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Despite the Indian AI market being at a nascent stage, it is expected to mirror the global AI market growth rate of 25-35 per cent CAGR over the next three-four years, and reach nearly $17-20 billion by 2027, reports indicate. Alongside, AI integration is said to boost the country’s GDP by $500 billion by 2025.
The Nasscom 2024 AI Adoption Index 2.0, released in partnership with EY, surveyed 500 companies across seven major sectors in India. The report noted that the global AI market, currently at $110-130 billion, is projected to reach $320-380 billion by 2027. The AI market in India, which stands at $7-10 billion, will experience similar growth.
A lion’s share of this global market growth can be attributed to AI software and services, and Generative AI (GenAI). The share of AI services and software in the global AI market by 2027 will be 66 per cent, up from 58 per cent in 2023.
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Hardware market
The hardware market is expected to double, but constitute a smaller portion of the AI market in 2027. Data & analytics and GenAI will become dominant themes, with the latter comprising 33 per cent of the expected AI market in 2027, up from 13 per cent in 2023.
A Deloitte India-Nasscom report titled “Advancing India’s AI Skills: Interventions and programmes needed” noted that the global AI market, comprising AI services and products, reached $120 billion in 2023, with AI services accounting for 24 per cent at around $29 billion.
“If Indian technology players capture a similar market share for AI services as for traditional services, where India accounts for about 20 per cent of the global services market, the estimated market potential for AI services would be $24-25 billion by 2027, even with delayed growth of a few years compared with global peers,” the report read.
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Teamlease report
A Teamlease Digital report titled “Digital Skills and Salary Primer” said AI integration is likely to boost India’s GDP by $500 billion by next year. Alongside, IT services and products companies will account for 8 per cent of India’s GDP by 2026, with the IT industry aiming to hit $350 billion in revenue.
Sangeeta Gupta, Sr Vice-President and Chief Strategy Officer at Nasscom, said, “As AI evolves from an emerging technology to a fundamental pillar of business strategy, Indian enterprises have a unique opportunity to lead this transformation.”
Despite a slowdown in tech spending, AI budgets remain strong, with 40 per cent of companies having dedicated AI funds and 64 per cent allocating at least 5 per cent of their tech budget to AI. However, despite India being a major talent hub for AI, enterprises struggle to find domain-specific and strategic AI expertise, often starting with “AI-as-a-service” models. To boost AI adoption, Indian companies need “right-sized” operating models, combining internal and external talent, consistent leadership oversight, and AI Centres of Excellence (CoEs) to scale AI initiatives, the Nasscom-EY report noted.
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