Two-thirds of Indian Tech CXOs foresee high impact from Gen AI on business

Around 68% of Chief Experience Officers (CXOs) in Indian tech-services companies believe that Generative artificial intelligence (Gen AI) will exert a high to existential impact on their businesses, revealed a new survey by global consultancy firm EY. The study, conducted during November-December 2023, encompassed 50 companies across small, mid, and large-cap categories, including information technology and business process management firms.

According to the survey, CXOs anticipate Gen AI's greatest impact in the realm of customer experience, with 89% of respondents highlighting this aspect. Following closely are innovation (66%), cost reduction (48%), and revenue growth (48%). Despite these positive expectations, 64% of CXOs express that their organisations' readiness to leverage Gen AI is currently rated as "very low" to "moderate."

The study emphasizes the transformative potential of Gen AI, illustrating its ability to reshape business models, boost productivity, and reduce both direct and indirect costs. EY's findings suggest substantial value-uplift in delivery-related areas, ranging from 20-50% for application development and support to 30-50% for business process management. Internal support functions within tech-services companies also stand to benefit, with potential value-uplifts of 30-40% for sales and marketing, 20-30% for human resources, and 30-40% for functions like finance, legal, and procurement.

Despite the promise of Gen AI to unlock opportunities for innovation, revenue growth, and improved customer and employee experiences, the implementation of this technology on the ground has been slower than anticipated.

CXOs cite a skills gap as the primary barrier (50%) to Gen AI adoption, followed by unclear use cases (36%) and challenges in converting pilot projects into production-grade engagements. Concerns also arise regarding customer hesitancy due to issues like inaccuracy, misinformation, bias, ethics, and intellectual property protection. Data privacy (48%), hallucination or fabricated answers (23%), and biased responses (20%) are identified as key risks as organisations consider integrating Gen AI into operational processes.

The evolving and uncertain regulatory environment surrounding Gen AI poses challenges for tech-services companies, requiring them to build trust with customers. While there is consensus among CXOs on the need for Gen AI regulation, opinions differ on who should design and govern the regulatory framework. Forty-eight per cent believe it should be the government, 25% prefer industry associations, and 20% advocate for self-regulation.

Nitin Bhatt, Technology Sector Leader at EY India, emphasized that despite lower customer spending on Gen AI in the past year, the study indicates ongoing engagement with tech-services companies for various strategic projects. Bhatt anticipates a significant surge in Gen AI-related spending over the next three years as the technology matures and establishes trust-by-design through compliance, safety, and ethical guardrails.

A recent study conducted by the Infosys Knowledge Institute, released on January 27, predicts a substantial increase in Gen AI spending by Indian companies. Over the next 12 months, these companies are expected to raise their Gen AI investments by nearly 165%, reaching a total of $386 billion. The research, published on Saturday, also indicates that companies throughout the Asia-Pacific region are poised to almost triple their Gen AI investments, reaching $3.4 billion in 2024, as reported by Infosys's research arm.

In a separate study earlier this month, online graphic design tool Canva found that more than 90% of chief innovation officers surveyed believe that integrating AI can significantly enhance both their own roles and their employees' experiences. Additionally, 93% of these officers plan to increase their budget for AI app investments, with more than half of them aiming for a 50% budget increase. However, the study reveals that over 50% of respondents consider access to IT talent and data security as the two primary challenges in successfully integrating AI.