BCG and IIMA report: Two thirds of Indian corporates are still AI laggards
A report released by Boston Consulting Group and the Indian Institute of Management Ahmedabad evaluates how prepared Indian businesses are to adopt and use artificial intelligence effectively in their strategies and operations. The road ahead is promising – but also long.
Artificial Intelligence (AI) has evolved remarkably since its genesis in the 1950s. Today, it permeates every aspect of our daily lives – from phones, to the products on supermarket shelves, to suggesting the next movie on our entertainment platforms.
The technology is equally pervasive at the macro level, assisting in tasks as varied as studying the impact of weather on crops, optimizing supply chain risk and determining the best drug molecule for diseases.
While AI still is in its infancy, the report by Boston Consulting Group (BCG) and the Indian Institute of Management Ahmedabad (IIMA) suggests the technology has the potential to transform entire industries, by redefining products, services and value chains.
Given its promise, AI expenditure in India is expected to reach $11.78 billion by 2025, on the back of a compound annual growth rate of 39% from 2019-2025. However, when it comes to private investment in AI, the United States and China lead the rest of the world by a huge margin.
“The opportunity of AI is India’s for the taking – the challenge is now to turn its enormous potential into reality,” said the researchers.
Based on a survey of 130 companies operating in India, Boston Consulting Group and the Indian Institute of Management Ahmedabad found that the overall AI maturity of companies is steadily improving, although there remains a gap between leaders and laggards.
Just over 1 in 10 (11%) of organizations are branded as leaders – they have transformed their AI capabilities in the last 3 years. The vast majority of the companies surveyed however are considered as laggards – two thirds of entities are still in the early stages of adopting AI and may face business challenges ahead. Even though some Laggards have made slight progress, AI is not a top priority for them.
Laggards often prioritize adopting AI technology without considering how it fits into their overall digital transformation journey. The study reveals that the main issue is commonly not the choice of technology or algorithm but rather the inefficient integration of AI outputs into their business processes.
Growth in the maturity of the laggards group can come with major benefits, said Bharat Bhasker, Director of the Indian Institute of Management Ahmedabad.
“India is poised to enter into a digital revolution where successful AI adoption by industry can be a crucial determinant of India’s competitiveness globally. Successful adoption of AI could add up to 1.4 percentage points annually to real GDP growth of India.”
“A successful adoption of AI is expected to add over a five-year period, approximately $15 billion to $25 billion in incremental pre-tax profit for the top 500 Indian companies alone.”
The research also found that India’s 500 largest companies are expected to have a demand for 25,000 to 30,000 skilled professionals in artificial intelligence/machine learning within the next 3-5 years.
