India's AI market to reach $17 billion by 2027 as investments, talent surge, reveals report

A recent report jointly published by Boston Consulting Group (BCG) and India’s IT industry apex body NASSCOM reveals that India’s artificial intelligence (AI) market is on a robust growth trajectory, projected to hit approximately $17 billion by 2027.

Titled “AI-Powered Tech Services: A Roadmap for Future Ready Firms; AI & GenAI’s Role in Turbocharging the Industry,” the report was launched during the NASSCOM Technology & Leadership Forum 2024.

According to the report, the AI sector in India is experiencing a compounded annual growth rate CAGR of 25-35 per cent, buoyed by escalating investments.

It anticipates a 15 per cent CAGR in demand for AI talent in India by 2027. AI and machine learning (ML) have emerged as the top categories for IT spending among buyers, fueled by expanding enterprise tech budgets, a burgeoning AI talent pool, and a substantial uptick in AI investments.

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Globally, AI investments have maintained a robust 24 per cent CAGR since 2019, with investments in 2023 reaching nearly $83 billion. A significant portion of these investments has been directed towards horizontal AI applications encompassing data analytics, GenAI, and ML algorithms and platforms.

In the Indian tech services landscape, a staggering 93 per cent of investments from both Indian tech services and homegrown product players are channeled into digital content, data analytics, and supply chain solutions.

This trend underscores the industry’s shift towards developing AI-based services and solutions beyond conventional IT offerings.

The report highlights India’s rapidly growing talent base in AI, with the country boasting the second-largest talent pool comprising 420,000 professionals engaged in AI-related roles. India also leads in skills penetration, with three times more AI-skilled talent compared to other nations.

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Over the past seven years, India has witnessed a 14-fold increase in AI-skilled individuals, positioning it among the top five countries in this regard.

Acknowledging the pivotal role of human capital in the AI landscape, leading firms have ramped up investments in upskilling and reskilling their workforce in AI and related technologies.

Some organizations have earmarked substantial budgets, with investments totaling up to $1 billion over the next three years dedicated to upskilling initiatives.

Debjani Ghosh, President of NASSCOM, emphasized the transformative impact of AI adoption by leading firms, highlighting the shift towards client-centric service offerings and the importance of a human-centered approach prioritizing transparency and oversight.

Rajiv Gupta, Managing Director and Senior Partner at BCG, noted the proactive stance of Indian companies in embracing AI, with dynamic Centers of Excellence driving the AI agenda.

The report outlines key imperatives for technology companies in India to further their AI agenda, including developing client-centric strategies, bridging the skills gap, and rethinking operational models to foster innovation and growth in the evolving tech landscape.

(With inputs from agencies)