Adoption

Index 2.0
Tracking India’s
Sectoral Progress in AI Adoption

August 2024
Leader’s Note
Remarkable developments in the global AI space have emerged since the beginning of 2023,
making it fully unambiguous that we are at the cusp of a new era of AI-augmented systems.
The launch of Generative AI has not only captured the world’s imagination but has also
accelerated the pace at which AI is evolving into a truly general-purpose technology. It has
furthered innovation within the AI technology umbrella, while democratizing AI access for
creative experimentation by all. Enterprises across sectors are rapidly transitioning from point
solutions to horizontal AI applications across internal functions and for sustained competitive
differentiation. Achyuta Ghosh

Nasscom’s 2024 AI Adoption Index comes at this transformative juncture, when growth in
Senior Director and
Head of Research
the Indian AI market is expected to mirror the global AI market growth rate of 25-35% over
the next 3-4 years. India’s leadership in digital services, coupled with a national mission-scale Nasscom
impetus on furthering AI adoption and innovation, present opportunities for our industries in
this medium-term to transition from AI-ready to AI-first organizations.

In 2022, nasscom’s inaugural AI Adoption Index report set a benchmark by measuring the AI
maturity of four key sectors in India: BFSI, CPG & Retail, Manufacturing, and Healthcare. The
aggregate score was 2.45 on a scale of 4, at the Enthusiast maturity stage. It signalled the need
for urgent strategic action to make AI real in India. In 2024, however, we have a significantly
differentiated context with the emergence of Generative AI, faster digitalization across legacy
and digital savvy sectors, and an expanded scope covering seven sectors that account for 75%
of India’s GDP. This edition’s assessment methodology has also evolved, with emphasis on
execution over strategy, production over PoCs, and organizational readiness to exploit every
new AI innovation that happens yesterday.

The 2024 Index 2.0 score for India is 2.47. It is more than a marginally improved metric. It
reflects systemic maturing of industries in building standardized datasets for use in AI models,
planning for dedicated AI teams and budgets, and creating impressive AI risk mitigation
mechanisms. Where Indian enterprises need to act fast is in moving beyond the proverbial
“PoC paralysis” to rapid production. The study entails a comprehensive analysis of the nine-
dimensional frameworks across the seven sectors. With this study, we intend to drive the idea
that irrespective of the scale of disruption, the time to act towards decisive and systemic AI
adoption is now, and the benefits of an AI-empowered India are boundless! We hope you find
this edition informative. Do write to us with your feedback, thoughts, and queries at research@
nasscom.in
Contents

04 12 17
Executive Global and India AI The 2024 AI
Summary Trends in 2024 Adoption Index
for Indian
Enterprises

23 37 74
India’s 2024 AI Sectoral Analysis Recommendations
Adoption Index to Fasttrack
India’s AI
Maturity

78
Appendix
Executive Summary
 5

AI Adoption Index 2.0

Executive Summary

#1 Global and India AI markets are set to grow at 25% - 35% CAGR through
2027, with lion’s share from AI software and services, and Generative AI.

Expected Global and India AI Market Growth,

2023-2027
In USD Billion ($ Bn)
25-35%

66%
320-380
Share of AI services and software in the
global AI market by 2027, up from 58%
in 2023

25-35% 110-130

7-10 17-22 33%

India Global Share of Generative AI in the global AI
market by 2027, up from 13% in 2023
2023 2027

#2 Approaches to AI technology adoption are rapidly evolving to enable

seamless integration of AI across products, services, and platforms.

Consumable AI AI-as-a-Service (AIaaS) Embedded AI

GenAI has made AI directly Building blocks of AI Product OEMs offer smart
consumable by “all” users, available as cloud services products with embedded
particularly non-tech business or open-source plug-n-play AI features, driving up
users components AI consumption in non-
traditional ways

Sources: nasscom-BCG AI in Tech Services Report 2024, nasscom-EY analysis

 6

#3
Report | August 2024

India’s AI adoption context has also evolved in line with global shifts,
leading to a differentiated construct of the 2024 India AI Adoption Index,
compared to the 2022 edition.

Nasscom’s AI Adoption Index Framework, 2022 vs 2024

AI Adoption Index 1.0, 2022 AI Adoption Index 2.0, 2024

Digital Spend 56% enterprises allocated >20% of IT 70% enterprises allocated >20% of IT
budget to digital budget to digital

Objective Assess AI strategy – vision, budget, op Assess AI execution – AI lifecycle

of the Index model, tech readiness, and risk posture maturity, budget, skills, use cases, PoC-
to-production

Sectors Covered Four sectors and 60% of India’s GDP Seven sectors and 75% of India’s GDP
– BFSI, CPG & Retail, Healthcare, and – In addition to 2022, Energy & Utilities
Manufacturing (E&U), Telecom, Media & Entertainment
(TM&E), and Transport & Logistics

315 companies surveyed 500 companies surveyed

Dimensions Six dimensions – AI Strategy and Nine dimensions – In addition to 2022,

of Adoption Impact, AI Investments, AI Talent and AI Use Cases, Generative AI Strategy,
Operating Model, Data and Technology and AI-Led Sustainability Goals
Readiness, AI-Led Innovation, and AI
Ethics, Governance & Controls
Multi-factor weighted analysis of core
AI strategy, planning, and early action

Analysis Multi-factor weighted analysis of core Multi-factor weighted analysis of core

Methodology AI strategy, planning, and early action AI execution enablers, use cases, and
scaled adoption

Primary Making AI Real in India – needed Scaling AI in India – needs dedicated

Call-to-Action base-level readiness of data and leadership commitment and budgeting,
modernized tech stack, better budgets, tech+domain AI skills, and singular
and enterprise-level strategy focus on PoC-to-production speed
 7

#4

AI Adoption Index 2.0

The aggregate 2024 AI adoption maturity of Indian enterprises at 2.47 on
a 4-point scale is positioned at the second, or the Enthusiast stage.

87% of the Indian enterprises are in the middle stages of AI maturity – Enthusiast and Expert – with 45%
at the Expert stage (of 500 companies), up from 35% in 2022 (of 315 companies surveyed then).

Evangelist

Expert

2.47
India’s Aggregate AI Adoption Maturity, 2024
Enthusiast
2.45
India’s Aggregate AI Adoption Maturity, 2022

Explorer

~12% ~42% ~45% ~1%

1.0 1.6 2.6 3.6 4.0

Maturity score cutoffs for the four stages and percent companies in each stage, 2024

Despite progress, certain systemic shortfalls are limiting companies from scaling-up AI initiatives and
advancing to higher stages of maturity:

• Lack of alignment of AI outcomes with business goals – crucial to demonstrate PoC success,
quickly move to production, and plan for scalability.

• Inconsistent supply of standardized, compliant, and quality data – critical to maintain enterprise
data discipline and enable risk-managed use of AI.

• Inadequate top leadership commitment – beyond IT teams, to drive an enterprise-grade AI

strategy that further ensures dedicated AI investments.

• Expertise shortfall despite abundance of skilled AI workforce – as companies consistently

flag shortage of tech+domain experience of AI workforce and expertise in strategic thinking and
building advanced AI solutions.
 8

#5
Report | August 2024

Analysis of the overall survey pool vis-à-vis the 90th percentile mature
adopters of 2024 unravels key differentiators in strategic execution.

2024 Indian Enterprise AI Adoption Highlights, across sectors

Dimensions Overall Adoption Trends Mature Adopter Trends

AI Strategy 75% - have a PoC-only AI strategy 40% - have AI integrated with

and Impact enterprise strategy and KPIs

40% - show moderate to high 96% - show high maturity in PoC-to-

maturity in PoC-to-production production

38% - companies indicate high 88% - companies demonstrate

maturity in selecting and building high maturity in selecting, building
strategic vendor partnerships and nurturing strategic vendor
partnerships

AI Investments 60% - have ad-hoc or project-based 76% - have dedicated enterprise-

AI budgeting wide AI budgets

28% - increased AI spend by 20% or 67% - increased AI spend by 20%

more in FY24 vs. FY23, while 94% in or more in FY24 vs. Y23, remaining
all increased the spend between 10-20%

AI Talent and 13% - have a dedicated AI team or 46% - have a dedicated AI team or
Operating Model CoE to drive AI initiatives CoE to drive AI initiatives

73% - are reskilling non-AI tech

talent for AI roles

Data and 18% - have enterprise-wide data 76% - have enterprise-wide data
Technology standards standards
Readiness
92% - use private, public or hybrid 50% - use hybrid cloud for AI
cloud for AI workloads workloads

AI Use Cases 13% - have 10-20 AI use cases 72% - have 10-20 AI use cases for
ready for PoCs PoCs

67% - have productionized 100% - have productionized

successful AI PoCs successful AI PoCs
 9

AI Adoption Index 2.0

Dimensions Overall Adoption Trends Mature Adopter Trends

AI-Led Innovation 5% - have filed for 5 or more 28% - have filed for 5 or more
patents in AI since 2020 patents in AI since 2020

50% - use in-house innovation 50% - use all three innovation

approaches of startup incubation,
in-house innovation, and sponsored
academic research

AI Ethics, 56% - report well-documented, 98% - report well-documented,

Governance formalized, and in some cases, enterprise risk integrated AI ethics,
and Controls enterprise-wide risk integrated governance, and audit frameworks,
AI ethics, governance, and audit with continuous improvement based
frameworks on external evaluation

#6 Most sectors are in the Enthusiast stage, while Manufacturing and

Telecom, Media & Entertainment have transitioned to the Expert stage.

Highlights of AI adoption hits and misses by sectors, 2024

Dimensions Sector Hits Sector Misses

AI Strategy 39% of manufacturing and 65% 50%+ - BFSI, CPG and retail, E&U,
and Impact transport and logistics have healthcare, and TM&E sectors have
transformation-focused AI strategy PoC-heavy AI strategy

~70% - BFSI and healthcare companies

seek competitive differentiation with AI

AI Investments 50%+ - manufacturing and transport 55%+ - BFSI, CPG and retail, E&U,
and logistics have some dedicated AI healthcare, and TM&E sectors have
budgeting ad-hoc AI budget

AI Talent and 60%+ - have central IT teams driving ~70% - have BU IT heads managing
Operating Model AI initiatives in E&U, manufacturing, AI initiatives in BFSI, healthcare,
and transport and logistics sectors CPG and retail, and TM&E sectors

60%+ - companies prioritize reskilling 80%+ - companies in transport

existing non-AI tech workforce for and logistics and TM&E find top
AI roles in BFSI, E&U, healthcare, leadership commitment challenges
transport and logistics, and TM&E to AI adoption
sectors
 10

Dimensions Sector Hits Sector Misses

Report | August 2024

Data and 60%+ - BFSI, manufacturing, CPG 48% - E&U companies and over
Technology and retail, transport and logistics, 30% of all sectors except transport
Readiness and TM&E companies have BU or and logistics have non-standardized
enterprise-level standardized data data in silos

BFSI and CPG and retail ~20% companies in E&U and

companies show near equal TM&E use hybrid cloud, the lowest
propensity towards public and propensity of all sectors
hybrid clouds for AI workloads

AI Use Cases 3-7% - BFSI, healthcare, transport 50%+ - of manufacturing and

and logistics, and TM&E companies healthcare firms have had no AI use
have over 20 AI use cases cases identified

29% of healthcare and 13% of 37% of manufacturing companies

BFSI companies have conducted have not PoCed AI use cases
PoCs of over 10 AI use cases

3-7% - of BFSI, healthcare, 71% of E&U, 67% of

transport and logistics, and manufacturing, and 47% of TM&E
TM&E companies have over 10 AI have had no production-grade AI
production cases use cases

5%+ - BFSI, healthcare, transport 85%+ - of manufacturing and

and logistics, and TM&E companies E&U companies have not PoCed
have conducted over 5 Generative Generative AI yet
AI PoCs

2% of BFSI and 4% of healthcare 50%+ - of E&U, healthcare and

companies have over 5 production- manufacturing companies have had
grade Generative AI cases active no Generative AI production cases

AI-Led Innovation 5% - of BFSI and transport and <5% – manufacturing and CPG
logistics companies have filed and retail have had less than 5%
between 6-10 patents during 2020- companies do patent filing activity
2023, and 12% of healthcare have in the last 3 years since 2020
published over 10 patents in this
time
 11

Dimensions Sector Hits Sector Misses

AI Adoption Index 2.0

AI Ethics, ~35% - of BFSI, manufacturing, and 52% of healthcare and 1-in-5
Governance and transport and logistics companies companies of all other sectors
Controls have well-documented AI risk except TM&E have no AI risk
framework integral to enterprise risk management framework or
management policies. methodology as yet

25%+ - companies across all sectors 55% of healthcare, 41% of

except healthcare have established CPG and retail, and ~30% of
integrated AI risk management manufacturing and transport
with a focus on continuous tracking and logistics companies have
systems and external audits no process to ensure AI outcome
compliance through planned audits

#7 Enterprises in India will benefit from thinking of a leap strategy, from

being AI-ready to becoming an AI-first company as the technology
acquires a general-purpose technology distinction.

Recommendations to boost and scale AI adoption, for large and SMB companies

Large Enterprises SMB Companies

Data discipline is the new company

Contextual use cases are key to faster SMB
value, and the aim should be 100%
adoption of AI
standardization

Strategic partnerships are crucial for rapid SMBs should actively explore Tech SME
scaling production cases for enterprise use partnerships to kickstart AI initiatives

AI is more impactful with ongoing

Only sustained leadership commitment can
innovation, not just standard efficiency
help create PoC-to-production agility
goals

Data governance understanding is equally

AI risks are real and need careful handling
critical for SMBs who are less aware of
through integrated risk frameworks
data regulations

AI is energy-intensive, hence thinking Peer learning and support systems can be

sustainability alongside AI expansion is game-changing in breaking AI adoption
important myths
 12
Report | August 2024

Global and India

AI Trends in 2024
 13

AI Adoption Index 2.0

#1
Global and India AI Trends
in 2024
Global AI Mobility on the Rise

In 2023, the global artificial intelligence (AI) space witnessed an unprecedented milestone being achieved with
the emergence of the Generative AI technology. Generative AI became not only the fastest adopted, but also,
the fastest continuously innovated technology in history. From a B2C-heavy start to a now-sharpening B2B focus,
Generative AI has entirely renewed enterprise AI strategy and future adoption.

