India's AI market set to grow at 25% CAGR till 2027: Report

India's artificial intelligence (AI) market is set to expand rapidly, with a projected growth of 25% CAGR until 2027, reaching a staggering $17 billion, according to a joint report by Nasscom and BCG titled 'AI's Role in Turbocharging the Industry' for 2024. 

The report highlights several factors driving this growth, including increased enterprise tech spending, a rapid increase in AI talent pool in India, and a significant uptick in AI investments. Globally, AI investments have grown at a 24% CAGR since 2019, reaching nearly $83 billion in 2023. Notably, a majority of investments in India focus on digital content, data analytics, and supply chain solutions. 

With rising tech spending, service providers are diversifying their offerings to include innovative AI-based services and solutions, extending beyond traditional IT services. This includes proprietary AI platforms, automation tools, data analytics solutions, and customised AI applications tailored for various industries like healthcare, finance, and retail, the report said. 

As per the report, India currently boasts the second-highest number of AI talent with 420,000 employees dedicated to AI job functions, exhibiting three times more AI-skilled talent than other countries. Over the past seven years, the country has experienced a 14-fold increase in AI-skilled individuals, with a projected 15% CAGR in demand for AI talent until 2027. 

The tech industry in India has witnessed over 15% growth in AI/ML jobs in the last year alone, with roles such as AI engineers seeing a remarkable 67% year-on-year increase. Leading firms are heavily investing in upskilling and reskilling their workforce in AI and related technologies, with some allocating up to $1 billion over the next three years for this purpose. 

Speaking at the launch, Debjani Ghosh, President, Nasscom, said, “Indian tech companies, with the advent of Generative AI, are expanding their portfolios beyond traditional IT and business process management to include AI-driven analytics, intelligent automation, and personalised customer interactions. Accelerating this journey will require massive scale investment on AI skilling, investments in ethical & secure AI development practices & governance frameworks and a fundamental shift towards a human-centred approach, prioritising transparency and human oversight.” 

Rajiv Gupta, MD and Senior Partner, BCG, said, “The exponential growth of India’s AI market underscores the country’s crucial role in driving global innovation. This is seen in all aspects investments within India, use cases across a range of industries, and growth and scale of talent we are seeing in India. Indian companies are starting to keep pace with the growth of AI and the Tech sector is creating future-ready organisations with dynamic and evolving Centers of Excellence driving the AI agenda.” 

The report also reveals that a significant portion of companies have well-defined frameworks for financing AI use cases and partnerships with Generative AI and cloud providers. Moreover, many companies have onboarded dedicated AI leaders and established AI governance frameworks to ensure oversight and compliance. 

On the talent front, the top 25 providers have committed to large-scale Gen AI skilling initiatives, while 80% of companies are actively incorporating new AI-specific roles and upskilling their existing workforce. These roles include Chief AI Officer, AI Architect, AI/ML Governance Specialist, and AI Ethics & Compliance Officer.