A report titled- "AI-Powered Tech Services: A Roadmap for Future Ready Firms; AI & GenAI's Role in Turbocharging the Industry", released by Nasscom in partnership with BCG, revealed that the AI market of India is growing at a CAGR of 25-35% is expected to reach 17 billion USD by 2027. The report was released on the sidelines of the Nasscom Technology & Leadership Forum 2024.

According to the report, the growth is propelled by factors such as increased enterprise tech spending, India's growing AI talent base, and a significant hike in AI investments. The report read that AI investments have seen a 24% CAGR since 2019 globally, with 2023 seeing investments close to 83 billion USD. According to the report, significant investments were made in data analytics, Generative AI and ML algorithms and platforms.

Significantly, the report says almost 93% of investments made by Indian tech services and made-in-India product players concentrate on digital content, data analytics and supply chain. With the surge in enterprise tech spending, the technology service providers are building a wide array of innovative AI-powered services and solutions, expanding their offerings beyond the traditional IT services, the report stated. It includes the development of proprietary AI and Generative AI platforms, tools for automation, data analytics solutions and bespoke AI applications for exact industry verticals like healthcare, banking & finance and retail, the report mentioned.

According to the report, India has the second highest installed talent base, with 420,000 employees working in AI job functions. India also has the highest skills penetration, with three times more AI-skilled talent than other countries. The country ranks among the top five nations with a 14 times growth in individuals skilled with AI in the last seven years, it said.

As the investments in AI are rapidly increasing, the demand for AI talent in India is also expected to grow at 15% CAGR till 2027, the Nasscom-BCG report said, adding the tech industry in India is already seeing more than 15% growth in AI/ML jobs over the past 12 months with positions like AI engineers rising at 67% year-on-year.

Realising the significance of human capital in the AI journey, leading firms have invested heavily in upskilling and reskilling their workforce in AI and related technologies, with some organisations allocating USD 1 billion over the next three years to upskilling.

Debjani Ghosh, President at Nasscom, said, "Indian tech companies, with the advent of Generative AI, are expanding their portfolios beyond traditional IT and business process management to include AI-driven analytics, intelligent automation, and personalised customer interactions".

She added that these companies are not just adopting AI; they are redefining their service offerings, creating more value for their clients, and setting new industry standards.

According to Ghosh, accelerating this journey will require huge-scale investments in AI skilling, ethical and secure AI development practices and governance frameworks, and a fundamental shift towards a human-centred approach, prioritising transparency and human oversight.