In addition to Generative AI, several substantial evolutions in the non-Generative AI basket, such as embedded
AI, Edge AI, and AI-as-a-service, have led to promising growth projections for the next 4-5 years. According to
a nasscom-BCG study from February 2024, the global AI market is likely to experience a strong growth cycle, at
a nearly 25-35% CAGR through 2027. This would expand the current AI market of $110-130 Bn to a nearly $320-
380 Bn potential. AI software is expected to comprise 66% of the 2027 AI market, up from 58% today, while AI
services will account for 22%. The hardware market is expected to double but constitute a smaller portion of the
AI market in 2027.

Further, data & analytics and Generative AI will become dominant themes. Generative AI will comprise 33% of the
expected AI market in 2027, up from 13% today.

Sources: nasscom-BCG AI in Tech Services Report 2024, nasscom-EY analysis

 14
Report | August 2024

AI technology advancements that have boosted adoption since 2022

Consumable AI AI-as-a-Service (AIaaS) Embedded AI

Generative AI has made AI Building blocks of AI Product OEMs offer smart

directly consumable by “all” available as cloud services products with embedded
users, particularly non-tech or open-source plug-n-play AI features, driving up
business users components AI consumption in non-
traditional ways

Democratization of AI has further diversified the market by creating interest in legacy

sectors, expanding the universe of vertical and horizontal use cases, creating more
impactful tech convergence ideas (AI-IoT platforms), and enabling value realization of AI
investments.

Global CEOs are now focused on AI-led enterprise transformations – in core operations, in building competitive
differentiation through distinguished customer experience journeys, and in boosting workforce productivity. EY’s
Global CEO Outlook Pulse Survey 2024 reveals that 76% of CEOs agree that AI will deliver efficiency benefits.
Global companies are also experimenting with AI to build future-ready businesses by using AI to achieve net zero
and sustainability targets well in time. 75% of the CEOs believe that AI can be used strategically to prevent or
mitigate sustainability challenges.

AI in India: Winds of Change

AI is rapidly emerging as an integral part of India’s digital economy transformation. The integration of AI
technologies is revolutionizing organizational functions and bringing about automation-led productivity
enhancements. From ubiquitous virtual assistants to seamless integration with processes and decision systems,
AI’s presence within Indian organizations has witnessed notable growth. The nasscom-BCG study indicates that
the AI market in India is poised to grow at a 25-35% CAGR through 2027, from $7-9 Bn in 2023 to $17-22 Bn by
2027.

Sources: nasscom-BCG AI in Tech Services Report 2024, EY Global CEO Outlook Pulse Survey 2024, nasscom-EY analysis
 15

Services and industrial sectors – BFSI, CPG and Retail, Healthcare and Pharmaceuticals, Telecom, Media and

AI Adoption Index 2.0

Entertainment, Energy and Utilities, Manufacturing, and Transport and Logistics sectors – are expanding their
AI footprint. Combined, these sectors account for 75% of India’s FY24 GDP, and AI usage could expand this
contribution further. Stanford’s Global AI Index 2024 reveals that India received nearly $1.4 Bn in private
investments in 2023, making it the 10th largest economy globally in AI funding.

Tailwinds Driving India’s AI Adoption

Factors Driving-Up AI
Momentum in India Key Highlights

I Government of India’s IndiaAI

Mission with ₹ 10,372 Cr
The IndiaAI mission aims to deliver:
• 10,000 GPUs of compute capacity
budgetary allocation
• Indigenous large multimodal models (LMMs) and domain-
specific foundational models
• Indigenous platforms for non-personal datasets
• #AIforAll use cases
• FutureSkills Prime initiative with nasscom for AI skilling
• DeepTech AI startup financing
• Building safe, trusted, responsible AI

II Robust AI Offerings by Indian

Tech Industry
Diverse range of AI-based services and solutions across:
• Predictive AI and Generative AI platforms, automation
tools, data analytics solutions, and bespoke verticalized
AI applications
• Generative AI advisory and custom model finetuning
services for domain specific solutions
• AI-led solutions portfolios
• Centers of Excellence (COEs) focused on AI leadership
development, workforce skilling, and responsible AI usage

III 3rd Largest Tech Startups

Ecosystem; Strong IP Footprint
• 74% DeepTech startups and 64% inventive DeepTech
startups use AI as a core solution tech
• 2nd largest contribution globally in AI-related patents, 25%
share; 17% CAGR in AI patent filings during 2010-2022p

Sources: Stanford HAI AI Index Report 2024, Fortune India, MeitY, EY India, nasscom-BCG AI in Tech Services Report 2024, nasscom analysis.
 16
Report | August 2024

Recent AI-Related
Achievements in India Key Highlights

IV World-Leading AI Talent Base • 2nd largest installed AI workforce of 425,000 skilled

employees
• Highest AI skills penetration of 2.75 per Stanford’s Global
AI Index 2024
• 15% CAGR of AI talent demand through 2027, estimated
to create 1-25 – 1.3 Mn AI jobs

V Generative AI Boost • An EY estimate posits Generative AI’s potential boost to

India’s GDP by $350-450 Bn by 2030 and a cumulative
value add of $1.2-1.5 Tn.
• Potential boost to economic growth rate of additional
0.9% to 1.1%

India’s ambition to be a digitally driven third-largest economy in the world, AI’s penetration and deep integration
across enterprise processes, in workforce augmentation, adaptive decision-making, and tech-led innovation is
crucial. With the Generative AI tailwind, both legacy and digital savvy sectors have the opportunity to leap in AI
adoption, from being AI-ready to becoming AI-first enterprises, the way India transformed to become one of
fastest manual-to-mobile nations in the world.

Sources: nasscom Patenting Trends in India Report 2024, nasscom India’s Deeptech Dawn Report 2024, nasscom State of Data Science and AI Skills Report 2022, EY
AIdea of India Report 2023, nasscom-EY analysis
 17

AI Adoption Index 2.0

The 2024 AI Adoption Index

for Indian Enterprises
 18
Report | August 2024

#2
The 2024 AI Adoption Index
for Indian Enterprises
The 2024 AI Adoption Index Adopts a Differentiated and Expanded Construct
from 2022

The 2024 AI Adoption Index • Generative AI emergence and rapid

reflects India’s fast transforming AI adoption

context with growing digitalization • 75% of India’s GDP covered with 7 sectors
• Expanded set of 500 companies surveyed
of all sectors and a positive
• Deeper assessment framework focused on
posture towards Generative AI-led
AI execution
opportunities.

Factors that have led to the evolution of AI technology have also changed the objectives, approach, and pace of
AI adoption across organizations, since the beginning of 2023.
 19

Nasscom’s AI Adoption Index Framework, 2022 vs 2024

AI Adoption Index 2.0

AI Adoption Index 1.0, 2022 AI Adoption Index 2.0, 2024

Digital Spend 56% enterprises allocated >20% of IT 70% enterprises allocated >20% of IT
budget to digital budget to digital

Objective Assess AI strategy – vision, budget, op Assess AI execution – AI lifecycle

of the Index model, tech readiness, and risk posture maturity, budget, skills, use cases, PoC-
to-production

Sectors Covered Four sectors and 60% of India’s GDP Seven sectors and 75% of India’s GDP
– BFSI, CPG & Retail, Healthcare, and – In addition to 2022, Energy & Utilities
Manufacturing (E&U), Telecom, Media & Entertainment
(TM&E), and Transport & Logistics
315 companies surveyed
500 companies surveyed

Dimensions Six dimensions – AI Strategy and Nine dimensions – In addition to 2022,

of Adoption Impact, AI Investments, AI Talent and AI Use Cases, Generative AI Strategy,
Operating Model, Data and Technology and AI-Led Sustainability Goals
Readiness, AI-Led Innovation, and AI
Ethics, Governance & Controls
Multi-factor weighted analysis of core
AI strategy, planning, and early action

Analysis Multi-factor weighted analysis of core Multi-factor weighted analysis of core

Methodology AI strategy, planning, and early action AI execution enablers, use cases, and
scaled adoption

Primary Making AI Real in India – needed Scaling AI in India – needs dedicated

Call-to-Action base-level readiness of data and leadership commitment and budgeting,
modernized tech stack, better budgets, tech+domain AI skills, and singular
and enterprise-level strategy focus on PoC-to-production speed
 20
Report | August 2024

Sectors in Index 2.0

BFSI Manufacturing

• ~13% of India’s GDP in FY2024 • 16-17% to annual GDP in FY2024

• $2.1 Tn UPI transactions in CY2023, at a 60% • $1 Tn sector GDP by FY2026
y-o-y increase • $450 Bn worth goods export in FY2023
• $450 Bn+ combined market capitalization of
top five banks in India

CPG & Retail Telecom, Media & Entertainment

• ~10% to India’s annual GDP in FY2024 • Largest global data consumer base in India
• ~$4.4 Tn in market size by 2030 • 20GB+ per subscriber per month data usage,
• ~$1 Tn to be contributed by ecommerce, 316X rise from 2014
growing at 12% CAGR • $75 Bn expected marlet size of media and
entertainment by 2027

Energy & Utilities Transport & Logistics

• One of the largest energy and utilities market • 14% of annual India GDP in FY2024
worldwide • In the top five largest transport sectors
• $300 Bn expected size of the industry, at worldwide
6-7% of Indian GDP by FY2026 • 20 Mn people employed by the sector
• Estimated technology spend exceeded
$2.5 Bn in 2023, with emerging investments
in smart grids, digital infrastructure and
automation

Healthcare & Pharma

• 2.1% of national GDP spend in FY2024

• $640 Bn market size of healthcare by 2025;
$1 Tn by 2030
• $190 Bn+, $130 Bn+, and $50 Bn+ expected
market sizes of provider segment (hospitals),
pharma, and medical devices by 2030,
respectively
 21

AI Adoption Index 2.0

Dimensions in Index 2.0

AI Strategy & Impact AI Investment AI Talent & Operating Model

AI integration with the overall Financial commitment towards Skills, roles, and processes
business strategy and its impact AI initiatives aligned with AI implementation
• Maturity in AI initiatives • Dedicated AI budget • AI talent strategy
• Core AI strategy elements • Percentage of IT budget • Upskilling/reskilling
• Key drivers for Al adoption allocated for AI initiatives
• Success of AI based • AI budget increase for FY24 • PM Methodology
initiatives from FY23 • Operating model for
• Business functions implementing AI initiatives
leveraging A

Data & Technology Readiness AI-Led Innovation AI Ethics, Governance & Control

Core data and tech stack Research, publications, patents, Ethics, compliance, governance,
readiness to support AI efforts related to AI innovation efforts and controls for AI use
• Sophistication of Al • Number of Al patents/ • Responsible and ethical Al
technology publications practices
• IT readiness for Al • New innovations in Al space • Audits and control
• Data management mechanism for AI
practices
• Data-led AI initiatives

AI Use Cases Generative AI Strategy AI-Led Sustainability Goals

Identified, piloted and Piloted and productionized Role of AI in enabling

productionized AI use cases Generative AI use cases and sustainability goals
• Use cases identified observed impact • Perceived potential of AI in
• Use case pilots • Generative AI use case addressing sustainability
• Pilot to production pilots challenges
• Top AI use cases • Use cases in production
• Business impact from
Generative AI
 22
Report | August 2024

The Four Maturity Stages

Evangelist

Most mature in AI adoption,

Expert
focusing on democratization
of AI
Collaborated with industry
Enthusiast
disruptors to implement AI

Beyond Proof-of-Concepts solutions

Explorer
to drive AI adoption in
New enterant figuring out organization
how to useeffectively AI

AI Maturity
Explorer Enthusiast Expert Evangelist
Parameters

AI Strategy Starting now; nascent Point solutions, at most Functional AI strategy, Enterprise-scale AI
and Impact experiments BU-level strategy some scale-ups strategy integrated
with overall business
strategy

AI Investments AI part of tech, fully Ad-hoc budget mostly 5-25% of IT budget, Dedicated corporate AI
discretionary spend BU-level, up to 10%, BU or central funding, budget, over 25% of IT
y-o-y increase of up y-o-y increase of 11- budget, with an increase
to 10% 30% potential of over 30%
y-o-y

AI Talent and No AI teams or roles; Largely outsourced, BU-level AI teams Dedicated AI team or
Operating Model tech experts do PoCs project managed by or cross-functional AI CoE, centrally led or
internal IT domain + IT teams federated with BUs

Data and Partial digitalization of Some BU-level data BU/functional level Enterprise-wide
Technology business data standards, but isolated data standardization standardized data
Readiness

Applications Partial stack of Legacy and Modernized Modernized applications

Readiness enterprise applications, modernized stack, applications stack with stack with nearly 100%
legacy leading to data major cloud presence cloud presence
disconnect

AI-Led No AI-specific R&D No set approach to Multiple avenues Multiple avenues – joint
Innovation or IP R&D – in-house trials – open-source AI start-up incubation
submissions or and in-house R&D key
academic papers differentiator

AI Ethics, Not aware about Organizational Ethics and risks with AI Integrated AI risk
Governance and AI ethics and risk governance and risk formally documented, and enterprise risk
Controls framework frameworks used compliant with management framework,
regional laws compliance with global
standards
 23

AI Adoption Index 2.0

India’s 2024
AI Adoption Index
 24
Report | August 2024

#3
India’s 2024
AI Adoption Index
India’s 2024 Aggregate AI Adoption Index

Evangelist

Expert

2.47
India’s Aggregate AI Adoption Maturity, 2024
Enthusiast

Explorer

~12% ~42% ~45% ~1%

1.0 1.6 2.6 3.6 4.0

Maturity score cutoffs for the four stages and percent companies in each stage, 2024

2-in-3 enterprises prefer using AI to drive business growth, indicating that there is realization of
#1
AI’s actual potential and scope of impact.

70%+ companies dedicated over 5% of IT spend to AI, and more number increased AI budgets in
#2
FY24 over FY23, despite a difficult year.

#3 58% respondents reported standardized data availability for AI applications.

