“A year spent in artificial intelligence is enough to make one believe in God”
– Alan Perlis, early computer science pioneer
It’s futile to deny it, but Artificial Intelligence(AI) is no longer the buzzword of tomorrow, it’s a striking reality of today, and the enterprise landscape of AI has never looked more promising than it does today!
By 2022, the global business value created by AI will touch a whopping $3.9 trillion, and spending on AI systems is expected to reach $79.2 billion1. Forecasts estimate that AI technologies will pervade every software product2 next year, and AI software revenue is expected to grow to 118.6 billion by 20253. All these are tantamount to the fact that AI is no longer just a differentiator but a core part of business functions!
In India, the enterprise AI market is heading towards much wider adoption. An industry expert associates the Indian Enterprise Market for AI to be estimated to be $100 million, growing at 200-250% CAGR. Futuristic growth of this sort clearly underscores the potential in the big revolution that business leaders should prepare for!
AI is increasingly being used by software vendors and AI solution providers as embedded products and services to deliver more value across a host of business problems. This journey has roots in core business applications like ERP & CRM, but today, almost every sector is using AI in their auxiliary processes as well, such as customer support, recruitments sales, or marketing. For example, a majority of banks and insurance companies in India have AI-driven chatbots that are fast becoming the first point of customer interactions. While the scale and complexity of these implementations may vary, it’s soon becoming the norm in the market.
C-suite executives have gone beyond committing ‘digital experimentation’ to hardcore Digital Transformation. This has led to a surge in demand for enterprise-ready AI services, applications, and tools across organizations. There are plenty of forerunners in the market: Enterprise AI solutions like the IBM Watson platform, which is portable across any cloud, is used by customers to manage multiple customer service touchpoints like chatbots, email or phone, forecast inventory and demand, or improve customer care. Salesforce Einstein empowers sales and support while Google’s latest offering — Contact Center AI provides the best of Google’s AI and machine learning solutions with software that allows businesses to improve customer experiences and operational efficiency at the same time.
As the industry evolves, certain sub-sectors that are creating disruption have risen to prominence; Enterprise AI has made inroads in areas like diagnostics (healthcare), salesforce automation (CRM), automated trading (financial services) and anomaly detections (oil & gas, utilities). We believe as the adoption grows, AI will become increasingly interdependent on core business functions.
“It’s not just AI, but AI+X that is going to be the game-changer, X being your core business function. The future is about AI being tightly coupled with all our everyday tools until it becomes an integral part of existing tools and processes”
Ramprakash Ramamoorthy, Product Manager, Zoho Labs
As companies look for additional capabilities to turbocharge innovation — we believe large-scale AI consultancies will play a critical role in bringing in pre-built customizable solutions that can drastically reduce the time-to-market and speed up innovation. With deep domain expertise and trained workforce, AI consultancies are better positioned to educate customers, offer pilots, and scale up the use cases.
According to our 2017 report on the State Of Analytics In Domestic Firms In India4, captives account for 75% of the Indian analytics market, while service providers account for 5% market share. With the adoption of AI solutions increasing, we foresee rapid expansion in the number of use cases tailored for specific business functions creating an opportunity for AI consultancies to bring deeper relationships and in-depth domain knowledge to the table.
“Unlike earlier technology cycles, we see India being at par with the rest of the developed countries concerning technologies such as AI, ML, and others. Indian companies have mandated their CIOs for effective adoption of cognitive just as much as the focus is on the cloud”
Anil Bhasker, Business Unit Leader Analytics and Big Data, India/South Asia, IBM India
“We are seeing some of India’s largest IT firms utilizing AI extensively internally or with consulting companies. With the potential to revolutionize both the services offered by consulting firms to their clients and how consultants work, AI is imperative”
Hemal Shah, Senior Vice President & Regional CIO, Asia Pacific, Dell Technologies
“We’ll continue to see increasing adoption of enterprise AI solutions as organizations further optimize their IT infrastructure, striving for faster digital product and service development. There will be continued adoption of end-to-end enterprise data management to serve as the foundation for enterprise AI and build an ecosystem of change across analytics and business processes. Also, the growth of digital platforms, which is making it easier for organizations to develop AI applications, will drive business model innovation and optimize the use of Big Data, AI, and IoT”
Ronald Van Loon, Digital Transformation Influencer
The Re-envision of Digital Transformation is responsible for the flutter in global markets. We need to take a moment to comprehend that digitization isn’t merely changing business models or creating new businesses, but it’s about keeping up with faster and better techniques of accessing, utilizing, and getting value out of the existing tonnes of data. The speed with which enterprises are getting onto the digital bandwagon speaks of the critical urgency in which transformation initiatives are being carried out by organizations.
