Artificial Intelligence is having a serious industry moment.

What was once a sci-fi or marketing

talking point is now widely available to consumers and businesses. We haven't got HAL 3000
or Skynet yet, but ChatGPT and Stable Diffusion are at least taking over social media.

AI-powered systems are increasingly present in the world around us, often in subtle ways. It
is useful for companies to look at AI through the lens of business capabilities rather than
technologies.

Broadly, AI currently is used only for the following three important business needs:

• Automating few business processes

• Gaining insight through data analysis
• Engaging with customers and employees

While these cover a broad scope of business, the opportunity to leverage AI is much larger.

As of 2023, the market growth of artificial intelligence (AI) continues to be impressive, with
the market size expanding significantly. The AI market size reached approximately $60 billion
in 2022 and is expected to maintain a growth rate of around 39.4% CAGR from 2022 to 2028.
(Bloomberg, n.d.)

The market was driven by various factors, including increased AI adoption across industries,
advancements in AI technologies, and a growing awareness of the potential benefits that AI
can offer.

AI adoption has become ubiquitous across industries, with sectors such as energy, agriculture,
and education increasingly leveraging AI for process optimization and data-driven decision-
making.

In 2022, global investment in AI startups exceeded $50 billion, indicating continued strong
investor interest in AI-driven innovations. (Mukherjee, n.d.)

The growth was attributed to the widespread application of AI in areas such as:

• Business Intelligence and Analytics: AI-powered data analysis and insights were becoming
critical for informed decision-making.
• Automation and Robotics: AI-driven automation was transforming manufacturing,
logistics, and other industries, leading to increased efficiency and cost savings.
• Healthcare: AI was being employed for medical image analysis, drug discovery, and
predictive analytics, improving patient care and outcomes.
• Natural Language Processing (NLP): AI-powered NLP technologies were enhancing
customer service, virtual assistants, and sentiment analysis.
• Autonomous Vehicles: The development of self-driving cars and AI-powered
transportation systems contributed to market growth.
 • E-commerce and Retail: AI-driven personalized recommendations, chatbots, and supply
chain optimization were reshaping the retail landscape.

Before embarking on an AI initiative, companies must understand which technologies perform

what types of tasks, and the strengths and limitations of each. Rule-based expert systems and
robotic process automation, for example, are transparent in how they do their work, but
neither is capable of learning nor improving. Deep learning, on the other hand, is great at
learning from large volumes of labeled data, but it’s almost impossible to understand how it
creates the models it does. This “black box” issue can be problematic in highly regulated
industries such as financial services, in which regulators insist on knowing why decisions are
made in a certain way.

The need for India’s prosperity in the AI space would not come by continuously adding more
apps with little or no differentiation in terms of core customer benefit that they provide. The
companies in this space will have to do core work of creating tech solutions of value for
customers and then apply/integrate it with convenience.

For this year’s competition, we want the participating teams to work on two startups Alpha
and Beta. These tech startups have successfully established themselves in IT industry for last
3 years and their founders believe that now is the right time for them to expand with focus on
Artificial Intelligence. Both startups have limited experience in AI but aim to be recognized as
one of the best organizations providing AI solutions/services in the market. The current
solutions provided by each startup can be seen in Annexure C along with their funding status
in Annexure B

As suggested in preceding paragraphs, the emergence of Chat GPT and other Generative AI
technologies has aligned the current market trend towards AI. There is a growing acceptance
and desire in business organizations to embed AI in their internal processes to improve
operational efficiency and in customer service areas to get more customer satisfaction. This
presents a great opportunity for startups Alpha and Beta to venture into, but they would need
a good strategy to begin and then scale.
Company Alpha

Company Alpha was founded in Mumbai in 2019 at the cusp of pandemic where physical
human interactions became restricted and in fact hazardous by Mr. A who graduated from
one of the most prestigious technical institutes of the country and made a career working in
banking solutions. Company Alpha focused on being an end-to-end technology first company
wherein sophisticated technical capabilities are created by a passionate group of techies. You
name any advanced technology in the world and Company Alpha has the capability to build it
at scale.

With this technology advantage, the company has been able to build a reputation in the
industry where the business has been growing tremendously as mentioned in Annexure A.
While the company can scale up AI technologies from zero to one faster than its peers, the
integration of these tech capabilities into client’s businesses to create value for them and their
customers is the tricky part for Company Alpha.

While Company Alpha has flagship solutions build for fraud risk management solutions for
BFSI industry and metaverse enabled retail store of the future, the founders feel the company
needs strategic business vision to continue and expand its growth in the long term. The critical
factor for the company is to identify customers’ problems in different sectors and then create
value for them by providing cutting edge AI solutions integrated in their business. Further
financial details of the company are annexed.

Company Beta

Company Beta was founded in Bangalore 3 years ago by an IIM Alumnus who has rich
experience of working with multiple startups. Company Beta too, is focused on creating value
for its clients by sourcing and integrating tech solutions. The company recruits from top B
schools and has a pool of talent which specializes in problem identification and solving.

The usual business model of the company is to identify business problems, sourcing or
developing technology solutions, and then integrating it into the customer’s infrastructure.
The core USP therefore becomes personalizing the tech solutions to varying clients’ needs.
Sourcing the technology at times comes with a price and delays the execution cycles due to
increased dependency on external technology provider. The company has been growing
steadily but the founder feels that there is a lot of scope to improve.
Challenges common to both startups

The challenges are immense. Stiff competition in the AI technology space where there are
already multiple startups who have solutions catering to wide aspect of business and across
industries. It will therefore be difficult for Alpha and Beta to excel in this ecosystem. Many tier
1 and 2 IT companies have also collaborated with startups and created joint solutions and are
already reaching out to consumers at a large scale. Especially Generative AI is a buzz and all
cloud service providers like Google, Azure, AWS have come up with their own large language
models and have tied up with IT system integration companies to tap the market. Hence, it is
important for Alpha and Beta to identify specific areas within AI and Gen AI to create a
differentiated offering in the market.