Experienced AI talent is a real challenge, and hence, majority companies seek system integrators
#4
(SIs) or specialists on contract to gain access to AI talent.
 25

Aggregate Dimension Scores

AI Adoption Index 2.0

AI Strategy
and Impact

AI-Led Sustainability AI
Goals Investments
2.05
2.41 2.17

Generative AI AI Talent and

Strategy
1.5 2.42 Operating Model

1.34
3.09 Data and Technology
AI Use Cases
2.19 Readiness

2.9
AI Ethics, Governance AI-Led Innovation
and Controls

2024 AI Adoption Highlights across Indian Enterprises

Dimensions Overall Adoption Trends

AI Strategy 75% - have a PoC-only AI strategy

and Impact 40% - show moderate to high maturity in PoC-to-production
38% - companies indicate high maturity in selecting and building strategic vendor
partnerships

AI Investments 60% - have ad-hoc or project-based AI budgeting

28% - increased AI spend by 20% or more in FY24 vs. FY23, while 94% in all increased
the spend

AI Talent and 13% - have a dedicated AI team or CoE to drive AI initiatives

Operating Model 73% - are reskilling non-AI tech talent for AI roles

Data and 18% - have enterprise-wide data standards

Technology 92% - use private, public or hybrid cloud for AI workloads
Readiness

AI Use Cases 13% - have 10-20 AI use cases ready for PoCs
67% - have productionized successful AI PoCs

AI-Led Innovation 5% - have filed for 5 or more patents in AI since 2020

50% - use in-house innovation

AI Ethics,
56% - report well-documented, formalized, and in some cases, enterprise-wide risk
Governance
integrated AI ethics, governance, and audit frameworks
and Controls
 26
Report | August 2024

I AI Strategy and Impact

Stuck in PoC or point implementations, primarily by the customer services and IT

functions, Indian enterprises will need to scale AI by expanding the gamut beyond
2.05 basic virtual assistants and predictive analytics to a combination of AI tech based
on scalable use cases.

1. Indian enterprises will need to go beyond PoCs to scale AI implementations

Percent of Companies at Different Stages of AI Strategy Formulation, 2024

AI-led process transformation/ • AI is yet to scale in India: ~50% enterprises are

aligned AI with business 20% in PoC/ planning stage and 25% have small-scale
metrics
implementations

Small scale implementation, • Top AI focus areas:

25%
planning to scale in 2024
» Strategic partnerships with cloud/tech providers
» Hiring/upskilling AI talent
Planning/proof-of-concept
49% » Moving PoCs to production with external
phase
expertise and resources
» Building a skilled workforce
AI not a priority/yet to explore
6% » Tracking AI RoI against business goals
applicability

2. Companies need to broaden AI penetration beyond customer services and IT

Top Functions Leveraging AI Within Each Sector, 2024

BFSI CPG Manufacturing Healthcare Energy Telecom Transport

Information Information Information Clinical Information Sales and Information

Technology Technology Technology Operations Technology Marketing Technology

Customer Customer Customer Clinical Customer Customer Inventory

Services Services Service/Support Operations Services Service/ Warehouse
Support Management

RM. and Logistics and Logistics and Research and Procurement Information Transport/Delivery
Governance Warehouse Warehouse Development Technology Management

Box size represents the number of companies selecting the function within respective sectors.
RM = Risk Management
 27

3. As realization sets in about the massive potential of AI in boosting business growth

AI Adoption Index 2.0

• Major AI adoption drivers: Business growth is top
priority, as organizations get real with AI initiatives.
Business Growth
Being a general-purpose technology, AI’s integration
into core business processes and outcomes is key to
scaled adoption

Competitive Differentiation • Mature adopters: Majority of these companies, the

90th percentile performers, use AI to gain competitive
differentiation, suggesting the use of AI for forward-
looking growth strategies

Innovation and R&D

4. And organizations optimize commercial use of basic AI technologies

Most-Deployed AI Technologies, 2024

• 50%+ enterprises have production-grade chatbots

AI Chatbots/Voice bots/Virtual Assistants
and virtual assistants, and at least one production-
level predictive analytics use case
Predictive/Prescriptive Analytics
• ~20% have piloted or implemented speech recognition
and video processing
Natural Language Processing (NLP)
• BFSI, Manufacturing, and Transport & Logistics

Text Mining sectors demonstrate superior penetration of

advanced AI tech

Image Processing

5. With growing openness to utilize both open source and proprietary embedded AI

Preferred AI Products/Solutions, 2024

AI-infused enterprise • ~70% prefer deploying embedded AI platforms or

71%
products
point solutions
AI-infused point solutions 68%
• 2-in-3 companies are also experimenting with open-
Using open-source AI source AI software via developer libraries or open-
66%
platforms
source based AI platforms
In-house AI products using
64%
services from cloud providers • 64% indicate the propensity to build in-house AI
Strategic acquisition of AI products on cloud-provisioned compute and store
36%
companies
resources
 28
Report | August 2024

II AI Investments

• ~70% prefer deploying embedded AI platforms or point solutions

2.17 • 2-in-3 companies are also experimenting with open-source AI software via
developer libraries or open-source based AI platforms

1. AI budgeting trends in 2024 show constraint with limited dedicated budgeting, but are
encouraging in a tough tech spend environment

AI Budget Strategy in FY24 AI Budget as Percent of Tech Budget in FY24

No planned AI budgets yet 25% Less than 1% 4%

1-2% 9%
Dedicated AI budgets but for
24%
pilots and/or BU-level adoption

3-4% 15%

Dedicated AI budgets for

16%
enterprise-scale programs
5% or more 64%

AI budgets are ad-hoc, not AI budget carved within

35% 8%
consistently allocated tech budget

• Only 40% companies report having dedicated AI initiative budgets

• 64% of the above-noted companies allocated 5% or more of tech budget to AI in FY24
 29

2. Noteworthy that 100% of the companies either chose to increase AI budget in FY24, or keep it

AI Adoption Index 2.0

the same as FY23

Increase in FY24 AI Budgets over FY23

AI budget has decreased 0%

Remained same 26% • 74% of enterprises that have dedicated

1%
AI budgets indicate an increase in their
>40%
AI budgets between FY23 and FY24, the
Increase Percent

31-40% 2%
remaining having kept it the same as FY23
21-30% 8%
• With mature adopters, 100% increase in AI
11-20% 17%
budgets is seen
0-10% 46%

III AI Talent and Operating Model

Indian enterprises need to invest much more in building “right-sized” operating

models for their AI initiatives, combining both internal and external talent sources
2.42 with consistent leadership oversight and centers of excellence (AI CoEs) to
streamline and scale-up disparate AI programs across the organization.

1. Due to limited availability of domain+tech skills in AI, enterprises increasingly rely on external
service providers to kickstart their AI journey

Organizational AI Talent Strategy, FY24

3%

• 75% enterprises prefer starting

11% AI foray as-a-service, particularly
Inhouse talent development 22%
as inhouse talent building can be
Consume AI-as-a-service 12%
a challenging route.
Start with AIaaS, then inhouse

Either inhouse or AIaaS, depending • Mature adopters are not too

on use case
distinct in that they follow a
Not sure about our AI talent strategy
similar approach of starting with
52%
external access to AI talent.
 30

2. Expertise building is challenging also because majority companies find it difficult to hire and
Report | August 2024

retain talent over a sustained period, while base-level sourcing is not difficult

Not faced any challenges

30%
thus far
Hiring and retention issues, • ~50% companies find at least two of these
30%
not skilling three, hiring, retention, and best-fit reskilling,
Across hiring, skilling, and
19% as major challenges in building the right AI
retention
skills
Developing best-fit reskilling
programs 11%
• Base-level AI workforce is not an issue due
Retaining existing talent
9%
(external demand) to the existing stream of globally 2nd largest AI
Hiring new talent (skills skilled workforce that India possesses
shortage) 2%

3. As a result, much greater focus is on reskilling non-AI tech employees for AI roles and
upskilling existing AI employees on advanced AI skillsets

Organizational AI Talent Development Approaches, 2024

73%
63%
58%
51%
42%

9%
3%

Reskill existing Invest in Upskill existing Hire Generative Hire STEM Acquire AI start- Unsure about
non-AI tech research talent AI employees AI experts on graduates up talent required skills &
employees from academia contract expertise of AI

4. Companies also struggle with hiring dedicated AI leadership and rely on IT heads to own AI
initiatives, with ad-hoc execution teams

AI Leadership Organizational AI Team Composition

4% 1%
3%
3% 12%

34% Ad-hoc teams on need bases

10% Cross functional teams with
business experts
49% BU IT Heads
43% Central IT Heads
Dedicated AI Tech team
within IT team
Head of DS or AI, within IT
Dedicated enterprise-wide AI CoE
Head of AI CoE 41% Fully outsourced, managed by
Initiative based AI leadership IT/PMO

• Only 8% companies have designated a dedicated AI leader, majority of which are mature adopter
organizations. AI leaders are known to be able to envision and drive enterprise-scale AI initiatives more
effectively

• 13% enterprises have dedicated AI teams, reflecting the limited availability of specialist AI talent
 31

AI Adoption Index 2.0

IV Data and Technology Readiness

Data and technology stack readiness has significantly improved since 2022 when
lack of technology modernization emerged as the key impediment. In 2024, this
3.09 area scores the highest as most enterprises report mostly modernized and on-
cloud applications stack and majorly standardized data for AI use.

1. Data standardization has significantly improved since 2022 and is not limited to functional
silos any more

• 30% increase in enterprises with

standardized data since 2022, although
challenges exist with enterprise
33%
standardization efforts
40%
• ~42% companies above ₹5,000 Cr revenue
BU-level data, but in silos and 33% of Manufacturing firms have
Enterprise-wide enterprise-level data standardization
standardized data
18% • 98% of mature adopters have standardized
Inadequate data 9%
data
Standardized BU level data

2. However, more focused data strategy is needed to prepare AI-ready backend data, through
adequate access and security controls in place

Facilitate data accessibility to • 32% of the enterprises do not have data

54%
foster innovation
back-end ready for AI
Implement robust data privacy • Of the remaining 68%, majority focus on
42%
to protect sensitive information
data accessibility, reflective of the still-
Integrate data sources existing BU-enterprise data silos
for enterprise-scale data 38%
consistency • Further, just about 1-in-5 are focusing on
bias-free data
Tighten data security against
24%
unauthorized access

Improve data quality to ensure 21%

unbiased AI models

No AI-supporting data
32%
initiatives undertaken
 32
Report | August 2024

V AI-Led Innovation

Since AI applications are still a notch below integration into core processes in a
major way, innovation in and with AI, particularly with the goal of IP creation,
2.19 has found limited traction. Startup incubation has grown and could serve as the
breakthrough strategy for Indian companies looking to fire-up their AI innovation
plans.

1. Enterprise IP creation in AI-related technologies is limited as AI is yet to scale for companies

to establish research and innovation capabilities

Number of Patents Filed by Surveyed Enterprises, 2020-2023

2% 3%

7% • India’s overall patent filing activity grew ~25%

y-o-y in FY23, from FY22
8%

None
• Particularly, in the DeepTech related patents,
nearly 63% were in AI, in areas of image
1-2
processing, NLP, and predictive modeling
3-5

6-10 • Enterprise activity is low in areas of major patent

>10 80% filing as majority prioritize application over
innovation

2. Most companies prefer in-house innovation and AI platformization, although startup

incubation has increased as it offers superior potential of pivoting and speed of realizing
innovation goals

Preferred Approaches to innovation and IP Creation in AI, 2024

Other 3%
• TM&E leads in patent filings
Sponsored academic
27%
research • Manufacturing enterprises prefer more academic
Open-source research sponsorship
24%
contributions
• Transport & logistics companies contribute more to
AI start-up incubation 59%
open-source research programs
In-house research and
63% • Majority enterprises do not demonstrate a
development
systematized setup to AI innovation
None 22%
 33

AI Adoption Index 2.0

VI AI Ethics, Governance, and Controls

Enterprises report encouraging action in managing AI ethics and governance

2.90 through integration with existing risk frameworks, and similarly well-formalized
audit and control mechanisms to be able to report AI outcomes and decisions.

1. More enterprises are focused on defining and aligning AI ethics and governance norms with
either internal risk guidelines or applicable regional/global regulations

Approaches to Adoption of AI Ethics & Governance Framework, 2024

Integral to enterprise risk

management framework and 29% • 56% of all enterprises have either fully
adherence
documented and formalized, or even further,
None 23%
integrated ethical AI guidelines into enterprise risk

Only in the initial phase of

frameworks
21%
model deployment
• 98% of mature adopters have taken-up
Well-documented and formalization of AI ethics and governance rules
27%
formalized

2. Businesses are more conscious of brand and growth risks due to AI fallouts, and hence, have
enacted formalized audit and control measures at relevant levels through the AI lifecycle

Approaches to AI Audit & Control for Risk Mitigation, 2024

Enterprise wide risk

34% • 59% of all enterprises have either enabled AI
management

risk mitigation efforts at BU or enterprise level,

BU level risk management 25% although ~30% with no such measures needs
attention
Ad-hoc monitoring audits 12%
• 87% of TM&E companies have established AI
audit and control measures for risk mitigation
No formal monitoring/audits 29%
 34
Report | August 2024

VII AI Use Cases

Majority enterprises need to boost their use case identification methodology.

1.34 Organizations move swiftly in conducting PoCs once relevant use cases are
selected, however, need faster PoC-to-production scale.

