The AI Adoption Index 2.0 Report by NASSCOM and Ernst & Young (EY) is out, and it finds that there has been a marginal improvement in India’s Artificial Intelligence (AI) adoption, with its index rising from 2.45 in 2022 to 2.47 in 2024. According to the report, that is based on a survey of 500 companies, 87 percent of the Indian enterprises are in the middle stages of AI maturity – Enthusiast and Expert – with 45 percent at the Expert stage.
Established in 1988, National Association of Software and Services Companies (NASSCOM), is a non-governmental trade association and advocacy group for India’s technology industry. Meanwhile, EY is a global accounting and multinational professional services giant.
The first AI Adoption Index Report, where NASSCOM collaborated with Microsoft, Capgemini, Ernst & Young and EXL, was published in 2022, and was based on a survey of 315 companies. The second report, released recently, finds that the Indian AI market is set to grow at 25 – 35 percent Compounded Average Growth Rate (CAGR) through 2027, with lion’s share from AI software and services, and Generative AI. This is in line with global trends.
The report further finds that some of the factors holding back AI adoption include lack of alignment of AI outcomes with business goals, and inconsistent standardised, compliant, and quality data. Then there is also the curious case of expertise shortfall despite abundance of skilled AI workforce, as well as what the report considers inadequate commitment from the top leadership. It says that India needs “dedicated leadership commitment and budgeting, tech+domain AI skills, and singular focus on PoC-to-production speed.”
But there are some upbeat findings as well. Moreover, 2-in-3 Indian enterprises prefer using AI to drive business growth, indicating that there is realisation of AI’s actual potential and scope of impact. Also, 56 percent of the surveyed companies reported well-documented, formalised, and in some cases, enterprise-wide risk integrated AI ethics, governance, and audit frameworks.
Sector-wise adoption
According to the report, most sectors are in the Enthusiast stage, which the report describes as “beyond Proof-of-Concepts (PoC) to drive AI adoption in organization”. Meanwhile, Manufacturing and Telecom, Media & Entertainment (TM&E) have transitioned to the Expert stage, which the report says refers to those who have “collaborated with industry disruptors to implement AI solutions”.
This is mainly due to the difference on the approach strategy. While, 39 percent of manufacturing and 65 percent of transport and logistics have transformation-focused AI strategy, over 50 percent of Banking Financial Services and Insurance (BFSI), Consumer Packaged Goods (CPG) & Retail, Energy & Utilities (E&U), healthcare as well as TM&E still have a Proof of Concept (PoC) heavy AI strategy.
The report also found that over 50 percent of manufacturing, transport and logistics sectors also have dedicated AI budgeting, while BFSI, CPG & Retail, E&U, healthcare and TM&E have more ad-hoc AI budgets. On a positive note, over 60 percent of the companies prioritise reskilling existing non-AI tech workforce for AI roles in BFSI, E&U, healthcare, transport and logistics, and TM&E sectors.