Further, developing AI solutions requires advanced technical expertise. Recruiting and

retaining skilled AI resources is going to be another challenge. Complex data privacy and their
regulations across the globe add to the complexity of AI solutions and their acceptance among
clients. Integration of AI solutions with ecosystem is not an easy affair and require in depth
study of existing architecture and how well it gels with AI. On the other hand, customer needs
are ever changing and hence picking up the right area for AI exploration is not an easy decision.
Also, the AI products that will be developed would need regular updates to be able to compete
with other products in the market.
As startups, managing the balance sheet is just as important for Alpha and Beta as establishing
a brand name in the AI solutions market. Hence, the founders will have to look for additional
funding either from VC funds or other sources. Every investor would like to evaluate a clear
roadmap of what is the strategy of these startups to win in the AI ecosystem.

Opportunities for AI Tech Solutions

Businesses in different sectors are tapping their AI-driven prowess to enhance several
functions. Some notable industries use cases are listed below where AI tech solutions are
desired and employed:

• Banking and Finance: Banking and financial institutions use AI applications for customer
management and document search. This helps the banking professionals to understand
the client without them being physically present.
• Healthcare: The healthcare sector can save time spent on clinical documentation, speech
recognition, and interpreting clinical data with the help of AI solutions. Computer-aided
coding (CAC) is another area where AI is significantly used in the healthcare industry. It
comes in handy when certain patients need personalized health solutions.
• Manufacturing: The manufacturing industry is embracing AI technology by providing
solutions like task automation, quality control (by scanning data to identify patterns),
maintenance & repair (by analyzing sensor and equipment data), and predictive
maintenance.
• Transportation: The transportation industry is embracing technological advancements,
with computer vision taking the forefront. Pedestrian detection, self-driving cars, and road
condition monitoring are the finest examples of their implementation. Autonomous
driving technology heavily relies on this technology.
• Construction: Construction business is one of the fastest ones to adopt AI for crucial tasks
like workplace hazard detection, asset inspection, and monitoring machines and
 equipment for maintenance requirements are the ways in which the industry has
leveraged computer vision.
• Retail: Use of AI in retail is something one should watch out for. AI simplifies tasks in the
retail industry by performing inventory scans, notifying stock-outs, and helping people
self-checkout, which is ultimately improving customer experience.
• Autonomous Driving: Self-driving vehicles largely employ machine learning models based
on CNNs (convolutional neural networks). These models identify and classify objects, like
zebra crossing, road signs, etc., and learn from them. Using this learning, they develop
programs for autonomous driving vehicles.
• E-commerce: E-commerce platforms provide tailored experiences to customers based on
their past purchases and browsing history.
• Entertainment: OTT platforms are thriving, and easy accessibility is the major factor
contributing to their success. To boost user experience, streaming apps are implementing
deep learning. Netflix, one of the leading streaming platforms in the world, uses deep
learning algorithms to analyze the tastes and preferences of viewers.

This is just an indicative list of where the companies Alpha and Beta can find their future
clients and grow at an enormous scale if they solve their own challenges and shortcomings
effectively.
Your team’s Deliverables
To secure more funding and to thrive in the AI momentum, founders of both Alpha and Beta
have approached your team. Act as a consulting firm to help them on the following:

1. What should be the future operating models of Company Alpha and Beta? Should they build
technology and business capabilities separately or should they collaborate to utilize their
collective strength? Evaluate the pros and cons of this restructuring decision.

2. Once you have finalized the structure, suggest a 5-year marketing roadmap to grow these
companies by 5x and gain market share. This should involve identifying areas of AI that the
company wants to build expertise into by market sizing, target customer segments, value
proposition, pricing models, distribution channels. Provide application of these products in at
least 2 sectors/companies.

3. For the business entities (or the unified entity), suggest how operations would be Generative
tech embedded for achieving process efficiency and lower operating costs.

4. As hiring and retaining skilled employees is very critical, suggest best practices for Company
Alpha and Beta (or the unified entity) to adopt HR practices.

5. How will you consult alpha and beta (or the unified entity) for securing funding? Consider their
financial performance and vision.
Annexures
Annexure A: Financial Performance

Revenues:

Pointer Company Alpha Company Beta

Year 1 revenue $ 1.9 million $ 3.5 million
Year 2 revenue $ 5.0 million $ 5.5 million
Year 3 revenue $ 20 million $ 15 million

Annexure B: Funding received till date.

Funding Alpha Beta

Seed funding $ 4 million $ 10 million
Series A $ 25 million $ 50 million
Series B $ 50 million Nil

Annexure C: Flagship Solutions

Alpha Beta
Fraud risk management solutions for BFSI next generation digitized call center
Metaverse enabled retail store of the future Blockchain based remittances

Works Cited
Bloomberg. (n.d.). Retrieved from https://www.bloomberg.com/press-releases/2022-06-27/-422-37-
billion-global-artificial-intelligence-ai-market-size-likely-to-grow-at-39-4-cagr-during-2022-
2028-industry

Mukherjee, S. (n.d.). Retrieved from Live Mint: https://www.livemint.com/companies/news/ai-

startups-raise-over-50-billion-venture-capital-funding-in-2022-globaldata-
11678707977509.html