1. 55% of all AI use cases identified move into PoC stage; 37% into production, indicating that
there exists a real challenge in scaling AI at the use case identification and selection stage

AI Use Cases Selected Use Cases to PoCs PoCs to Production

2%
11%
6% 33%
38%
100% =500 100% =310 100% =276
49% 18% 54%
63%

3% 10%
8%
2%
3%

Upto 10 use cases Upto 5 PoCs Upto 5 in-production

11-15 use cases 6-10 PoCs 5-10 in-production

16-20 use cases 11-15 PoCs >10 in-production

>20 use cases >15 PoCs No use cases in-production

No AI use cases identified No AI PoCs yet

• Use case identification is most critical as 38% companies struggle with it, whereas with mature adopters,
72% have a shortlist of 10-20 AI use cases

• PoCs are more widespread as 89% are able to conduct PoCs once use cases are available

• PoC-to-production is the next major hurdle with 33% companies struggling to move PoCs into production,
suggesting the need for more budgets and/or a stronger MVP. It is also at this stage that a stronger
alignment with business KPIs is beneficial in speed of action

• Companies in TM&E, energy & utilities, and transport & logistics lead in AI use case selection, while transport
& logistics has highest PoC-to-production rate
 35

AI Adoption Index 2.0

VIII Generative AI Strategy

Despite rapid global adoption of Generative AI, even in low-hanging applications,

such as Generative AI-enabled chatbots, Indian enterprises indicate a slower
1.50 rate of adoption, likely due to data and use case readiness required to effectively
leverage Generative AI.

1. 38% of all enterprises are conducting Generative AI PoCs; 22% have moved PoCs to
production

Active Generative AI PoCs Generative AI Production Cases Generative AI Impact

• 60% of the companies using

production-grade Generative
28%
AI report modest benefits; 21%
42%
100% =500 100% =190 47% report strong business impact

62% 7% • 56% of BFSI and retail

10%
companies are PoCing
3%
1% Generative AI solutions, 48%
TM&E and nearly 33% each in
1-2 PoCs 1-2 in-production
healthcare and transport &
3-5 PoCs 3-5 in-production
logistics
>5 PoCs >5 in-production

No Generative AI PoCs No Generative AI production cases • Big majority of legacy

sectors energy & utilities and
manufacturing are yet to start
PoCs
 36
Report | August 2024

IX AI-Led Sustainability Goals

Enterprises increasingly recognize the importance and effectiveness of AI

technology as not only an optimization tool, 55% want to drive operational
2.41 efficiencies as a way to build sustainable businesses, but also as a critical
decision-enabling application for advancing sustainability in situations where
traditional analytical tools fail to assess unknown unknowns.

1. 55% of the companies use AI to drive operational efficiencies, and resulting business
sustainability; very early days in the use of AI for broader ESG goals

AI for Business Sustainability Goals

• 32% of companies are targeting sustainability

Optimizing energy usage 8% decision-making, indicating a growing awareness

of AI’s potential to contribute to integrated ESG
planning
Meeting regulatory and 2%
compliance requirements • The limited interest in broader sustainability
areas suggests that many companies might lack
a comprehensive strategy for leveraging AI to
Facilitating sustainable 32%
decision-making achieve their sustainability goals

• This gap could be arising primarily from lack of

Enabling waste reduction 1% consolidated datasets that are needed to build a

holistic ESG tracking, reporting, and improvement
strategy
Enabling predictive
3%
maintenance of equipment • Mature adopters also do not exhibit too
distinct a preference from the overall sample
set, suggesting deeper sensitization and
Driving operational efficiency 55%
experimentation with AI to assess success with
sustainability goals
37

AI Adoption Index 2.0

Sectoral Analysis
 38
Report | August 2024

#4
Sectoral Analysis
Sector-Level AI Adoption Index Analysis

The 2024 sector performance reveals that majority sectors in India adopt similar approaches to building AI
strategies, allocating AI budgets and the ownership of execution, and also in the construct of AI project teams.

Sectors also exhibit similarities in their propensity to identify AI use cases of benefit for their organizations,
and in moving the use cases to PoC and production. Collectively, strategic planning, execution speed, and team
planning require concerted efforts for sectors to move to the next Expert stage.

However, Manufacturing and Telecom, Media and Entertainment have transitioned to the Expert stage. The
more progressive companies in these two sectors reflect a distinct, well-coordinated approach – from planning
AI for not the immediate-term benefits, but for long-term competitive differentiation, ensuring top leadership
commitment and sustained budgeting, dedicated AI team ownership, and a stronger conversion from PoCs to
production.

Since more companies individually are now in the Expert stage (45% of the total), there is an expectation that
sectors will see greater momentum towards maturing their nascent or early-stage AI adoption.

Aggregate Sector-Level AI Adoption Index, 2024

2.45
BFSI
2.37
CPG & Retail
2.47
Energy & Utilities (E&U)
2.11
Healthcare
2.67
Manufacturing
2.67
Telecom, Media & Entertainment (TM&E)
2.54
Transport & Logistics

0 2 4
 39

AI Adoption Index 2.0

I. Banking, Financial Services and Insurance

2.45 | Enthusiast

Emerging Trends in BFSI’s Digital and AI Adoption in 2024

A December 2023 Gartner assessment revealed that Indian banking and financial services companies had spent
nearly $11.3 Bn on technology spend and are likely to spend up with 10% of operating expenses allocated to tech
spend, from 6-8%. With Reserve Bank of India advisory for superior digital readiness in preparation for UPI 2.0,
BFSI enterprises are expanding their investment horizon from core banking digitalization to fraud detection and
risk management, and enhanced customer experiences. AI is destined to be at the core of this digital enhancement
journey.

Additional competitive pressure from the ever-expanding Fintech footprint in India, as the fastest growing tech
startup segments in India, and globally, the incumbents have impetus to leverage data assets well with AI/ML
and advanced analytics to improve efficiencies, customer targeting and experience management, and overall
operational resilience. Fintech has rapidly entered new territories, such as wealth management and personalization
of services for HNIs/UHNIs, driving the larger peers to rethink AI-led improvisations to their existing asset and
wealth offerings. Wealthtech is likely to be a $270 Bn+ market in India by 2030.

India’s Insurtech segment is the 2nd largest in APAC. However, with penetration rates between 1-2% for non-life and
sub-4% for life insurance across India, insurance companies and Insurtech startups have a tremendous untapped
opportunity in India across the rising middle-class, Gen Z dominance, but challenging climate and lifestyle-led
physical and mental health needs, and individualized perception towards with insurance. AI-led personalization of
insurance offerings, underwriting and risk management will make insurance servicing affordable, accessible, and
adaptable.

In all, digitally transformed BFSI is set for disruptive, but cost-effective and innovative services delivery with AI.

BFSI Companies’ AI Adoption Highlights in 2024, percent respondents

Dominant AI trends across BFSI companies, agnostic of size or digital maturity

Have a PoC-heavy AI strategy 50%

With the main objective to build competitive differentiation 69%

However, AI budgeting is ad-hoc or indistinct 51%

Driven majority times by BU IT Heads (back office or front office) 68%

Along with ad-hoc (situational) or BU-level AI teams 69%

BFSI companies rely on BU-level standardized data, not enterprise-scale 76%

With on-cloud AI development and deployment 80%

Most used Al technologies are conversational AI or predictive analytics 60%

Top AI use cases are in document processing, fraud detection, and risk
80%
management
Open-sourced or embedded Al models preferred 81%

More BFSI companies have PoCed Gen AI than Al 56%

BSFI companies have well-documented or enterprise-integrated Al risk

60%
management
BFSI firms believe Al can help drive sustainability through better
67%
operational efficiencies
 40
Report | August 2024

BFSI AI Adoption Deep-Dives

AI Strategy and Impact – 2.06

AI Implementation Strategy

• Over 90% of public-sector banks report a

Transformation-Focused/
20% more ad-hoc strategy
Aligned with Business KPIs
• However, over 50% of all BFSI firms reveal
Small-Scale Adoption moderate to high maturity in selecting the
23%
Focused right vendor partnerships, and acquiring AI
capabilities through M&As.
Ad-hoc/PoC-Heavy 57% • Moreover, 46% of the firms indicate that
they have seen success in achieving
their core objective with AI – competitive
differentiation.

AI Investments – 2.18

AI Investment Strategy
• Ad-hoc budgeting stems from the strategic
AI posture that majority BFSI companies
No budget planned
24% report, however, enterprise-scale AI budgets
or allocated
have seen a near 73% increase since 2022.
Ad-hoc budget 31% • 64% companies increased their AI budgets
by up to 20% in FY24.
Lower-end spending with
26% • Another 33% kept it unchanged from FY23.
dedicated budget
• Nearly 2-in-3 public-sector banks are yet to
Enterprise-level carve out dedicated AI budgets.
19%
dedicated budget

AI Talent and Operating Model – 2.35

AI Ownership and Execution

• 68% of AI initiative budgeting and execution
ownership sits with BU IT heads.

20%
• Of BFSI enterprises that drive AI through BU
27% IT teams, nearly 78% are privately-owned,
AI initiatives revealing that while public-sector banks may
11% are managed have more of an ad-hoc approach, decisions
by…
on AI implementation are centrally managed.
Need-based teams
• 27% of all AI initiatives are managed
Cross-functional teams
42% Dedicated AI teams centrally by CIO/CTO offices.
Outsources/ PMO-managed
 41

AI Adoption Index 2.0

AI Talent Strategy

• ~40% BFSI enterprises indicate facing no AI talent

Hiring Generative AI talent on challenges. While this may seem positive at face
#1
contract value, it is likely because of the lack of depth of
deployment where AI skills coupled with domain
knowledge become crucial. More advanced AI
Reskilling non-AI tech talent for
#2 technologies, beyond conversational AI and
current and future AI roles
predictive analytics, will also require specialist AI
capabilities.

Investing in research students from • 1-in-3 reveal that they face all three types of issues
#3 – hiring, retention, and upskilling/ reskilling for
academia for long-term pipelining
relevance.

Data and Technology Readiness – 3.08

• 73% of BFSI firms indicate having modernized

Standardized
15% applications portfolio.
Enterprise Data
• While 81% of BFSI companies develop AI
Standardized applications on cloud, either public or hybrid, 89%
38%
BU Data
prefer deploying AI workloads through cloud.
• Since enterprise-scale single source of data
BU Data in Silos 38%
continues to be a challenge, 48% of BFSI
firms focus on enabling cross-functional data
Inadequate accessibility as their primary data management
9%
Business Data
priority, followed by ensuring data security.

AI Use Cases – 1.23

Companies Shortlisting Companies PoCing Companies

Use Cases Use Cases Productionizing PoCs

58% 47% 42%

• Use case selection is the biggest roadblock in AI adoption and scale-up.

• Automated document processing, fraud detection, and risk management are the top productionized use
cases.
 42
Report | August 2024

Generative AI Strategy – 1.91

Companies Conducting Companies • Generative AI has taken a slice of the predictive

PoCs Productionizing PoCs AI focus as more BFSI companies have conducted
PoCs.
• 34% of BFSI companies productionized at least
56% 34% one use case, in most cases, Generative AI-
enabled chatbots.
• 50% of these production cases delivered value.

AI-Led Innovation – 2.07

Patents Filed Innovation Approach

~11% of BFSI companies have filed 1 or more 63% of the BFSI firms prefer in-house
patents between 2020 and 2023. innovation, and in lack of adequate AI expert
talent, AI-led innovation has been relatively low.

AI Ethics, Governance, and Controls – 2.99

Adoption of AI Ethics & Governance Frameworks

35%

25%
22%
19%

No AI Ethics Frameworks In Early Stages of Model Well-Documented and Integrated with Enterprise
Implemented Deployment Formalized, Mostly Company- Risk Management, Aligned
Specific Norms with Regional/Global Norms

Audit & Control Mechanisms for AI Risk Mitigation

37%

22% 23%
17%

No Formal AI Risk Ad-hoc monitoring or audits Formal risk assessment Integrated AI risk
Assessment or Audit Plan based on business needs in parts with compliance, management focused on
planned monitoring and continued enhancements with
audits external evaluation

• Nearly 20% BFSI companies reveal having no AI ethics, governance, risk controls and auditing mechanisms
in place. This may need stringent compliance as AI rules evolve.
 43

AI Adoption Index 2.0

AI-Led Sustainability Goals – 2.74

Top AI-Enabled Sustainability Impact Areas

Operational Efficiency Sustainable

Gains Decision-Making • A significant aspect of operational efficiency
comes from effective compliance management to
avoid risk-related costs.

67% 27% • BFSI firms also stand out with 27% focused on
sustainable decision-making practices using AI.

BFSI: Major Challenges in Scaled AI Adoption

Challenges
Ineffective data and cybersecurity capabilities 85%

Data
Ambiguity on handling data privacy and regulatory
compliance 80%

Lack of AI Outcomes
Ambiguity with aligning AI and business outcomes 77%

Alignment
Limited or no measurable RoI from PoCs 60%

Limited or no measurable RoI from at-scale deployments 44%

Commitment
Top leadership commitments 67% Leadership
Limited

High TCO & financial investment 47%

Lack of skills to integrate existing ITOps with AIOps 75%

Lack of specialist, experienced strategy skills in AI 55%

Challenges
Talent

Lack of domain skills needed for creative use case thinking 52%

Lack of domain specialist technical skills for building and

47%
testing AI solutions/models

• Only 2% of BFSI firms align their AI initiatives with business goals, limiting traceability of AI PoC or
production outcome.
• Data standards, tech partnerships, and innovation within guardrails will be key to drive AI usage in BFSI.
• With rising scale of digital transactions, BFSI sector will witness competitive demand for data and AI
engineers.
 44
Report | August 2024

2. Consumer Packed Good (CPG) and Retail

2.37 | Enthusiast

Emerging Trends in CPG and Retail’s Digital and AI Adoption in 2024

India’s CPG and retail sector contributes nearly 10% to annual GDP and is expected to reach ~$4.4 Tn in market
size by 2030. Retail alone is expected to grow at a 9% CAGR through 2030 to reach between $1.8-2 Tn, of which
majority, nearly $1 Tn will be the ecommerce market, at a CAGR of ~12%.

India is currently the fifth largest retail market worldwide, expected to become the third largest within a decade.
Further, RetailTech has invited collective FDI of over $4.5 Bn by the end of 2023. AI is increasingly finding use
cases in several areas in the sector, including customer service, competitive intelligence, inventory management,
and product design.

The recent campaign by Britannia NutriChoice for customers to interact with brand ambassador, Ranveer Singh,
is an example of how Gen AI is enabling customer engagement. Nestle uses an AI model to analyze consumer
behaviors and preferences, developed in India. ITC is aiding its premium portfolio through AI-enabled demand
prediction and bundling recommendation engines.

