Executive summary

To know how AI is transforming organisations, Deloitte surveyed 200 Indian business leaders and 2,620 business leaders globally, between April 2022 and May 2022. In the second edition of Deloitte’s State of AI in India study, we gathered insights from these leaders to get a sense of how AI has crossed the chasm in India Inc and is gradually becoming a “mainstream technology.” The study also deciphered the impact AI has had on Indian businesses and how Indian businesses are upping their game to make the most of AI opportunities.

Improved business outcomes will drive increasein AIinvestments

There is an increased confidence in AI as businesses plan yearon-year increases in their AI investments compared with the past year (82 percent in 2021 and 88 percent in 2022). However, the fear of a global economic slowdown has introduced some caution in terms of the scale of increase in investments. We expect businesses to refrain from making large capital-intensive AI investments and stick to incremental investments focused on maximising returns from existing AI assets.

The positive sentiment towards AI is supported by the fact that more respondents this year said they were able to achieve intended business outcomes from their AI initiatives to the highest possible degree. An exceptional improvement in payback periods proves AI’s ability to deliver on its promise. Nearly half of the respondents were able to achieve quicker-than-expected paybacks on their AI investments this year compared with less than one-tenth last year.

There isamovetowards greater AIdecentralisation and democratisation

Over the past year, businesses in India appear to have shifted their focus from AI centralisation towards a balanced mix of centralised and decentralised AI practices. Success in achieving business outcomes and tangible returns from AI investments and increasing popularity of democratising technologies (such as low code–no code, and greater proficiency and comfort within the workforce in working with AI) seem to be the key drivers of this change. However, businesses have not completely abandoned practices that help them maintain control and ownership of AI. Establishing AI centres of excellence, creating AI-specific roles, and forming AI ethics boards are amongst the popular governance practices in use.

Theability to scaleAIprojects iskey to sustaining business outcomes

Businesses faced challenges throughout the lifecycle of an

AI implementation project and found scaling the project more difficult than starting one. After the pilot phase is over, continuing to prove business value and maintain ongoing support, and integrating the project into longstanding business processes become roadblocks. The wider adoption of and adherence to best practices, such as MLOps/AIOps is key to sustaining AI initiatives in the long run.

Thetime hascometo build the culture of working “With” AI

Despite the excitement around AI and active measures being taken by businesses to promote the benefits of AI and the general good it can do for stakeholders, there is a palpable and persistent fear amongst the workforce for AI and its ultimate role in job cuts. What makes it a stubborn problem to solve is that this fear is grounded in some truth – most businesses did count automating jobs amongst their top AI use cases. Businesses need to proactively chart out and communicate an acceptable transition plan for jobs that AI will inevitably replace.

Organisations are taking proactive action for AIsuccess

Businesses in India are taking several concerted actions to accelerate AI adoption while maximising value from AI initiatives. Ensuring transparent communication around AI vision and value of working, effective change management, and enabling and incentivising democratic adoption of AI across the workforce, help develop an AI-ready culture.

Businesses have scaled up their efforts to mitigate perceived ethical risks of AI over the past year. This has resulted in more respondents being confident of their organisations’ ability to implement ethical AI. However, adoption of standard AI best practices remains low, limiting organisations’ ability to scale and sustain AI implementation.

Businesses have made progress in imparting AI skillsets to existing workforces. However, that does not appear to have eliminated the need to hire from a highly competitive talent market. This increasing demand for AI talent is further fueled by organisations’ rising preference to build in-house AI teams (rather than relying on external sources).

Businesses are being selective in choosing AI use cases for themselves. Across industry sectors, focus is on niche, industryspecific use cases that would help strengthen core business value drivers and sustain competitive advantage.