AI may become $22 bn market in India by 2027: Nasscom-BCG report

India’s AI market is projected to grow by 35% each year, reaching up to $22 billion by 2027, according to a Nasscom and Boston Consulting Group report.

A large AI talent base and surging investments in the transformative technology are expected to drive the fast-paced growth, the report, titled AI Powered Tech Services: A Roadmap for Future Ready Firms, said.

The report said AI use in technology and government sectors will grow, making up one-third of the AI market by 2027, up from one-fourth now.

Investments in AI

Global AI investments reached $83 billion last year, focusing mainly on data and analytics ($42 billion) and generative AI technology ($23 billion), the report said.

The sectors receiving the most AI funding were technology, banking, and healthcare, respectively.

North America leads in generative AI investments, with India also seeing a notable increase in funding for this technology.

Trends showed Europe was investing heavily in human resources and customer relationship management, while India seemed to be focusing on marketing and advertising, the report said.

Budding AI talent

In terms of talent, India is leading with a rapid increase in AI-skilled individuals, growing 14 times in the past seven years. Despite a 15% expected growth in demand for AI talent in India, the market itself is projected to expand by up to 35%, indicating a shift towards upskilling current employees and moving away from traditional growth models, the study said.

Tech services companies are now hiring more AI and machine learning specialists, with significant increases in positions for AI leaders and engineers. Essential skills in the field include machine learning, Python, and SQL, with GitHub, PyTorch, and Databricks also gaining importance, the study added.

The joint study said there are about 420,000 people working in the AI function across industries.

Globally, the report projects the AI market to reach about $380 billion by 2027 with generative AI expected to form more than one-third of the overall market and financial services being the largest sector.

How companies can stand out

With the use of AI and investments in the sector surging, to stand out in any market, companies need to train not only their project teams but also those in sales, pre-sales, and internal functions, the report said.

“The focus of upskilling in AI and business acumen should start moving to not just the delivery teams, but also sales and pre-sales as well as internal functions, among others,” Nasscom president Debjani Ghosh and BCG managing director Rajiv Gupta said in the report.

“The internal AI agenda needs to function as a living entity- constantly evolving to fit the rapid changes in the tech landscape with robust prioritization practices in place,” Ghosh and Gupta wrote in the editor’s note.