Increasingly, supply chain optimization and autonomous customer interactions are gaining traction across even
the MSME segment in this sector.

CPG and Retail Companies’ AI Adoption Highlights in 2024, percent respondents

Dominant AI trends across CPG and Retail companies, agnostic of size or digital maturity

Have a PoC-heavy AI strategy 61%

With the main objective to gain cost savings and

70%
competitive differentiation

However, AI budgeting is ad-hoc or indistinct 67%

Driven majority times by BU IT Heads (product lines) 92%

Although with either cross-functional teams or some

52%
dedicated AI teams
CPG and Retail companies have standardized data at
62%
BU or enterprise-level
With on-cloud AI development and deployment
91%
preferred
Most used AI technologies and predictive analytics,
50%
NLP, and virtual assistants
Top AI use cases are inventory optimization and
89%
demand forecasting

Open-sourced embedded AI models preferred 94%

More companies are PoCing AI than Gen AI 58%

But a major subset do not have any formal AI risk

41%
assessment or audit plan
CPG and Retail films believe AI can help drive
60%
sustainability through better operational efficiencies
 45

AI Adoption Index 2.0

CPG and Retail: AI Adoption Deep-Dives

AI Strategy and Impact – 1.94

AI Implementation Strategy • Over 60% of CPG and Retail companies have an ad-
hoc AI strategy that can lead to shortfalls in achieving
the primary business objectives from AI – sustained
Transformation-Focused/
14% cost savings and long-term competitive differentiation
Aligned with Business KPIs
that the sector aims for.
• Of the 60% of companies who follow an ad-hoc AI
Small-Scale Adoption strategy, limited use, just by 43%, of conversational AI
25%
Focused
chatbots and predictive analytics is reported.
• However, of the 14% that have built a transformation-
led AI agenda, over 70% indicate success in use case
Ad-hoc/PoC-Heavy 61%
selection and 90% claim success in building strategic
AI partnerships.

AI Investments – 2.07

• Ad-hoc or unplanned budgeting stems from the

No Budgets Planned 31% strategic AI posture that majority CPG ad Retail

companies report.
Ad-hoc/Part of IT • 62% companies increased their AI budgets by up to
36%
Budgets 40% in FY24.

Low-End/BU-Level IT • Another 38% kept it unchanged from FY23.

27%
Budgets
• 33% of the companies allocate over 5% of total tech

Enterprise-Scale
spend to AI; however, nearly 50% of the companies are
6%
Dedicated AI Budgets yet to define a certain allocation to AI on a consistent
basis.

AI Talent and Operating Model - 2.21

AI Ownership and Execution • 92% of AI initiative budgeting and execution ownership

sits with BU IT heads, indicative of the product-line
dominant technology strategy planning and execution
19% model that majority of these companies adopt.
28%
• Just about 3% of companies report presence of AI heads
AI initiatives
7% are with budgeting ownership.
managed
by… • Stronger functional ivory towers can restrict a holistic
Need-based teams enterprise single view of customer truth, thereby pushing
Cross-functional teams
46% Dedicated AI teams
back major AI-led personalization projects.
Outsources/ PMO-managed
 46

AI Talent Strategy
Report | August 2024

CPG and Retail sector priorities in developing AI talent in the next 12 months

• ~40% of the enterprises indicate facing no AI

Hiring Generative AI talent on
#1 talent challenges. This could either be due to
contract
the fact that BU-level PoCs and productionizing
requires base level AI skills and expertise, and
that this scenario may reverse once CPG and
Investing in research students from
#2 Retail companies start building enterprise-grade
academia for long-term pipelining
AI programs.

• 28% reveal that they face all three types of issues

Hiring STEM students for entry-level – hiring, retention, and upskilling/ reskilling for
#3
AI roles, to be upskilled on-the-job relevance.

Data and Technology Readiness – 3.18

• 71% of CPG and Retail firms indicate having

Standardized modernized applications portfolio.
9%
Enterprise Data
• 90%+ develop and deploy AI applications on
Standardized cloud, either public or hybrid.
53%
BU Data
• Similar to the budgeting ownership for AI, BU-level
data standards majorly limit the single view of a
BU Data in Silos 32%
customer needed for integrated services.
• Data accessibility by cross-functional teams, data
Inadequate
7%
Business Data security and privacy, and data quality for use in AI
models are core data management priorities.

AI Use Cases – 1.46

Companies Shortlisting Companies PoCing Companies

Use Cases Use Cases Productionizing PoCs

67% 54% 48%

• Prominent use cases in CPG and Retail have been related to better operational efficiencies through AI, such
as omnichannel inventory optimization, demand forecasting, and use of conversational AI.
 47

AI Adoption Index 2.0

Generative AI Strategy – 1.83

Companies Conducting Companies

PoCs Productionizing PoCs • CPG and Retail firms are relatively slower at
picking up on Generative AI trends compared to
piloting predictive AI use cases.
• 1-in-3 of all companies productionized at least one
58% 34%
use case, such as Generative AI-enabled chatbots.
• 73% of these production cases delivered value.

AI-Led Innovation – 2.05

Patents Filed Innovation Approach

<1% of CPG and Retail companies have filed 1 or 63% of the firms prefer startup incubation,
more patents between 2020 and 2023. followed by in-house innovation, however,
clearly not focused on IP creation yet.

AI Ethics, Governance, and Controls – 2.79

Adoption of AI Ethics & Governance Frameworks

27% 27% 28%

18%

No AI Ethics Frameworks In Early Stages of Model Well-Documented and Integrated with Enterprise
Implemented Deployment Formalized, Mostly Company- Risk Management, Aligned
Specific Norms with Regional/Global Norms

Audit & Control Mechanisms for AI Risk Mitigation

41%

27% 27%

5%

No Formal AI Risk Ad-hoc monitoring or audits Formal risk assessment Integrated AI risk
Assessment or Audit Plan based on business needs in parts with compliance, management focused on
planned monitoring and continued enhancements with
audits external evaluation

• Amongst the highest of all sectors, 41% of CPG and Retail companies report having no AI risk assessment or
audit controls, potentially endangering the business due to compliance and customer privacy violations.
 48
Report | August 2024

AI-Led Sustainability Goals – 1.53

Top AI-Enabled Sustainability Impact Areas

Sustainable Operational
Decision-Making Efficiency Goals
• The top sector in using AI to enable decision-
making that aims to support and further
sustainability goals.
60% 35%
• Sustainability goals for the CPG and Retail sector
extend beyond compliant operations to meeting
sustainability aspirations of customers.

CPG and Retail: Major Challenges in Scaled AI Adoption

Challenges
Ineffective data and cybersecurity capabilities 75%

Data
Ambiguity on handling data privacy and regulatory
compliance 40%

Lack of AI Outcomes
Ambiguity with aligning AI and business outcomes 58%

Alignment
Limited or no measurable RoI from PoCs 78%

Limited or no measurable RoI from at-scale deployments 74%

Commitment

Top leadership commitments 0%

Leadership
Limited

High TCO & financial investment 47%

Lack of skills to integrate existing ITOps with AIOps 69%

Lack of specialist, experienced strategy skills in AI 51%

Challenges
Talent

Lack of domain skills needed for creative use case thinking 58%

Lack of domain specialist technical skills for building and

56%
testing AI solutions/models

• CPG and Retail companies indicate nearly no alignment of AI objectives with business goals, a much-needed
strategic intervention.
• Contrarily, these firms did not report any leadership commitment challenges.
• Likely due to strong leadership backing, CPG and Retail firms do not find AI hiring a challenge.
 49

AI Adoption Index 2.0

3. Energy and Utilities

2.47 | Enthusiast

Emerging Trends in Energy and Utilities’ Digital and AI Adoption in 2024

The energy and utilities sector has seen intense activity in recent times, as demand continues to surge along with
economic development. The Indian energy and utilities sector is among the most diverse in the world, ranging
from traditional fossil fuel companies to leading-edge alternative energy firms. While the Indian government has
ambitious plans to meet the exponential rise in demand, reduction of carbon emissions by 45% and meeting 50%
of the country’s energy need through renewable and alternative energy has fueled rapid activity in this sector.

AI is playing an enabling role, as more energy and utility companies are looking to optimize supply chains,
distribution, pricing and operational efficiency to meet the sector’s growing demand. As one of the participating
companies revealed, AI is enabling them to achieve their customer-centricity goals. Companies are also using
AI for analyzing vast amounts of data, leading to many useful operational inputs, such as predicting complaint
areas for proactive action, optimizing rooftop solar installations and EV charging stations.

Observations from various sectoral interviews reveal that while curiosity and knowledge levels are high, we are
yet to observe high adoption rates in this sector.

Energy and Utilities Companies’ AI Adoption Highlights in 2024, percent respondents

Dominant AI trends across Energy and Utilities companies, agnostic of size or digital maturity

Have a PoC-heavy AI strategy 55%

With the aim to drive business growth 72%

Al budgeting is ad-hoc or indistinct 77%

However, in E&U companies, it is owned and managed by

77%
central IT teams

With mostly ad-hoc project execution teams 60%

Energy and Utilities companies struggle with BU-level

48%
data in silos
But report near-absolute on-cloud AI development
98%
and deployment

Al tech most used - virtual assistants 65%

Top Al use case is consumption forecasting 86%

AI-embedded best-of-breed solutions by vendors preferred 83%

Very nascent Gen AI production cases 6%

Formalized and enterprise-integrated Al risk strategy 73%

Energy and Utilities companies focus on energy use

15%
optimization with AI
 50
Report | August 2024

Energy and Utilities: AI Adoption Deep-Dives

AI Strategy and Impact – 2.13

AI Implementation Strategy • 56% of Energy and Utilities companies have an

ad-hoc AI strategy, majority actively PoCing AI use
Transformation-Focused/ cases.
17%
Aligned with Business KPIs • 75% of the companies are piloting or have
commercialized predictive analytics solutions, and
Small-Scale Adoption nearly 70% are using conversational AI bots and
27%
Focused
natural language processing (NLP).
• Of the 44% with scaled adoption, over 70%
Ad-hoc/PoC-Heavy 56% companies indicate a moderate-to-high level
maturity in building strategic vendor partnerships
and nurturing AI talent.
• Procurement function has emerged as one of the
top users of AI, besides IT and customer services.

AI Investments – 1.96

AI Investment Strategy

• A sector with lowest level of enterprise-scale

No budget planned
25% dedicated AI budgets, just at about 6%, Energy
or allocated
and Utilities could risk losing out on AI-led energy
transformation opportunities.
Ad-hoc budget 52%
• 65% companies increased their AI budgets by up to

Lower-end spending with

10% in FY24.
17%
dedicated budget
• Another 35% kept it unchanged from FY23.

Enterprise-level • 15% of the companies allocate over 5% of total tech

6%
dedicated budget spend to AI.

AI Talent and Operating Model – 2.33

AI Ownership and Execution

2%
• 77% of AI initiative budgeting and execution
6% ownership, unlike majority sectors, sits with central
IT heads.
60%
• While such a budgeting in Energy and Utilities
AI initiatives
32% are managed companies may bring efficiencies from
by… centralization, however, the extent of ad-hocism in
Need-based teams
AI adoption requires attention.
Cross-functional teams
• Energy and Utilities companies report lowest
Dedicated AI teams
Outsources/ PMO-managed intensity of dedicated AI leaders of all sectors.
 51

AI Talent Strategy

AI Adoption Index 2.0

Energy and Utilities sector priorities in developing AI talent in the next 12 months

• 62% of Energy and Utilities companies indicate

Reskilling existing non-AI tech getting AI talent access through providers as a
#1
employees for AI roles starting point to AI adoption, before building in-house
capabilities.

Upskilling existing AI employees from • 60% of the enterprises indicate facing challenges
#2
base-level AI skills with hiring and retaining AI talent, thus indicating the
need for a more prominent business case for AI in the
sector.
Hiring STEM students for entry-level
#3 • 20% reveal that they are not sure about any AI-
AI roles, to be upskilled on-the-job
specific talent strategy in place.

Data and Technology Readiness – 2.86

• Just 39% of Energy and Utilities companies have

Standardized modernized applications portfolio. Although, 98%
6%
Enterprise Data indicate using cloud for AI development and
deployment.
Standardized
35%
BU Data • This contradiction could indicate a lift-n-shift
migration to cloud without optimizing the
BU Data in Silos 48% applications portfolio.
• Instances of such cloud use often reveal
Inadequate overprovisioned, underutilized assets with
11%
Business Data limited RoI, thereby leading to future budgetary
restrictions in capacity expansion needed to
productionize and scale AI.

AI Use Cases – 1.42

Companies Shortlisting Companies PoCing Companies

Use Cases Use Cases Productionizing PoCs

73% 73% 21%

• Low pilot-to-production.
• Prominent use cases are consumption forecasting and automated fault detection in power systems, along
with conversational AI chatbots.
 52
Report | August 2024

Generative AI Strategy – 0.94

Companies Conducting Companies • One of the lagging sectors in conducting

PoCs Productionizing PoCs
Generative AI PoCs, even as experts suggest
content summarization and information retrieval
as beneficial productivity use cases for the sector.
12% 6% • Value realization of productionized Generative AI
use cases has also been relatively negligible in the
sector.

AI-Led Innovation – 2.38

Patents Filed Innovation Approach

21% of Energy and Utilities companies have No clear approach, mostly in-house innovation
filed 1-2 patents between 2020 and 2023. with very limited external partnerships with
academia or startups.

AI Ethics, Governance, and Controls – 3.16

Adoption of AI Ethics & Governance Frameworks

42%

25%
21%
12%

No AI Ethics Frameworks In Early Stages of Model Well-Documented and Integrated with Enterprise
Implemented Deployment Formalized, Mostly Company- Risk Management, Aligned
Specific Norms with Regional/Global Norms

Audit & Control Mechanisms for AI Risk Mitigation

44%

29%

15% 12%

No Formal AI Risk Ad-hoc monitoring or audits Formal risk assessment Integrated AI risk
Assessment or Audit Plan based on business needs in parts with compliance, management focused on
planned monitoring and continued enhancements with
audits external evaluation

• Energy and Utilities firms have embraced a formal AI ethics and risk management framework with majority
companies adopting a formal, well-documented approach, although the integrated approach in-line with
global standards needs deeper attention.
 53

AI Adoption Index 2.0

AI-Led Sustainability Goals – 1.48

Top AI-Enabled Sustainability Impact Areas

Sustainable Operational Efficiency Optimal

Decision-Making Gains Energy Use • One of the top three sectors,
and with most number of
companies using AI to track
and optimize its energy use.
48% 27% 15%
• With 2070 net zero goals
hinging on innovation by this
sector, energy use optimization
is critical.