But despite the buzz, organizations aren’t able to fully seize the opportunity presented by AI and turn it into actionable results. IT leaders across sectors face tremendous challenges at the start of their AI journey. While we often hear about AI PoCs advancing from the project stage, success is limited as deployments often fail to turn into actionable items. In addition to this, there is no established playbook for enterprise leaders to follow.
Most organizations are very early in this paradigm shift, and while CXOs know there’s value in AI, they are nervous about making bets. The reason is that to unlock real value from AI, there has to be a perceived tangible return on investment (ROI), or the technology has to be assessed against the key performance indicators. Another hurdle is that most companies lack the AI-specific skills to ‘do it alone’ and lack the resources to launch test-and-learn cycles. In addition to this, leaders are also looking to embrace AI because they don’t want to fall behind in the AI journey.
Against this backdrop, our report’ State of Artificial Intelligence in India 2019′ with BRIDGEi2i takes stock of the enterprise AI market in India, the AI player landscape, low-risk, revenue-generating PoCs that organizations can get started with and the rise of AI-as-a-service economy.
What Does the Report Cover?
Large-scale advancements in AI over the last five years have presented tremendous opportunities for companies to transform the customer experience, automate business functions, and broaden their product offerings. To provide a more informed view of the Enterprise AI market in India, we decided to perform our own research into how users are adopting AI technologies. The report also offers a snapshot of the current state of the rapidly changing AI industry, looking through the lenses of suppliers and consumers.
The report looks at the scale of opportunity in AI for large-scale organizations that are driving the AI ecosystem in India and how the C-suite can take advantage of PoCs that can deliver the best ROI. It is crucial for business leaders to have a thorough understanding of the AI ecosystem and to target the right PoCs, which can provide the maximum ROI.
The report answers questions around
- How AI/ML is finally getting real for enterprises
- High-value use cases enterprises can get started with
- How to measure tangible results of AI deployment
- Why India is Poised for Growth in the AI Market / India’s Contribution to the Global AI Industries
Who Should Read This Report?
This report is aimed at Executive Leaders, IT Decision Makers, senior managers, data science heads, and investors tasked with the responsibilities of driving digital transformation, innovation heads, or enthusiasts building delivery capabilities and CoEs.
Key Market Dynamics
According to a PwC report, “The business opportunity that AI provides is so vast that by 2030, the global GDP is estimated to 14% higher standing at $15.7 trillion just as a direct result of AI. This will be augmented by organizations trying to develop an array of AI-based services that can scale across a wide spectrum of software development, different industrial applications, and use cases.”
- The Indian AI sector has seen a total investment of$150 million5 in more than 400 companies over the past five years.
- Industry body NASSCOM6 indicates over 1,200 new advanced technology startups got added to the ecosystem in 2018, with data analytics being the most significant contributor.
- Due to its sheer size, BFSI is the largest adopter of AI followed by Healthcare and Logistics.
- There is an increase in demand for products and services which can attract more investment towards the R&D in the AI sector.
- With conglomerates and enterprises having a big share in India’s market, there is huge scope for AI-based enterprise solutions in the country.
Key Takeaways
- C-suite executives can gain an overview of Enterprise AI landscape and key players
- Overview of AI Service Delivery models and why AI as a service economy will drive the market forward
- Top use cases with high re-usability & ROI
- Key criteria AI Service firms must meet
Enterprise AI landscape in India
For many Indian organizations, the rapid rise of AI has become a top corporate agenda with organizations deeming it a critical part of their organizational strategy. IT Decision Makers and Business Leaders want to take advantage of the exponential growth in data and cloud computing. The news cycle is abuzz with Indian conglomerates and new-age companies who are adopting AI technology at large scale and making strategic investments in technical infrastructure and in building the right talent.
