) sector. The Indian manufacturing sector leverages AI-enabled predictive maintenance systems, aiding enterprises in autonomous real-time monitoring of equipment and anomalies. High-performance computing platforms (55 per cent) and automation of digital infrastructure (39 per cent) are expected to be areas with the highest spending in 2024.
The report further said that CIOs in India are most confident about AI, with 95 per cent expressing certainty that it will create a competitive advantage, and 57 per cent of them consider it to be a game changer for their organisations.
The total GenAI investments across markets have been highest in Korea (95 per cent), India (93 per cent), and ASEAN+ countries (91 per cent), and the impact of these investments and implementations have been highest in India (95 per cent) and ASEAN+ countries (94 per cent`).
Garter has predicted a surge in global spending on AI software from USD 124 billion in 2022 to USD 297 billion in 2027 with the market growing at a 19.1 per cent compound annual growth rate in the next six years. Integration of AI tools will be most prevalent in marketing, product design, and customer service, reflecting a shift towards more personalised and efficient operations, the research firm has forecast.
INDIAN MARKET
GenAI holds significant potential for India with a large portion of the added value expected to emanate from the service industries.
According to IT industry body Nasscom, India’s artificial intelligence market is projected to touch USD 17 billion by 2027, growing at an annualised rate of 25 -35 per cent between 2024 and 2027. It attributed the growth to an increase in enterprise tech spending, the country’s expanding AI talent pool and a rise in AI investments.
The major challenges that organisations are facing in adopting GenAI are data privacy (48 per cent), skill gap (36 per cent) and lack of unclear use cases (26 per cent), according to EY India.
While reliance on extensive datasets, a resource most organisations lack, remains a top technology challenge for AI, lack of requisite skills has forced organisations to pivot towards upskilling existing employees.
India has over 420,000 employees holding positions in AI job functions. To bridge the talent gap, IT companies have earmarked significant budgets to train their employees as well as to invest in start-ups and expand capabilities in the emerging technology. Of the top 25 technology service providers, 90 per cent have made large-scale Gen AI skilling commitments. Last year, IT services firm Wipro Ltd had announced USD 1 billion in investment in AI over three years to advance its foundation in AI, data and analytics capabilities, build new consulting capabilities and more.
With investment in AI rising, the subsequent demand for AI talent in India is also expected to grow at a rate of 15 per cent annually until 2027, the report added.
The ‘IBM Global AI Adoption Index 2023’ also found 59 per cent of IT professionals at large organisations having actively deployed AI with an additional 27 per cent exploring using the technology. It further noted that 74 per cent of IT professionals indicated that their company had accelerated their investments in or rollout of AI in the past 24 months in areas like R&D (67 per cent), reskilling/ workforce development (55 per cent) and building proprietary AI solutions (53 per cent).
INDIA’S AI MISSION
India has launched the National AI Strategy as well as other initiatives to promote AI adoption. It has approved an investment of USD 1.24 billion to enhance its technological infrastructure and AI capabilities, which includes building a supercomputer with over 10,000 GPUs. The money will also be used for funding AI start-ups, as well as developing AI applications for the public sector over the next five years, the government said in a statement.
The India AI mission will establish a comprehensive ecosystem catalyzing AI innovation through strategic programmes and partnerships across public and private sectors, it added.
According to India’s PSA office, AI expenditure is projected to grow with a CAGR of 39 per cent over the period 2019-2025 touching around USD 11,781 million by 2025.
About 50 per cent of the Government and Public Services (GPS) organisations are also ready to implement their GenAI solution within one year, driving overall efficiencies across processes by automating tasks, enhancing policy analysis, and promoting transparency, according to EY India.
These apart, the Union Cabinet has approved establishment of three semiconductor facilities with an investment exceeding USD 15 billion. The foundation stones of Rs. 91,000 crore Tata Electronics Fab and Rs. 27,000 crore Outsourced Semiconductor Assembly and Test (OSAT), and Rs. 7,600 crore CG Power’s OSAT were laid in March.
RISKS & ROAD AHEAD
Generative AI creates new data based on learned patterns from existing data. Tools that use GenAI can access your data and then use those to make tasks easier and faster while supporting decision making and giving insights. Despite the promises GenAI holds, inherent risks accompany its complexity in model deployment and validation. It is a double-edged sword capable both of doing and undoing businesses, particularly pertaining to data protection. Currently, organisations identify data privacy as the single-most crucial risk of GenAI.
Unauthorised use of copyrighted material to train large language models is also an emerging intellectual property risk in development of GenAI products. In addition, there is always the risk of an LLM hallucinating response, which can have profound implications for companies’ reputation and business integrity if the content is published or used in decision-making.
In a recent flash survey of more than 100 organisations with more than USD 50 million in annual revenue, McKinsey found that implementation of GenAI was a “high” or “very high” priority for 63 per cent of respondents, yet 91 per cent didn’t feel “very prepared” to do so in a responsible manner.
While remaining optimistic, Indian enterprises too acknowledge the need for better preparation.
A roadmap for strategic implementation is therefore essential to navigate this emerging landscape. Adapting proven risk management approaches to GenAI can help to move responsibly and with good pace, putting the technology to proper use, amid the evolving regulatory environment. The government can also support innovation by facilitating interventions to improve access to data, chips, talent, and computing resources.
