Silicon Subcontinent: Inside India's AI Revolution
Artificial Intelligence (AI) has been a transformative force globally, with significant growth observed since the mid-2010s. This surge is largely due to advancements in computing power, data availability, and breakthroughs in machine learning algorithms. For instance, the global AI market size was valued at around $196 billion in 2023 and is projected to reach $1,700 billion by 2028, growing at an astounding CAGR of 37%!
India’s AI market is growing at a CAGR of 25-35% and is projected to reach around $17 billion by 2027, according to a new report by BCG and IT industry apex body Nasscom.
Artificial intelligence (AI) is a transformative force in the emerging digital age. Major corporations, including Amazon, Google, Apple, Facebook, IBM, and Microsoft, are heavily investing in AI research and development, contributing to the growth of the AI market. These companies aim to enhance the accessibility of AI for business applications. Additionally, many organizations are integrating AI technologies to enhance customer service and strengthen their position in the AI-driven Industry 4.0. For example, in March 2020, McDonald’s invested $300 million in its largest technology acquisition, purchasing a Tel Aviv-based AI startup to deliver personalized experiences to customers using artificial intelligence.
Key Recent Developments in AI
Generative AI Explosion: Models like ChatGPT (Generative Pre-trained Transformer) and image generators such as DALL-E and Stable Diffusion have demonstrated remarkable advances in natural language processing and image creation.
AI for Science: AI is making groundbreaking contributions in fields like drug discovery, protein folding simulation (AlphaFold), and materials science.
Progress in Robotics & Autonomous Systems: Self-driving vehicles, warehouse robots, and sophisticated drones illustrate the rapid progress of AI in the physical world.
AI in India
The influx of investments in artificial intelligence is set to boost the demand for AI professionals in India, with projections indicating a robust 15% compound annual growth rate (CAGR) through 2027, according to the newly released "AI Powered Tech Services: A Roadmap for Future Ready Firms; AI & GenAI's Role in Turbocharging the Industry." This report was unveiled during the Nasscom Technology & Leadership Forum in 2024.
The analysis identifies AI and machine learning as the primary areas of IT investment for the year 2023, driven by a confluence of factors such as escalated spending on enterprise technology, an expanding pool of AI expertise in India, and a noticeable upswing in AI funding.
A significant 93% of investments by Indian tech services and homegrown product companies are being channeled into digital content, data analytics, and supply chain enhancements. As corporate spending on tech escalates, providers are crafting a gamut of AI-driven offerings, thus broadening their market reach beyond the conventional IT service spectrum to include novel AI and generative AI platforms, automation tools, data analytics, and custom AI applications tailored for sectors like healthcare, finance, and retail.
India is currently positioned as a global contender in AI expertise, housing the second-largest AI workforce, with 420,000 individuals in AI-related roles. The nation also boasts the highest concentration of AI skills, possessing triple the AI-savvy talent compared to other countries.
Among the leading countries, India has witnessed a 14-fold surge in AI-proficient professionals over the past seven years. Additionally, the past year has seen the technology sector in India experience more than a 15% growth in AI and machine learning roles, with job titles like AI engineers showing a 67% increase on a year-to-year basis.
By the year 2025, data and AI are anticipated to infuse the Indian economy with an added value of $450-500 billion, amounting to roughly 10% of the nation's $5 trillion GDP goal, as set before the COVID-19 pandemic. It's expected that nearly 45% of this contribution will be driven by three main sectors: Consumer Goods and Retail, Agriculture, and Banking and Insurance.
In the Consumer Goods and Retail sector, an impressive $90-95 billion boost is predicted, with AI playing a pivotal role in refining marketing strategies through predictive analytics and personalized campaigns derived from customer data. Moreover, AI will aid in safeguarding against counterfeit products using blockchain technology for tracking.
The Agriculture sector stands to gain $60-65 billion by leveraging AI for production planning with soil mapping and crop pricing, along with predicting crop failures to safeguard food supply and farmer incomes.
Banking and Insurance also show promising growth potential with an estimated $60-65 billion increase. Here, AI will be instrumental in risk assessment, particularly for the underwriting of SME loans, and in the optimization of pricing for self-employed customers through data-driven profiling.
The Indian Generative AI startup landscape has also shown remarkable progress and uptick in parallel with world trends.
Investment-wise, these startups have attracted significant funding, with more than $475 million poured into the sector between 2021 and 2023. There has been substantial growth in the ecosystem, with over 60 active Generative AI startups noted as of Q2 CY2023.
More than half of these startups, approximately 52%, are engaged in creating solutions for text, images, and video processing.
In 2023, five Indian AI startups received substantial investments, highlighting the growing interest in the country's tech innovation.
Builder.ai stood out with its no-code software development platform that utilizes pre-built components enhanced by AI, enabling organizations to create applications swiftly. In May of that year, Builder.ai secured a striking $250 million in a Series D round led by the Qatar Investment Authority.
Sarvam AI has carved a niche in generative AI, concentrating on crafting comprehensive stacks for large language models adept at processing Indian languages. In December 2023, the company's innovative direction attracted $41 million in Series A funding.
Krutrim AI, known for its chatbot capable of understanding multiple Indian languages, supports users in acquiring information on various topics. The company's unique offering garnered $24 million in funding in October 2023.
HealthPlix is revolutionizing medical record-keeping with its AI-powered electronic medical record software that aids doctors in making clinical decisions. This pivotal tool for healthcare professionals secured HealthPlix $22 million in a Series C funding round.
Lastly, Yellow ai, which specializes in enterprise-level solutions, empowers businesses to automate customer interactions through various channels such as voice and virtual assistants and chatbots. This focus on enhancing customer engagement through AI saw the company raise $20 million in a Series B funding round in December 2023.
Future of AI
While AI is often cited as a cause for job displacement, it also creates new opportunities. According to a World Economic Forum report, AI could displace 75 million jobs globally by 2022 but also create 133 million new ones. In India, there's a similar trend where AI is expected to affect traditional jobs but also generate demand in sectors like AI development, data analysis, and system maintenance.
With AI becoming a central tech-piece for organisations in generating buzz, there is also an increasing misuse of the phrase 'Powered by AI'.
Not all companies that claim to use AI are genuine; many use the term as a marketing tool while relying on simple, hardcoded algorithms. A notorious example is the controversy around certain chatbots that were found to be manually operated rather than AI-driven, misleading users about their technological capabilities.
With listed companies using the AI buzz to manipulate share prices, we are not standing far from market regulators across the world taking notes and implementing an AI usage and publicity policy to control malpractices.
Looking forward, AI in India is poised for expansive growth with potential directions including:
Agriculture: Using AI for crop assessment and soil health.
Education: Personalized learning experiences and automated administrative tasks.
Smart Cities: AI to manage traffic, security, and utilities more efficiently.
As AI continues to evolve, the emphasis must also be on ethical guidelines, public policy, and workforce development to ensure it contributes positively to society.
