India’s Artificial Intelligence (AI) market growing at a CAGR of 25-35 per cent is projected to reach $17 billion by 2027. While the AI market thrives, the domestic IT market at large too has flourished as growth in 2023 for the first time exceeded the export growth.
The congregation of tech leaders at Nasscom Technology & Leadership Forum (NTLF) were upbeat about the tectonic shift AI is expected to drive. The AI market is poised to grow with AI/ML capabilities, including GenAI, emerging as the top category of IT spend expected to be made by IT Buyers in 2023, the Nasscom-BCG AI acceleration survey report noted.
Growth factors
This growth is fueled by multiple factors which include increasing enterprise tech spending, India’s growing AI talent base and a significant increase in AI investments. Debjani Ghosh, President, Nasscom, said, “Indian tech companies, with the advent of Gen AI, are expanding their portfolios to include AI-driven analytics, intelligent automation, and personalised customer interactions. These companies are also redefining their service offerings, creating more value for their clients, and setting new industry standards.”
With increasing enterprise tech spending, technology service providers are developing a wide array of innovative AI-based services and solutions, expanding their offerings beyond traditional IT services, the report notes.
Puneet Chandok, President, Microsoft India & South Asia, on a panel discussion said, “The conversations around the topline impact using technology using AI have been exciting. In this part of the world where there are large IT services players and numerous GCCs, Generative AI could be a really interesting unlock for them on the topline.”
Demand for talent
As the investments in AI continues to increase, 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, the nasscom report forecasts.
Solidifying this, K. Krithivasan, CEO of Tata Consultancy Services, in a fireside chat noted that GenAI is not the cause of rationalization of the workforce, and eventually as more work will be done, more people will be hired.
The other bright spot this season has been the growth of IT in the domestic market, which, in 2023, for the first time, exceeded the services export growth. The domestic growth was supported by government investments and embracement of emerging technologies, as the market grew 7.8 per cent in 2023, as noted by Rajesh Nambiar, Chairman & MD, Cognizant India, Chairperson, Nasscom at NTLF. This comes even as the tech industry grapples to keep up the growth momentum, due to weakness in overseas markets bought on by tough macros.