AI No Longer Fringe Tech For Indian Companies: Bain & Company Report

Artificial intelligence (AI) is no longer a fringe technology for Indian companies. According to International Data Corporation (IDC), India's AI market was valued at $3 billion in 2020, approximately 1 per cent of the global pie. However, the market is expected to grow at the second-fastest rate of 20 per cent among major economies over the next five years, behind only China.

India is also a global source of talent in data and AI skills; it produces 16 per cent of the world's AI talent pool, placing it among the top three talent markets, said the findings of a report by Bain & Company titled "From Buzz to Reality: The Accelerating Pace of AI in India", in collaboration with Microsoft and the Internet and Mobile Association of India (IAMAI).

In its first edition, the report surveys 148 providers and 343 enterprises to examine India's AI landscape from the perspective of enterprises and providers and measure their progress in AI maturity.

The report said that approximately 80 per cent of enterprises have at least one AI model in production, indicating an extensive penetration of AI/Machine Learning (ML) across enterprises vs global. Within providers, too, 64 per cent have AI/ML as a core element for many of their products, as against 56 per cent of their global counterparts.

The thrust in AI adoption for enterprises is maximum in sectors such as communication, over-the-top (OTT) and gaming (55 per cent); technology (48 per cent); and financial services (39 per cent). Further, over 90 per cent of the digital native companies in CPG, retail and financial services have demonstrated AI/ML adoption.

Technology solution providers are the drivers of AI adoption in India. Of India's providers' prototypes, 65 per cent reach production scale—a significant lead over global providers' 49 per cent success rate. However, most organisations are still in the early stages of AI adoption, implementing just a few use cases.

When it comes to 'build' vs 'buy' preference, in the next three years, 49 per cent of enterprises plan to increase the proportion of 'build', compared to 29 per cent that plan to increase the proportion of 'buy'. Providers, too, are inclined toward building their models using third-party support or open-source tools/services. Their reliance on cloud platforms for pre-built models and packaged solutions is expected to decrease in the coming years (from 36 per cent of the AI feature/use cases in 2019 to a projected 29 per cent in 2023).

The report further added that although India constitutes a small share of the global AI market, it produces 16 per cent of global AI talent, placing it among the top three contributors in the world. "India's technology workforce grew up in an internet/cloud-first world. Its ability to assemble solutions from combinations of legacy, cloud and SaaS components is world-class," said the report.

To systematically build AI talent for enterprise demand, support from academic institutions is needed to introduce comprehensive formal education in core AI technology. Steps have been taken to this effect with the establishment of National Education Policy 2020, which includes provisions to include AI in each stage of education and has directed universities to work toward offering master's and doctoral programmes in this field

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor