India’s Artificial Intelligence (AI) market, growing at a CAGR of 25-35 per cent, is projected to reach $17 billion by 2027, with AI/ML capabilities, including GenAI, emerging the top category of IT spend expected to be made by IT Buyers in 2023, according to the Nasscom-BCG AI acceleration survey report.

This growth will be fuelled by multiple factors, including increased enterprise tech spending, India’s growing AI talent base, and a significant increase in AI investments. Globally, investments in AI have shown 24 per cent CAGR since 2019, with 2023 seeing close to $83 billion in investments.

The majority of this was made in horizontal AI applications in data analytics, GenAI, and ML algos and platforms. Notably, 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.

Debjani Ghosh, President, Nasscom, said, “Indian tech companies, with the advent of Generative AI, are expanding their portfolios to include AI-driven analytics, intelligent automation, and personalised customer interactions. These companies are not just adopting AI, they are redefining their service offerings, creating more value for their clients, and setting new industry standards.”

Accelerating this journey will require massive scale investments on AI skilling, investments in ethical & secure AI development practices and governance frameworks, and a fundamental shift towards a human-centred approach, prioritising transparency and human oversight, she added.

With increasing enterprise tech spending, technology service providers are developing an 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, according to the report.

As investments in AI grow, the demand for AI talent in India is also expected to grow at 15 per cent CAGR till 2027. The technology 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, the report noted.

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