Energy and Utilities: Major Challenges in Scaled AI Adoption

Challenges
Ineffective data and cybersecurity capabilities 83%

Data
Ambiguity on handling data privacy and regulatory
compliance 78%

Lack of AI Outcomes
Ambiguity with aligning AI and business outcomes 88%

Alignment
Limited or no measurable RoI from PoCs 75%

Limited or no measurable RoI from at-scale deployments 60%

Commitment
Top leadership commitments 67% Leadership
Limited

High TCO & financial investment 50%

Lack of skills to integrate existing ITOps with AIOps 93%

Lack of specialist, experienced strategy skills in AI 73%

Challenges
Talent

Lack of domain skills needed for creative use case thinking 29%

Lack of domain specialist technical skills for building and

23%
testing AI solutions/models

• Just 4% of E&U companies align AI outcomes to business metrics, and this reflects in inferior RoI from AI
PoCs or scaled projects.
• While 50% companies consider top leadership commitment as a challenge, funding is a bigger issue.
• IT-OT and domain skill gaps are glaringly prominent in E&U firms.
 54
Report | August 2024

4. Healthcare and Pharmaceuticals

2.11 | Enthusiast

Emerging Trends in Healthcare and Pharmaceuticals’ Digital and AI Adoption in

2024
India’s healthcare, lifesciences and pharmaceuticals sector invited nearly 2.1% of national GDP spend in FY2024.
The combined sector is expected to reach ~$1 Tn in market size by 2030. Healthcare is the biggest segment and
is projected to be around $640 Bn by 2025, with one of the largest workforce base of 75 Mn+ employees. India is
also the 3rd largest pharmaceuticals manufacturer outside of China and the US, and is likely to have a $130 Bn
sized domestic pharmaceuticals industry by 2030, from the current $65 Bn. The provider segment (hospitals) is
expected to be $190+ Bn by 2030, and the medical devices market is likely to reach $50 Bn.

AI is driving transformation of the healthcare industry into a phygital human-centred ecosystem. Telemedicine
and remote patient monitoring, AI-powered diagnostics and precision medicine, genomic sequencing, vaccine
development are major emerging themes in India’s healthtech arena. Indian deeptech startups in healthcare
have grown rapidly in the last decade and nearly 50% have found funding. With Gen AI-powered drug design
and discovery, health records summarization, patient prognosis and support to clinicians and care givers, India’s
healthcare can leapfrog from a human-intensive to a human-augmented care system across the preventive,
curative, and end-of-life healthcare lifecycle.

Healthcare and Pharmaceuticals Companies’ AI Adoption Highlights in 2024,

percent respondents

Dominant AI trends across Healthcare and Pharmaceuticals companies, agnostic of size or digital maturity

Nascent AI use with a PoC-heavy strategy 75%

Heathcare companies aim to drive sustainable competitive

80%
differentiation

Unplanned or at best ad-hoc budgeting is the norm 75%

Driven majority times by BU IT Heads (functions or divisions) 75%

Surprisingly, with projects driven by cross-functional or

47%
dedicated Al teams
Healthcare companies use standard data across BUs or
49%
company-wide

With on-cloud AI development and deployment preferred 88%

With more advanced Al tech usage seen - image processing,

22%
NLP and Generative AI
Top Al use cases are medical image analysis and personalized
51%
medicine

Open-sourced or embedded AI models preferred 87%

Limited Gen Al production cases 17%

Al risk and ethics frameworks formalized by very few firms

27%
despite high data sensitivity
Focus on sustainable long-term business and operational
27%
efficiency with AI
 55

AI Adoption Index 2.0

Healthcare and Pharmaceuticals: AI Adoption Deep-Dives

AI Strategy and Impact – 1.67

AI Implementation Strategy • Just 3% Healthcare and Pharma companies have a

transformation-focused and enterprise-integrated AI
strategy.
Transformation-Focused/
3% • Another 22% have small-scale or point-solution
Aligned with Business KPIs
strategy.
• 86% of the companies indicate that AI is being actively
Small-Scale Adoption
22% used by the clinical operations functions, followed by
Focused
56% where research and development departments
use AI. This is quite contrary to several sectors where
IT is the primary user of AI solutions.
Ad-hoc/PoC-Heavy 75%
• 40%+ firms use image processing conversational AI,
and Generative AI tools.

AI Investments – 1.89

No Budgets Planned 52% • Only 1-in-4 Healthcare and Pharma companies have
some BU or central dedicated AI budgets.
Ad-hoc/Part of IT • 52% report no planned budgets, revealing the lag that
23%
Budgets
the sector faces compared to others in AI adoption.

Low-End/BU-Level IT • However, 52% of the companies indicate having

12%
Budgets increased their FY24 AI spend by up to 50%, compared
to FY23. This could be an indication of the sector firms
Enterprise-Scale
13% catching up on a slow and delayed start.
Dedicated AI Budgets

AI Talent and Operating Model – 2.24

Ownership and Execution

• 75% Healthcare and Pharma companies leverage BU-led
AI budgeting and execution.
• Another 19% use central IT teams to own and manage AI
26%
27% initiatives.
AI initiatives
• The sector with 26% of companies opting for PMO-
are
managed managed outsourced AI services is the topmost in this
9% by…
category.
Need-based teams
Cross-functional teams
38% Dedicated AI teams
Outsources/ PMO-managed
 56

AI Talent Strategy
Report | August 2024

Healthcare and Pharma sector priorities in developing AI talent in the next 12 months

• 47% of Healthcare and Pharmaceuticals

Investing in research students from companies do not have any formal AI talent
#1
academia for long-term pipelining strategy in place, either to work with vendor
partners or acquihire or in-source such workforce.

Upskilling existing AI employees from • Another 43% indicate getting AI talent access
#2 through providers as a starting point to AI
base-level AI skills
adoption, before building in-house capabilities.

• 61% of the enterprises indicate facing no

Hiring Generative AI experts on
#3 challenges related to AI talent, due to the ad-hoc
contract
nature of AI and AI talent strategies.

Data and Technology Readiness – 2.92

• 75% of Healthcare and Pharma companies have

Standardized modernized applications portfolio.
18%
Enterprise Data
• However, compared with other sectors, fewer
Standardized healthcare companies, about 78%, opt for cloud-
32%
BU Data based AI development and deployment.
• Data privacy to protect sensitive information and
BU Data in Silos 32%
enterprise-scale data consistency are key data
management priorities and this focus is reflected
Inadequate
18% in the cautious approach to cloud-based AI
Business Data
implementation.

AI Use Cases – 1.18

Companies Shortlisting Companies PoCing Companies

Use Cases Use Cases Productionizing PoCs

44% 43% 38%

• Use case shortlisting is a limiting factor in rapidly piloting/ productionizing AI.

• Prominent use cases are medical image processing, personalized medicine, and conversational AI bots.
 57

AI Adoption Index 2.0

Generative AI Strategy – 1.25

Companies Conducting Companies

PoCs Productionizing PoCs

• 75% indicate modest impact from Gen AI cases

that have been put to production environment
34% 16%

AI-Led Innovation – 1.91

Patents Filed Innovation Approach

10% of Healthcare and Pharma companies have AI teams in these companies prefer making
filed over 10 AI patents between 2020 and 2023. contributions through open source research.

AI Ethics, Governance, and Controls – 2.03

Adoption of AI Ethics & Governance Frameworks

52%

19% 21%
8%

No AI Ethics Frameworks In Early Stages of Model Well-Documented and Integrated with Enterprise
Implemented Deployment Formalized, Mostly Company- Risk Management, Aligned
Specific Norms with Regional/Global Norms

Audit & Control Mechanisms for AI Risk Mitigation

55%

18% 17%
10%

No Formal AI Risk Ad-hoc monitoring or audits Formal risk assessment Integrated AI risk
Assessment or Audit Plan based on business needs in parts with compliance, management focused on
planned monitoring and continued enhancements with
audits external evaluation

• Healthcare and Pharmaceuticals companies are amongst the lowest adopters of AI ethics, risk, and audit
mechanisms. Lack of protective guardrails around using sensitive public health information (PHI) for AI
models could be the single biggest roadblock to scaling AI.
 58
Report | August 2024

AI-Led Sustainability Goals – 1.97

Top AI-Enabled Sustainability Impact Areas

Operational Efficiency Sustainable

Gains Decision-Making • One of the top sectors intending to use AI to
make long-term sustainable business decisions,
Healthcare and Pharmaceuticals sector may
gain significantly by using AI to determine more
48% 48%
sustainable and adaptive patient care models of
the future.

Healthcare and Pharmaceuticals: Major Challenges in Scaled AI Adoption

Challenges
Ineffective data and cybersecurity capabilities 92%

Data
Ambiguity on handling data privacy and regulatory
compliance 50%

Lack of AI Outcomes
Ambiguity with aligning AI and business outcomes 65%

Alignment
Limited or no measurable RoI from PoCs 50%

Limited or no measurable RoI from at-scale deployments 94%

Commitment

Top leadership commitments 50%

Leadership
Limited

High TCO & financial investment 45%

Lack of skills to integrate existing ITOps with AIOps 88%

Lack of specialist, experienced strategy skills in AI 46%

Challenges
Talent

Lack of domain skills needed for creative use case thinking 61%

Lack of domain specialist technical skills for building and

40%
testing AI solutions/models

• While the challenges highlighted by the healthcare firms are not very divergent from other sectors,
companies seem to struggle with bringing all components together to create the right organization structure,
teams, momentum, and buy-in to pilot and productionize AI solutions.
 59

AI Adoption Index 2.0

5. Manufacturing (Discrete and Process)

2.67 | Enthusiast

Emerging Trends in Manufacturing’s Digital and AI Adoption in 2024

India’s manufacturing sector is one of the three core GDP pillars, contributing nearly 16-17% to annual GDP,
and is expected to reach $1 Tn by FY2026. In 2022-23 the total worth of India’s exports of manufactured goods
stood at $450 Bn. Much of this growth can be attributed to factors such as India’s growing eminence as a
manufacturing destination and the government’s boost through various PLI schemes and marquee initiatives,
such as Make in India.

AI’s prominence in manufacturing is growing, particularly as digitalization on the lines of Industry 4.0, cost-
effectiveness of industrial IoT, and applicability of AI in operational efficiencies gains ground with the sector, and
the enabling value chains. Product design, supply chain improvements and analytics-based decision making are
being implemented using AI.

Automotive sector, specifically, has embraced AI to a great extent. The impact of this segment’s superior digital
manufacturing adoption is also visible in the scores of this adoption index for the sector. Particularly, in budget
allocations and certain technology readiness aspects, more of the automative companies responded at higher
levels of maturity. Yet, across the sector, growing recognition of the benefits of digital transformation and
Industry 4.0 practices in streamlining and optimizing current and future production processes is likely to drive-up
scaled AI implementations.

Manufacturing Companies’ AI Adoption Highlights in 2024, percent respondents

Dominant AI trends across Manufacturing companies, agnostic of size or digital maturity

Highest rate of enterprise-scale, transformation-led AI

39%
strategy

With the aim to drive business growth 70%

More companies report BU-level or enterprise-level dedicated

55%
AI spend

Driven majority times by Central IT 84%

With mostly cross-functional and in some cases, dedicated AI

61%
teams
Manufacturing companies have standardized data across BU
60%
and/or enterprise-level

With on-cloud AI development and deployment preferred 96%

Most used AI technologies are predictive analytics and virtual

69%
assistants
Top AI use cases are supply chain optimization and predictive
69%
maintenance
Manufacturing companies prefer strategic tech M&A and Al-
66%
embedded point solutions to develop AI solutions

However, Generative AI PoCs have been very low 4%

More companies follow formalized and enterprise-integrated

55%
AI risk strategy
Manufacturing companies focus on energy use optimization
12%
with AI
 60
Report | August 2024

Manufacturing: AI Adoption Deep-Dives

AI Strategy and Impact – 2.54

AI Implementation Strategy
• With 39% of the companies building
transformation-focused AI strategies and aligning
Transformation-Focused/
39% AI outcomes to business KPIs, Manufacturing
Aligned with Business KPIs
companies represent one of the top progressive
sectors in AI adoption.
Small-Scale Adoption
25%
Focused • Another 25% have small-scale or point-solution
strategy.

Ad-hoc/PoC-Heavy 36% • 87% of the companies report moderate to high

maturity in building strategic vendor partnerships,
hiring AI talent, and using M&As for acquihiring.
• 52% of the companies report logistics and
warehousing function as the top user of AI.

AI Investments – 2.45

AI Investment Strategy

No budget planned
• With 25% of companies reporting enterprise-scale
9%
or allocated dedicated AI budgets, manufacturing leads other
sectors in dedicated AI spend.
Ad-hoc budget 36% • 100% of the companies with dedicated AI budgets
allocated over 5% of their IT spend on AI.
Lower-end spending with
29% • Further, 96% of Manufacturing companies
dedicated budget
increased budgets by up to 30% in FY24, y-o-y, the
Enterprise-level highest percent of firms across sectors.
25%
dedicated budget

AI Talent and Operating Model – 2.67

AI Ownership and Execution

• 84% of the Manufacturing companies’ AI initiative
budgeting and execution ownership lies with
4% Central IT heads, remaining split between BU IT
20% and dedicated AI teams
35%
• Majority of the firms, particularly the ones with
AI initiatives
are managed
a transformation-focused AI strategy, are
by… inward-focused. These companies do not use any

Need-based teams
outsourced model at all.

