Indian Startups, GCCs More Proactive In Adopting Generative AI Technology: EY Report

An analysis of the state of generative artificial intelligence adoption in India in 2024 shows that even as enterprises have rolled out proofs of concept to production, organisations vary at different levels of adoption maturity, according to a report by EY India.

The report showed that domestic enterprises are carefully considering the enterprise-grade functionality and reliability of gen AI, while digital savvy enterprises such as startups and global capability centres are moving faster in rolling out POCs to production.

The EY analysis of India’s top 50 most valued unicorns showed that 66% are already using AI or gen AI technology, indicating that startups have been more proactive in terms of adopting AI technology as compared to the legacy players. About 15–20% of POCs by domestic enterprises have been rolled out into production.

GCCs are embracing gen AI for innovation, rolling out 30–40% POCs to production. With their deep talent pool in AI/machine learning, GCCs also hold the key to unlocking AI-powered opportunities. 

The report highlighted three issues—hallucination of large language model responses, data privacy and sovereignty, and the cost implications of deploying gen AI in production—as the key challenges for organisations in making investment decisions.

Mahesh Makhija, partner and technology consulting leader at EY India, said, “Enterprises need to make the shift from ad hoc experiments to deploying 'fit for purpose' use cases for immediate value creation and long-term programmes that provide functional transformation.”

“They will not only have to build their enterprise AI platform but also keep a close eye on cost implications/total cost of ownership and stay agile to adopt a hybrid approach due to lack of India availability of different models,” Makhija added.

Most Implemented Gen AI Use Cases Among India Inc. 

About one-third of the use cases are on utilising gen AI to execute point tasks using intelligent assistants. Approximately 25% relate to marketing automation, enabled by text generation and multimodal capabilities such as text-to-image and text-to-video. Document intelligence is emerging as a key opportunity, with around 20% of use cases focusing on document summarisation, enterprise knowledge management, and search.

Additionally, gen AI assistants are increasingly powering enterprise intranets, and companies are exploring gen AI for customer-facing chatbots, enhanced user experience, coding assistants, and internal process automation.

Significant AI Investments Have Been In Early-Stage Companies

India’s AI investment landscape is rapidly evolving, marked by strategic emphasis on AI, internet of things, and government-driven AI initiatives. Unlike the first quarter of 2023, in which investments were in healthcare, life sciences and financial services sectors, the first quarter of 2024 witnessed diversification into various sectors such as technology, industrial and energy utilities, and consumer products goods.

Investors in AI companies are looking at three facets while evaluating potential investees: estimating AI performance and its subsequent impact, understanding the cost implications of AI, and considering AI compliance factors. 

Availability Of GPU Infrastructure To Accelerate Adoption

The availability of compute is a critical requirement both to train models and to incorporate gen AI into applications. GPUs (the chips which are used for AI) have become expensive as demand has risen in the gen AI era. However, the government, large business groups, and startups are building domestic and localised GPU infrastructure, which will boost enterprise adoption of gen AI, the report noted.