All In On AI

India’s handling of artificial intelligence (AI) and generative AI has faced a noticeable storm of criticism in the first 18 months of the boom. However, a recent BCG study reveals a surprising trend: most markets do not see a majority of frontline employees regularly using GenAI for work. But India and the Middle East are notable exceptions, with usage rates of 85 per cent and 80 per cent, respectively, far surpassing the US at 16 per cent, the UK at 13 per cent, and the overall market average of 43 per cent.

This trend extends to business leaders as well, with a majority reporting regular use of GenAI. India leads in this category at 93 per cent, followed by the Middle East at 90 per cent, the US at 84 per cent, and the UK at 83 per cent, with the overall average at 82 per cent.

India’s current AI efforts in public are being led by its IT industry which has come under the scanner of leading analysts of international stature for their slow GenAI adoption. But they have been catching up fast and helping enterprises world over adopt AI and GenAI while training employees internally. 

As the numero uno of the IT space, TCS is spearheading AI efforts with over 300 active projects, ranging from pilots to full-scale production. The company recently shared that its pipeline is close to the billion-dollar-mark. “At 300-plus, we have active projects on AI that’s going on between pilots and production,” says Krishna Mohan, VP & Deputy Head of AI.Cloud unit at TCS.

While these projects are not yet enterprise-wide, they are being implemented where immediate value and safety are ensured. Mohan adds: “It is not necessarily an enterprise-wide rollout of generative AI yet. But it'll reach there. Right now, the implementations are wherever customers feel that there is immediate value and where they feel there are enough guardrails or safety measures in place.” 

In fact, TCS currently boasts a robust talent pool with 40,000-50,000 employees in its dedicated AI.Cloud unit and an impressive 3 lakh employees trained in generative AI foundations across the organisation. 

“We haven’t seen a technology that has evolved so fast and still be evolving at such a pace in a long, long time” - Krishna Mohan, VP & Deputy Head of AI.Cloud unit at TCS

Meanwhile, Infosys has embedded generative AI across its service lines, developing 23 AI industry blueprints and 25 playbooks to create impactful solutions. During the 43^rd Annual General Meeting, Infosys Chairman Nandan Nilekani spotlighted this integration: “We have integrated generative AI components into our entire service lines and developed 25 playbooks to create impact for our clients.” 

With over 225 GenAI programmes underway for clients, Infosys seemingly has strong AI capabilities and a pipeline. The company has also trained 2.5 lakh employees in the areas of GenAI.

“As we look at the larger business environment, we are now into the second year of the GenAI revolution, and the initial AI doomerism has quietened down” – Nandan Nilekani, Chairman, Infosys 

India’s second largest IT player has reportedly has generated over 3 million lines of code using generative AI large language models (LLMs). 

L&T group’s LTIMindtree, along with L&T Technology Services (LTTS), recently revealed a GenAI deal pipeline worth $200 million. “If we look at the current landscape, we have over 150 use cases. Many of these have gone into production, primarily focusing on efficiency. However, with the advancement of GenAI, we anticipate that these use cases will eventually contribute to revenue generation,” says Debashis Chatterjee, CEO and MD, LTIMindtree. Between both L&T IT companies, 35,000-40,000 engineers have been upskilled in GenAI capabilities.

Meanwhile, Ashok Soota-led Happiest Minds Technologies is another IT player which has laid heavy emphasis on GenAI by carving out a business unit completely focused on the technology. The company recently told BW Businessworld that GenAI could contribute 10-15 per cent of its $1-billion revenue goal by 2031. To support this vision, Happiest Minds has established a dedicated GenAI unit with 100 personnel and trained 3,000 of its 5,168 employees in the technology.

Innovation Conundrum
The global technology industry has seemingly turned multiple pages in its relatively short history with GenAI stepping into the spotlight since late 2022. While India is pegged to be a major player in AI and technology in the years ahead, criticism from the industry and some analyst communities has focused on the innovation aspect, where India has been trailing compared to its global counterparts. 

Indian IT, which has been instrumental in aiding organisations across the globe integrate AI and GenAI into their operations to enhance efficiencies and enable digital transformation, may not be expected to significantly support AI-based innovation within India. Their revenues largely stem from North America and Europe that limit the direct innovation impact locally. However, potential avenues for smaller-scale contributions exist through partnerships with esteemed educational and research institutions which are happening now. 

An exception to this trend is Tech Mahindra, which has launched an indigenous AI foundation model called Project Indus. This project has been tailored to converse proficiently in various Indic languages and dialects, with ambitions for global expansion. As per reports, Tech Mahindra developed this initiative with just a $5-million investment, tipping the hat to India’s reputation for achieving large innovations at a comparatively lower cost on the global stage.

However, India’s startup ecosystem, home to more than 3,600 deep tech startups (with over 480 being established in CY2023), ranked third globally despite being cash-starved currently, remains central to driving AI-focused innovation efforts domestically. 

According to a Nasscom report, out of the 480 startups launched in 2023, more than 100 are “inventive deep tech firms” that have created intellectual property or innovative solutions in emerging domains. Interestingly, about 74 per cent of these deep tech startups in 2023 were focused on AI, a big rise from 62 per cent in the period spanning 2014 to 2022. While this growth is promising for supporting innovation among AI startups, the ecosystem requires huge enhancements including funding support to enable the development of globally competitive products as India aims to establish itself as a powerhouse in product innovation. As much was also highlighted by GitHub CEO Thomas Dohmke during his recent visit to India. 

“Everywhere around the world except the United States, there’s not enough private capital to fund new startups and ideas. If you look at the dollar amounts that are spent in the Silicon Valley, on the west coast of US, it’s obviously putting startups in countries such as India, Germany and Brazil at a disadvantage,” says Dohmke.

In an interview with BW Businessworld earlier this year, T.V. Mohandas Pai, Chairman at Aarin Capital Partners agreed that there wasn’t enough money in the Indian startup ecosystem to support AI innovation at the pace and magnitude required. More recently at a Bengaluru event, he went on to say that the startup ecosystem needs up to $40-50 billion boost to support innovation in the country. 

While the Rs 10,000 crore national AI mission announced earlier this year by the Centre is expected to help the country’s AI cause, it hasn’t made landfall fast enough. GenAI startups such as Vishnu Vardhan’s SML have publicly said that they have been spending as much as $3.3 million per month to keep the lights on for their large language models. But these efforts need greater support from investors to keep going and scaling.

Similar efforts are also being led by Bhavish Aggarwal’s Ola Krutrim and BharatGPT creator CoRover, which seem to be enjoying relatively better attention from investors. But there is a larger ecosystem beyond those in the spotlight that needs more layered support, including help from VCs and a faster rollout of the India AI Mission.