41%
Cross-functional teams • Very low inclination towards outsourcing AI
Dedicated AI teams
Outsources/ PMO-managed
initiatives is likely due to concerns with sharing core
operational data.
 61

AI Talent Strategy

AI Adoption Index 2.0

Manufacturing sector priorities in developing AI talent in the next 12 months

• Unlike other sectors, 81% of the Manufacturing

Reskilling non-AI technology talent companies face significant challenges with hiring and
#1
for AI roles retaining AI talent.

• As AI initiatives are managed in-house, talent across

Upskilling existing AI employees from the pyramid of AI skills will need to be built, along
#2
base-level AI skills with IT+OT expertise.

• However. 72% of Manufacturing companies are willing

to consume AI services externally provided so as to
Hiring research talent from academia
#3 get access to specialist talent before building the
to build tech+domain expertise
skills internally.

Data and Technology Readiness – 3.16

Standardized
38% • 57% of Manufacturing companies have modernized
Enterprise Data
their applications portfolio, much below cross-
Standardized sector average.
22%
BU Data
• Yet, on-cloud development of deployment
endorsement by 96% of all Manufacturing
BU Data in Silos 35% companies is a positive trend.
• Data privacy to protect sensitive information and
Inadequate
5% enterprise-scale data consistency are key data
Business Data
management priorities.

AI Use Cases – 0.97

Companies Shortlisting Companies PoCing Companies

Use Cases Use Cases Productionizing PoCs

51% 32% 11%

• Manufacturing firms struggle significantly with second-lowest PoC and production conversion.
• Prominent use cases are supply chain optimization, predictive maintenance, and inventory management and
demand forecasting
 62
Report | August 2024

Generative AI Strategy – 1.04

Companies Conducting Companies

PoCs Productionizing PoCs • Manufacturing firms have the lowest rate of
Generative AI PoCs and productionizing of all
sectors.
• Many global Manufacturing organizations
15% 4%
implementing Generative AI in supply chain
optimization have seen early benefits.

AI-Led Innovation – 2.37

Patents Filed Innovation Approach

13% of Manufacturing companies have filed up AI teams in these companies prefer incubating
to 5 AI patents between 2020 and 2023. startups and sponsoring academic research.

AI Ethics, Governance, and Controls – 2.84

Adoption of AI Ethics & Governance Frameworks

31% 33%

19% 17%

No AI Ethics Frameworks In Early Stages of Model Well-Documented and Integrated with Enterprise
Implemented Deployment Formalized, Mostly Company- Risk Management, Aligned
Specific Norms with Regional/Global Norms

Audit & Control Mechanisms for AI Risk Mitigation

31%
29% 27%

13%

No Formal AI Risk Ad-hoc monitoring or audits Formal risk assessment Integrated AI risk
Assessment or Audit Plan based on business needs in parts with compliance, management focused on
planned monitoring and continued enhancements with
audits external evaluation

• More manufacturing companies have moved towards integrated risk management comprising AI
governance audit and control embedded into enterprise risk frameworks, compared with 2022, although still
below average across sectors.
 63

AI Adoption Index 2.0

AI-Led Sustainability Goals – 2.63

Top AI-Enabled Sustainability Impact Areas

Sustainable Operational Efficiency Optimal

Decision-Making Gains Energy Use • One of top two sectors
intending to use AI to optimize
current energy use and
undertake AI-based decision-
59% 25% 12%
making for sustainable
business decisions.

Manufacturing: Major Challenges in Scaled AI Adoption

Challenges
Ineffective data and cybersecurity capabilities 92%

Data
Ambiguity on handling data privacy and regulatory
compliance 85%

Lack of AI Outcomes
Ambiguity with aligning AI and business outcomes 80%

Alignment
Limited or no measurable RoI from PoCs 94%

Limited or no measurable RoI from at-scale deployments 50%

Commitment
Top leadership commitments 50% Leadership
Limited

High TCO & financial investment 45%

Lack of skills to integrate existing ITOps with AIOps 88%

Lack of specialist, experienced strategy skills in AI 61%

Challenges
Talent

Lack of domain skills needed for creative use case thinking 46%

Lack of domain specialist technical skills for building and

14%
testing AI solutions/models

• Manufacturing firms seem to have lesser struggle with top leadership commitment and financial investments
but find it particularly challenging to standardize data and then build AI use cases to PoC and scale.
• Being an asset-heavy sector, lack of RoI from AI PoCs can divert away dedicated AI funding to pressing
business growth needs.
 64
Report | August 2024

6. Telecommunications Media and Entertainment (TM&E)

2.67 | Enthusiast

Emerging Trends in TM&E’s Digital and AI Adoption in 2024

India’s telecommunications, media and entertainment sectors, combination of telecom, and media and
entertainment segments. Tailwinds for this sector’s growth, despite competitive margin pressures, are strong
as India is one of the biggest consumers of data worldwide, data usage having grown 316X in the last decade,
from ~62MB per subscriber per month (pspm) in March 2014 to 19.47 GB pspm by December 2023. By 2025,
India will need ~22 Mn skilled workers in 5G-centric technologies of IoT, AI, robotics and cloud computing. India
has already constituted the sixth-generation (6G) innovation group, keeping in consideration he criticality of
connectivity technologies with rapidly growing digitalization.

Media and entertainment is expected to grow at a 9.7% CAGR to reach $74 Bn by 2027, with doubling of OTT
revenues, rapid growth in gamingtech, and continued expansion of the core television media. AI has gained
widespread use in software-defined networks, bandwidth optimization, content personalization, churn prediction,
dynamic pricing and VAS bundling, and in gamingtech, for increasingly immersive experiences. The flip side is
more rapidly rising content misuse, deepfakes, misinformation and disinformation challenges. AI will be utilized to
solve for the problems it creates.

TM&E Companies’ AI Adoption Highlights in 2024, percent respondents

Dominant AI trends across Healthcare and Pharmaceuticals companies, agnostic of size or digital maturity

TM&E companies have a PoC and small-scale deployment

83%
focused AI strategy
TM&E companies aim to drive sustainable competitive
74%
differentiation

However, stuck with ad-hoc or project-based budgeting 55%

Driven by central or BU IT heads 83%

TM&E companies have a higher representation of multi-

72%
domain or dedicated Al teams

With BU-level or firm-wide standardized data 84%

And a strong preference for on -cloud AI development and

93%
deployment
Most used Al technologies are virtual assistants and predictive
60%
analytics
Top AI use cases are dem and forecasting and realtime
89%
tracking
Both in-house and embedded Al-enabled OTS products are
89%
preferred
Limited Gen AI production cases, although amongst the
33%
better-performing sectors
Al risk and ethics frameworks formalized by few firms despite
59%
standardized datasets

Major drive to attain operational efficiencies for long-term 75%

 65

AI Adoption Index 2.0

TM&E: AI Adoption Deep-Dives

AI Strategy and Impact – 2.01

AI Implementation Strategy
• 17% of TM&E companies have either a transformation-
based or KPI-linked AI strategy, better than most
Transformation-Focused/ sectors, however, significantly low for an increasingly
17%
Aligned with Business KPIs digital-native sector.
• Another 23% have small-scale or point-solution

Small-Scale Adoption strategy.

23%
Focused • 89% of TM&E companies’ sales and marketing
functions implement AI, for real-time recommendation
engines and pricing.
Ad-hoc/PoC-Heavy 60% • 88% of TM&E companies use virtual assistants and
70% use predictive analytics.

AI Investments – 2.35

No Budgets Planned 21% • In sharp contrast to their majorly ad-hoc AI strategy,

46% of the TM&E companies indicate having some
Ad-hoc/Part of IT dedicated AI budgets, 24% at enterprise-scale. This
33%
Budgets
could largely be the difference between having a

Low-End/BU-Level IT strategic plan vs. an execution-first focus, although the

22%
Budgets former is crucial for achieving scale.
• 80% of the companies indicate having increased their
Enterprise-Scale
24% FY24 AI spend by up to 10%, a potential fallout of not
Dedicated AI Budgets
having a strategic plan to foresee funding needs.

AI Talent and Operating Model – 2.59

AI Ownership and Execution

• 61% of AI initiative budgeting and execution ownership
sits with Central IT heads, 16% with dedicated AI teams,
5%
highest across sectors.

21% • 1-in-5 companies choose to establish dedicated AI

AI initiatives 39%
teams for executing the AI projects.
are
managed • TM&E sector enterprises generally house fully functional
by…
IT teams and that shows in their limited inclination for
Need-based teams
Cross-functional teams outsourcing AI projects.
35% Dedicated AI teams
Outsources/ PMO-managed
 66

AI Talent Strategy
Report | August 2024

TM&E sector priorities in developing AI talent in the next 12 months

Reskilling non-AI technology

#1
workforce for AI roles
• 75% of the TM&E companies indicate significant
hiring, retention, and skilling challenges. This
Upskilling existing AI employees from challenge also stems from the fact that just 5%
#2 of TM&E companies prefer outsourcing (above
base-level AI skills
chart) Ai initiatives, the remaining seeking to build
capabilities internally.
Scouting for research talent from
#3
academic institutions, and hiring
Generative AI experts on contract

Data and Technology Readiness – 3.06

• 68% of TM&E companies have modernized

Standardized
15%
Enterprise Data applications portfolio.
• 94% companies opt for on-cloud deployment,
Standardized
38% although majority prefer public or private cloud
BU Data
but less so, hybrid cloud.
BU Data in Silos 42% • Data privacy to protect sensitive information and
enterprise-scale data consistency are key data
Inadequate management priorities and this focus is reflected
5%
Business Data
from the level of silo-ed BU data in the sector
firms.

AI Use Cases – 1.41

Companies Shortlisting Companies PoCing Companies

Use Cases Use Cases Productionizing PoCs

71% 65% 34%

• TM&E companies lead in their ability to shortlist AI use cases, and this shows in the speed to PoCs.
• Prominent use cases are churn prediction and content personalization and recommendation engines
 67

AI Adoption Index 2.0

Generative AI Strategy – 1.82

Companies Conducting Companies

PoCs Productionizing PoCs
• TM&E companies exhibit moderate rate of
Generative AI POCing and production level
activity.
51% 35% • 56% indicate modest impact from Gen AI cases
that have been put to production environment

AI-Led Innovation – 2.43

Patents Filed Innovation Approach

41% of TM&E companies have filed up to 5 AI Majority prefer in-house innovation and AI
patents between 2020 and 2023. platformizing while 25% sponsor academic
research.

AI Ethics, Governance, and Controls – 3.57

Adoption of AI Ethics & Governance Frameworks

48%
29%
16%
7%

No AI Ethics Frameworks In Early Stages of Model Well-Documented and Integrated with Enterprise
Implemented Deployment Formalized, Mostly Company- Risk Management, Aligned
Specific Norms with Regional/Global Norms

Audit & Control Mechanisms for AI Risk Mitigation

63%

24%
7% 5%

No Formal AI Risk Ad-hoc monitoring or audits Formal risk assessment Integrated AI risk
Assessment or Audit Plan based on business needs in parts with compliance, management focused on
planned monitoring and continued enhancements with
audits external evaluation

• TM&E companies lead across sectors in establishing formalized and well-integrated AI ethics, risk, and
governance frameworks. Coupled with the least proportion of companies indicating having no formal
mechanisms, the sector stands out in using AI responsibly.
 68
Report | August 2024

AI-Led Sustainability Goals – 3.25

Top AI-Enabled Sustainability Impact Areas

Sustainable Operational Efficiency

Decision-Making Gains • One of the top sectors intending to use AI to
make long-term sustainable business decisions,
Healthcare and Pharmaceuticals sector may

71% 16% gain significantly by using AI to determine more

sustainable and adaptive patient care models of
the future.

TM&E: Major Challenges in Scaled AI Adoption

Challenges
Ineffective data and cybersecurity capabilities 87%

Data
Ambiguity on handling data privacy and regulatory
compliance 82%

Lack of AI Outcomes
Ambiguity with aligning AI and business outcomes 73%

Alignment
Limited or no measurable RoI from PoCs 67%

Limited or no measurable RoI from at-scale deployments 50%

Commitment

Top leadership commitments 86%

Leadership
Limited

High TCO & financial investment 52%

Lack of skills to integrate existing ITOps with AIOps 71%

Lack of specialist, experienced strategy skills in AI 58%

Challenges
Talent

Lack of domain skills needed for creative use case thinking 26%

Lack of domain specialist technical skills for building and

22%
testing AI solutions/models
 69

AI Adoption Index 2.0

7. Logistics and Transport

2.54 | Enthusiast

Emerging Trends in Transport and Logistics’ Digital and AI Adoption in 2024

India’s logistics and transportation sector, comprising rail, road, air, port, and inland waterway infrastructure, is
one of the largest globally, and contributes ~14% to Indian GDP. The sector is a major employment supporter for
over 20 Mn people. Logistics transformation is considered a critical pillar to India@100 transition to a developed
$26 Tn economy.

Massive initiatives under National Logistics Policy on dedicated freight corridor, integrated logistics parks, and
multimodal logistics connecting major and inland locations, offers an immense opportunity to design, build,
and optimize operations with AI at the core for maximum efficiencies and minimum cost-to-GDP ratio, which is
currently amongst the highest worldwide.

AI is being extensively leveraged by several digital-first logistics operators, such as the shipping services of
large ecommerce companies, DTC companies, and even traditional logistics players that have transformed into
tech-first players. Real-time tracking and supply chain visibility, warehousing and inventory optimization, and
increasingly, use of Gen AI in contracts management, summarization, and generation are some top applied AI
use cases.

