According to a recent report by NASSCOM and BCG, India’s artificial intelligence (AI) market may see an exponential growth of $17 billion by 2027.
This significant surge in the coming years is estimated at a compounded annual growth rate (CAGR) of 25–35%.
The report titled, “AI-Powered Tech Services: A Roadmap for Future Ready Firms; AI & GenAI’s Role in Turbocharging the Industry“ was released on Tuesday at the sidelines of the Nasscom Technology & Leadership Forum 2024.
It identifies several factors driving this growth, including rising enterprise tech spending, India’s expanding AI talent base, and a notable increase in AI investments.
Factors contributing to the surge in Indian AI market
- In almost all industries, people have recognized the potential of AI to optimize operations, boost efficiency, and gain a competitive edge. The competitive mindset has led to increased investments in AI-powered solutions, fueling market growth.
- India is home to talented AI professionals. The large population with a great educational foundation in STEM also contributes to making India a hub for skilled and affordable AI resources. The report also highlights India’s impressive skill penetration, with three times more AI-skilled personnel compared to other countries.
- The great strength of the Indian AI market multiplies with domestic and international investors. This influx of funding helps create innovative AI startups, fuels research, and development, and facilitates wider adoption of AI technologies.
- Recognizing the importance of human capital, leading firms are investing heavily in upskilling and reskilling their workforce in AI and related technologies. This proactive approach ensures a readily available workforce equipped to handle the evolving AI landscape.
- Also, the Indian government, through its multiple initiatives and programs, is supporting AI development in India. These initiatives provide crucial infrastructure, funding, and policy support, fostering a conducive environment for AI growth.
Key Highlights of NASSCOM-BCG Report
The joint report of NASSCOM and BCG involves a survey of more than 65 respondents across larger-tech and mid-tech companies, as well as companies in the business process management space and global capability centers. This report aims to serve as a learning experience for the different sectors, highlighting key achievements in the AI market and recommending strategic actions for the way forward.
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A few important key points from the report are:
- India boasts the second-highest installed talent base, with 420,000 employees working in AI job functions.
- The demand for AI talent in India is also expected to grow at an annualized rate of 15% until 2027.
- The Indian AI market is projected to reach $17 billion by 2027, growing at a CAGR of 25–35%.
- This growth is driven by increasing enterprise tech spending, a rapidly growing AI talent pool, and rising AI investments.
- It has the highest skill penetration, with three times more AI-skilled talent than other countries.
Overall, this report suggests a promising picture of the Indian AI market. It poised India as a global leader in the AI market, with skilled individuals, rising investment opportunities, and government support. As the report says, by overcoming the challenges, India, with this transformative technology, can improve diagnostics, optimize crop yields, enhance fraud detection, personalize customer experiences, and more.
