Myth and Reality of AI impact
While over the years there have been numerous developments in the realm of Artificial Intelligence (AI) in India — both academically-driven, as well as percolations in business models and consumer demands; in recent past, commercialization of AI and its use in core business processes has somewhat picked up.
Yet, our Corporate Profit to GDP Ratio is at an all-time low of 2.9 per cent. The figure is more striking when compared with other global peers, including the US, where despite lower GDP growth vis-à-vis India, the Corporate Profit to GDP Ratio is between 9 – 10 per cent.
This is a clear indicator that it is time for Indian enterprises to be more amiable towards emerging technologies, especially AI, to improve business profitability and strengthen core operations.
According to data computed by a cognitive business and finance intelligence platform, Unearth PrivCo, there are approximately 450 Artificial Intelligence (AI)-based start-ups and businesses currently based in India, which canbe leveraged to acquire digital automation products to help drive efficiencies and experiences for B2B and B2C consumers in India. While 95 per cent of these start-ups have enterprise and industrial solutions, the remaining 5 per cent focus on B2C or consumer solutions.It has also been estimated that such AI-led start-ups pan India, will be generating ~$180 to $200 million revenue annually. This data clearly reveals the huge scope of AI and AI-led technologies, and the need for these start-ups to make a stronger and more operational efficiency & bottom line impact driven business pitch for large technology and non-IT enterprises.
However, what is interesting to note is that while 75 per cent of these AI firms were started between 2014 to 2018; Open Software Technologies and Absolute e-Data leveraged Natural Language Processing (NLP) for automating Business Intelligence/ Visualization way back in 1999 and 2000. This implies that the AI genie has been long out of its lamp, and the time has come to address and measure its impact on businesses and humanity, in general.
While many small and large enterprises – across industries and sectors like banking, automobile & manufacturing, energy, textiles, natural resources, retails, consumer goods and so on – are betting big on Artificial Intelligence; most Indian enterprises are yet to make deep inroads in utilizing the true potential of technologies as big as AI. For instance, the table below encapsulates top enterprises based on Market Capatilization (excluding IT Sector) that are already leveraging AI capabilities in their business or investing heavily in AI. Yet, the trend remains that majority of these enterprises are leveraging AI for either enhancing consumer experience through chatbots, or for increasing operational efficiency.
While it is encouraging to see the willingness of these enterprises to test the AI water, there is still immense potential of AI that remains untouched.
This becomes more apparent when the list of world’s top 20 technology giants (by market value) is analyzed. As the table below indicates, there is not even one Indian technology company that features in this list. Yet, one thing which is common amongst all these enterprises is that they are all early adopters and investors in AI technology.
Earlier this month, Reliance Jio was in news for hiring a team of professionals — led by Akash Ambani — to work on AI and its multiple use cases. This news came at the backdrop of the announcement made by Reliance Industries Chairman Mukesh Ambani at the beginning of the year, to invest INR 60,000 croreand “make Maharashtra the birthplace and cradle of the Fourth Industrial Revolution in India”.
Enterprises like Reliance, despite being non-technology focused companies, are making a strong caseby investing and hiring skilled professionals in the domain of emerging technologies like AI. In fact, it has been estimated that the AI-led start-ups and established players currently employ 170,000 AI professionals jointly – leading to creation of 4,500 to 5,000 AI jobs each year.Further, Unearth PrivCo has estimated that the government of India, out of the ~$8.5 Billion investment in IT, is likely to invest $800 to $900 million in AI over the next 5 years.
Given this, $5 Billion is estimated to be the opportunity size of AI market in India approximately, with both listed and non-listed enterprises. This implies that India is right at the cusp of an AI revolution, and it is time for Indian enterprises to leverage AI in their core businesses.In the coming few years, AI will exist as a layer atop every business process — from customer service and marketing to product development/ R&D and sales — across every industry. The early adopters of this technology will not just benefit from increased business profitability, but will also contribute in shaping the future.