Transport and Logistics Companies’ AI Adoption Highlights in 2024, percent respondents

Dominant AI trends across Transport and Logistics companies, agnostic of size or digital maturity

Transport and Logistics companies have enterprise-scale

65%
transformation-led AI strategy

With the strong focus on driving business growth 91%

With a shift in favor of some dedicated AI budgeting 50%

Owned and managed by central IT teams 61%

More often with cross-functional and in some cases,

56%
dedicated Al teams
Transport and Logistics firms report using BU-leve or firm-
61%
wide standardized data
And a strong preference for on-cloud AI development and
93%
deployment

Most used AI technology is virtual assistants 66%

Top Al use cases are customer churn prediction and content

50%
personalization

Embedded Al best-of-breed solutions preferred 45%

Limited Gen AI production cases, although amongst the

33%
better-performing sectors
Strong AI ethics, risk, and governance with high level of
82%
enterprise-level frameworks
Transport and Logistics firms aim to drive sustainable
75%
operational efficiencies with AI
 70
Report | August 2024

Transport and Logistics: AI Adoption Deep-Dives

AI Strategy and Impact – 1.99

AI Implementation Strategy

• At 35%, the sector enterprises represent the top two

Transformation-Focused/ sectors in building a transformation and outcome-
35%
Aligned with Business KPIs linked AI strategy.
• Also, the highest presence of small-scale adoption
Small-Scale Adoption
Focused
29% focused AI strategy, with 29% companies following
this strategy.
• 88% of Transport and Logistics companies’ IT,
Ad-hoc/PoC-Heavy 36%
warehousing, and transport management functions
leverage AI, for inventory management based on
demand forecasting and for real-time fleet and
product tracking.

AI Investments – 2.33

AI Investment Strategy

No budget planned
21%
or allocated • Transport and Logistics companies lead when it
comes to enterprise-scale dedicated AI budgeting,
Ad-hoc budget 33% at 24% of the survey set.
• 71% companies increased budgets by up to 30% in
Lower-end spending with
22% FY24, compared to FY23
dedicated budget
• Remaining 29% kept it the same.
Enterprise-level
24%
dedicated budget

AI Talent and Operating Model – 2.53

AI Ownership and Execution

5%
• 83% of Transport and Logistics companies leverage
11% BU-led AI budgeting and execution.
28%
• Cross-functional teams are preferred, likely due to
AI initiatives major value chain dependencies that need multi-
are managed domain capabilities to build specific AI use cases
by…
for the sector.
Need-based teams
• At 5%, one of the lowest propensities to leverage
Cross-functional teams
56%
Dedicated AI teams outsourced AI services.
Outsources/ PMO-managed
 71

AI Talent Strategy

AI Adoption Index 2.0

Transport and Logistics sector priorities in developing AI talent in the next 12 months

• ~50% of Transport and Logistics companies reveal

#1 Hiring fresh STEM talent
facing no challenges with regards to AI talent – likely
due to preference for abundant entry-level talent and
high churn in the industry that allows periodic talent
Reskilling non-AI technology refresh. On the flip side, this may affect expertise
#2
workforce for AI roles building for scaling-up AI.

• Another 25% indicate challenges across the board

– hiring, retaining, and reskilling workforce for AI
Hiring Generative AI experts on
#3 relevance.
contract

Data and Technology Readiness – 3.36

Standardized • 84% of Transport and Logistics companies have

35%
Enterprise Data standardized data, highest of all sectors.
• 91% indicate having a modernized applications
Standardized
49% portfolio.
BU Data
• ~95% companies opt for cloud-based AI
BU Data in Silos 11% development and deployment.
• Data access for cross-functional innovation, data
Inadequate security from unauthorized access, and enterprise-
5%
Business Data scale data consistency are top data management
priorities.

AI Use Cases – 1.73

Companies Shortlisting Companies PoCing Companies

Use Cases Use Cases Productionizing PoCs

78% 78% 76%

• Highest rate of use case identification across sectors, coupled with PoCs and PoC-to-production.
• Prominent use cases are demand forecasting for inventory management and real-time tracking
 72
Report | August 2024

Generative AI Strategy – 1.67

Companies Conducting Companies

PoCs Productionizing PoCs • Empirical rate of Generative AI PoC and
productionizing.
• 58% indicate modest impact from Gen AI cases
34% 23% that have been put to production environment.

AI-Led Innovation – 2.13

Patents Filed Innovation Approach

5% of Transport and Logistics companies Nascent, ad-hoc approach which indicates no

published between 6-10 patents between 2020 real preference for a specific way to research or
and 2023. innovate with AI.

AI Ethics, Governance, and Controls – 2.91

Adoption of AI Ethics & Governance Frameworks

35%

24%
21% 20%

No AI Ethics Frameworks In Early Stages of Model Well-Documented and Integrated with Enterprise
Implemented Deployment Formalized, Mostly Company- Risk Management, Aligned
Specific Norms with Regional/Global Norms

Audit & Control Mechanisms for AI Risk Mitigation

33%
29%
25%

13%

No Formal AI Risk Ad-hoc monitoring or audits Formal risk assessment Integrated AI risk
Assessment or Audit Plan based on business needs in parts with compliance, management focused on
planned monitoring and continued enhancements with
audits external evaluation

• Transport and Logistics companies perform in-line with other sectors, although stricter AI risk management
would be warranted as the sector deals with multi-dimensional decision-making that impacts the entire value
chain and other sectors.
 73

AI Adoption Index 2.0

AI-Led Sustainability Goals – 3.27

Top AI-Enabled Sustainability Impact Areas

Sustainable Optimal
Decision-Making Energy Use • Transport and Logistics sector costs India 14%
of GDP annually, and experts believe that a large
portion of this cost can be saved by improving
efficiencies in existing operations and value
75% 7%
chain integration, thereby improving the financial
performance of the sector.

Transport and Logistics: Major Challenges in Scaled AI Adoption

Challenges
Ineffective data and cybersecurity capabilities 45%

Data
Ambiguity on handling data privacy and regulatory
compliance 36%

Lack of AI Outcomes
Ambiguity with aligning AI and business outcomes 68%

Alignment
Limited or no measurable RoI from PoCs 67%

Limited or no measurable RoI from at-scale deployments 55%

Commitment
Top leadership commitments 80% Leadership
Limited

High TCO & financial investment 71%

Lack of skills to integrate existing ITOps with AIOps 64%

Lack of specialist, experienced strategy skills in AI 60%

Challenges
Talent

Lack of domain skills needed for creative use case thinking 58%

Lack of domain specialist technical skills for building and

55%
testing AI solutions/models

• The sector struggles with significantly low top leadership and funding support.
• Logistics management systems often interact with operations of production units and hence need IT-OT
systems expertise, revealing the challenge due to lack of access to IT-OT skills.
 74
Report | August 2024

Recommendations to
Fasttrack India’s AI Maturity
 75

AI Adoption Index 2.0

#5
Recommendations to
Fasttrack India’s AI Maturity
Way Forward

India’s agility to AI maturity is critical, and challenges in this journey are more systemic than evolutionary.
According to UNESCO, of the 193 member countries, only a handful have disproportionately grown their
investments in AI in the last decade, over 28X in some cases. India has significant ground to cover to be in the
coveted club. While AI is the bedrock of most Indian technology startups, end user enterprise adoption in India
is crucially wanting. Success with AI can have quite divergent formulae for large organizations vs. the small and
medium-sized businesses (SMBs), depending on the complex interplay of finding adequate funding and talent
supply, selecting the right use case(s) to scale and prove RoI, and leadership commitment to sustain foundational
data and tech stack investments to scale AI usage.

Striving Towards Scaling AI Adoption in India

Large Enterprises

Data Discipline is the New Company Value

Data readiness has significantly bettered in Index 2.0, yet it needs the most work in today’s
Gen AI context. Data standardization, availability, and security – all three are crucial, but
conflicting goals that need creative thinking to build the data discipline framework for next-gen
AI technologies.

Strategic Partnerships are Crucial for Speedy Action

Long-standing technology partners can effectively “consult” enterprises on the balance between
opportunity cost of not using or selectively using AI today against the total cost of scaled
AI deployment in the near-mid term (12-36 months). AI is rapidly changing for a longer-term
consideration.
 76
Report | August 2024

AI is Impactful with Innovation, Not Just Efficiency Goals

Enterprises are barely innovating business models, product designs, and processes with AI,
where real AI potential lies, in lieu focusing on short-term efficiency gains that can be a crucial
but only an initial validation to scale AI. Enterprises filing patents in AI report disproportionately
low talent challenges.

AI Risks are Real and Need Careful Handling

AI risk management involves many design choices for firms in integrating it with management
of many other risks related to data privacy, cybersecurity, data ethics, reputational and
sustenance risks. Sandboxing and well-defined guardrails for responsible use of data in AI, and
of AI for business outcomes is crucial.

AI Will Need Energy, Finding Sustainable Sources is Key

A World Economic Forum study reveals that the computational power needed to run the
worldwide AI instances is doubling every 100 days! Enterprises will have to rethink their data
center and cloud strategy alongside the AI strategy to minimize energy usage, while also
planning offsetting investments for the long term.

Small and Medium-Sized Businesses (SMBs)

Nasscom AI and Meta jointly conducted a study on the current adoption and potential value of AI for tech
MSMEs. 94% of the participating MSMEs expressed their belief in AI’s potential to build & grow their business.
However, these companies cited challenges spanning from resource constraints and limited access to AI
capabilities, to lack of specialized AI talent and concerns about data privacy and security.

Contextual Use Cases Key to SMB Adoption

AI use cases that solve for systemic sector-specific problems, such as demand forecasting for
a seasonal goods supplier, are more important than good-to-have or innovation-oriented use
cases.

Tech SME Partnerships to Kickstart AI Initiatives

Tech SME-provided AI solutions can be a cost-effective way for SMBs to start their AI journey,
as they build organizational awareness, capabilities, and investment resources for larger AI
projects.
 77

AI Adoption Index 2.0

Leadership Commitment to Build PoC-to-Production Agility

Sustained leadership commitment for AI initiatives is wanting even in large and somewhat more
mature companies, and majorly challenging in SMEs. It can prove critical in attracting the right
talent, finding best-aligned use cases, and creating a fail-fast culture needed to work with AI
technologies.

Data Governance Understanding is Critical

Data quality is of critical concern across the board, more so with SMEs with limited resources for
overall technology maintenance and upgrades. Further, SMEs cited lack of awareness of data
protection laws in India, underscoring the importance of data governance understanding before
implementing AI.

Peer Learning and Support Systems Can be Game-Changing

According to the nasscom AI – Meta study, 78% SMEs reveal their struggle with adopting AI
due to limited awareness, and their willingness to scale AI if peer learning and collaborative
experimentation support is available.

India’s continuing struggle with scaling-up AI adoption requires four challenges to be mitigated – firstly, having
good quality, consistent, standardized input datasets for AI/ gen AI models; secondly, breaking the iron triangle
of leadership commitment, adequate budgeting, and demonstrable RoI; thirdly, establishing auditable, ethical,
and bias-minimizing guardrails around AI datasets, algorithms, and outputs, and finally, building a mission-scale
initiative to develop deep data science and AI skills pipelines for India. This Adoption Index aimed to highlight
the real achievements and ongoing challenges on the journey to AI maturity global AI leadership.
 Appendix
78
Report | August 2024
 79

AI Adoption Index 2.0

#6
Appendix

Survey Respondent’s Profile

Respondents selected across the 500 responding organizations are senior executives heading IT/emerging
technologies department across the seven sectors.

Revenue Segmentation Business Type Segmentation

Others
Small: up to
6%
₹500 Cr
22%
Large: Publicly-listed 21%
36%
> ₹5000 Cr

73%
42%
Privately-held
Medium: up to
₹500-5000 Cr

Sector Segmentation

Transport & Logistics Banking, Financial Services and

Insurance (BFSI)
11% 16%
Telecommunications,
Media & Entertainment
17%

16% CPG & Retail

15%
10%
Manufacturing
Energy & Utilities
15%

Healthcare & Pharmaceuticals

 80
Report | August 2024

Acknowledgments
We would like to thank the 500 survey participants and the 20+ industry leaders that we interviewed 1-to-1 for
their time and valuable insights that helped us develop this report.

We would also like to thank our survey partner, Refract Consulting, and our knowledge partner, EY India for their
support through the project.

nasscom Team EY India Team

Sangeeta Gupta Mahesh Makhija

Senior Vice President and Chief of Strategy Leader, Technology Consulting
nasscom EY India

Achyuta Ghosh Abhinav Johri

Senior Director and Head of Research Partner, Cloud, Digital and Emerging Technology
nasscom Insights EY

Namita Jain Rohit Pandharkar

Director Partner, Data and AI Consulting
nasscom Insights EY

Ankit Bose Prosenjit Datta

Head Leader, Content and Knowledge CoE
nasscom AI EY

Madhav Bissa Vikram Choudhury

Program Director Associate Director
nasscom AI EY

Saikat Saha Debabrata Mukherjee

Director Senior Manager
nasscom AI EY

Radhika KTP
Senior Technology Writer
EY

Apeksha Srivastava
Consultant
EY

Rubal Charak
Consultant
EY
 81

AI Adoption Index 2.0

About
Nasscom represents the voice of the $250 billion+ technology industry in India with the vision to establish the
nation as the world’s leading technology ecosystem. Boasting a diverse and influential community of over
3000 member companies our network spans the entire spectrum of the industry from DeepTech and AI start-
ups to multinationals and from products to services, Global Capability Centres to Engineering firms. Guided by
our vision, our strategic imperatives are to accelerate skilling at scale for future-ready talent, strengthen the
innovation quotient across industry verticals, create new market opportunities - both international and domestic,
drive policy advocacy to advance innovation and ease of doing business, and build the industry narrative with a
focus on Trust, and Innovation. And, in everything we do, we will continue to champion the need for diversity and
equal opportunity.

nasscom Insights is the in-house research and analytics arm of nasscom generating insights and driving thought
leadership for today’s business leaders and entrepreneurs to strengthen India’s position as a hub for digital
technologies and innovation.
 82
Report | August 2024

Disclaimer
The information contained herein has been obtained from sources believed to be reliable. nasscom and its
advisors & service providers disclaim all warranties as to the accuracy, completeness or adequacy of such
information. nasscom and its advisors & service providers shall have no liability for errors, omissions or
inadequacies in the information contained herein, or for interpretations thereof. The material or information is not
intended to be relied upon as the sole basis for any decision which may affect any business. Before making any
decision or taking any action that might affect anybody’s personal finances or business, they should consult a
qualified professional adviser.

Use or reference of companies/third parties in the report is merely for the purpose of exemplifying the trends
in the industry and that no bias is intended towards any company. This report does not purport to represent
the views of the companies mentioned in the report. Reference herein to any specific commercial product,
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The material in this publication is copyrighted. No part of this report can be reproduced either on paper or
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