According to a joint report by nasscom and Boston Consulting Group (BCG), the artificial intelligence (AI) market in India is growing at a compound annual growth rate (CAGR) of 25-35 per cent and is projected to reach $17 billion by 2027. The market growth is fuelled 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”, was released on the sidelines of the nasscom Technology and Leadership Forum 2024.
As per the report, investments in AI have seen a 24 per cent CAGR since 2019 worldwide, with 2023 seeing close to $83 billion investments. Majority of investments were made in data analytics, GenAI, and machine learning (ML) algorithms and platforms. The report notes that 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. It stated that 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. This includes the development of proprietary AI and GenAI platforms, tools for automation, data analytics solutions, and bespoke AI applications for specific industry verticals such as healthcare, banking and finance, and retail.
Further, the report highlights that 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-fold growth in individuals skilled with AI in the last seven years.
The report forecasts that as the investments in AI continue to increase, the demand for AI talent in India is also expected to grow at 15 per cent CAGR till 2027, 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. Recognising 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 organisations allocating $1 billion over the next three years dedicated to upskilling.
During his address at the nasscom Technology and Leadership Forum 2024, Rajeev Chandrasekhar, Union Minister of State for Electronics and Information Technology and Skill Development and Entrepreneurship, said that the government is working on a draft AI regulation framework that is set for release in June or July 2024. He stated that the intention of the regulation is to harness AI for economic growth and address potential risks and harms.
Speaking on the sidelines of the report, the minister said that the government intends to exploit AI to its fullest to achieve the goals of economic growth, ensuring a huge impact on healthcare, agriculture and farmer productivity, among others.
