India's AI market, growing at a compounded annual growth rate (CAGR) of 25-35 per cent is projected to reach $17-billion by 2027, according to a report.
This growth is fueled by multiple factors including increasing enterprise tech spending, India's growing AI talent base and a significant increase in AI investments, the report titled 'AI Powered Tech Services: A Roadmap for Future Ready Firms; AI & GenAI's Role in Turbocharging the Industry' said.
The Nasscom report in partnership with BCG was released on Tuesday at the sidelines of the Nasscom Technology & Leadership Forum 2024 in Mumbai.
Globally, investments in AI have seen 24 per cent CAGR since 2019, with 2023 seeing close to $83-billion investment, it said.
Majority of investments were made in data analytics, GenAI, and ML algos and platforms, as per the report.
Notably, around 93 per cent of the investments made by Indian tech services and made-in-India product players focus on digital content, data analytics and supply chain, according to the report.
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, it stated.
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, the report said.
According to the report, India has the second highest installed talent base with 420,000 employees working in AI job functions.
India also has the highest skills penetration with three times more AI skilled talent than other countries. The country ranks among the top five nations with a 14 times growth in individuals skilled with AI in the last seven years, it said.
As the investments in AI continues to increase, the demand for AI talent in India is also expected to grow at 15 per cent CAGR till 2027, the Nasscom-BCG report said, adding the tech industry in India is already seeing more than 15 per cent growth in AI/ML jobs over the past 12 months with positions such as AI engineers growing at 67 per cent 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 USD 1-billion over the next three years dedicated to upskilling.
"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," said Debjani Ghosh, president at Nasscom.
These companies are not just adopting AI; they are redefining their service offerings, creating more value for their clients, and setting new industry standards, she noted.
Accelerating this journey will require massive scale investment on AI skilling, investments in ethical and secure AI development practices and governance frameworks and a fundamental shift towards a human-centered approach, prioritising transparency and human oversight, according to Ghosh.