“In a nutshell, several factors can be attributed to be pushing the growth of AI in India, including the availability of massively organized and cleansed data sets, the growing sophistication of machine learning and self-improving algorithms and the emergence of hardware”
Prithvijit Roy, CEO, and Co-Founder of BRIDGEi2i
a) Market Size
As per a report7, the AI market was valued at $21.5 billion in 2018 and is likely to reach $190.6 billion by 2025. Meanwhile, the global enterprise AI market is valued at $796.38 million and is expected to reach $9880.4 million by 2023. Research by Accenture9 insists that AI has the potential to add US$957 billion to India’s economy in 2035 if the AI Revolution receives the right support among enterprises, business leaders, and policymakers. India’s AI startup ecosystem is booming with a number of startups working in the domain of machine learning, computer vision and NLP. More than 50 percent of firms in India are working on advanced analytics and computer-vision based AI technologies. India is contributing significantly to the data labelling market, which is where humans teach machines to recognize familiar human patterns, and this business is expected to reach $1.2 billion by 2023, according to the research firm Cognilytica.
b) Investment
India has stepped up the AI game and saw an investment of $73 million10 in 2017. As per our research in 2018, startups with operations in India and globally raised approximately USD$ 529.52 million in funding rounds, and this data includes startups with investment at varying stages of development, from pre-seed to well-funded companies. As per Gartner, the global business value derived from artificial AI is estimated to be $1.2 trillion in 2018, a 70 percent increase from 2017.
c) Adoption by Industry
AI In Finance:
As per our report, the size of the analytics industry in the financial sector is currently estimated to be $1.2 billion (annual) in revenue. Financial institutions have achieved exponential growth and are driving innovation in the industry by building an enterprise-wide analytics capability that is now woven into the key business processes throughout the organization.
Banks and FIs are now investing in several vital dimensions – technology infrastructure, strengthening processes, and people to build sophisticated analytics capability. Some of the top players in this segment are HSBC, American Express, ICICI Bank, Moody’s Analytics Knowledge Services, Citi, JPMorgan Chase & Co., HDFC Bank, Axis Bank, Paytm and PhonePe among others.
IBM and HDFC ERGO General Insurance Company, India’s third-largest non-life insurance provider in the private sector, are collaborating to co-create new AI-based solutions on IBM Cloud, that will redefine customer experience in India. Leveraging IBM Garage11, teams from HDFC ERGO and IBM Services work together to develop and test new solutions that will help to address customer inquiries better, ensure faster turnaround time and draw deeper customer insights for a better omnichannel experience.
AI In Healthcare:
The adoption of AI is reshaping the Indian healthcare market significantly. AI-enabled healthcare12 services like automated analysis of medical tests, predictive healthcare diagnosis, automation of healthcare diagnosis with the help of monitoring equipment, and wearable sensor-based medical devices are expected to revolutionize medical treatment processes in the country. The applications of AI in the healthcare space will be worth INR ~431.97 billion by 2021, expanding at a rate of 40%.
Top players in this segment are Niramai, Sigtuple, Qure.ai, Tricog Health.
Bengaluru-based startup Niramai’s diagnostic platform is now using thermal image processing and machine learning algorithms to enable accurate breast cancer screening. Hospitals are now spending only one-tenth the cost on Niramai hardware compared to mammography machines that cost around ₹1 crore.
AI In E-commerce:
The E-commerce market in India is well-placed. One of the fastest-growing markets in the Asia Pacific driven by innovations in personalization, social media analytics, omnichannel service and sharing economy business models. In 2018, e-commerce and consumer internet companies raised over US$7 billion in private equity and venture capital in 2018, EY report13 indicated.
The interplay of technologies — analytics, AI, cloud, digital, mobility, social and virtualization are driving the industry forward. The innovation is driven by Amazon which committed $5 billion investment in India and Walmart-owned Flipkart which acquired Liv.ai in 2018 to reach the next million users. Some of the key areas where AI is leveraged in the e-commerce sector are recommendation engines, virtual assistants, predictive sales and warehouse automation.
Top players in this segment are Amazon, Flipkart, BigBasket and consumer internet majors Oyo, Swiggy, Zomato, Byjus that are disrupting the landscape.
India’s largest hotel chain Oyo has a Dynamic Room Pricing model that finds the optimum price point to maximize the overall yield – the combination of price and occupancy. The team watches out for hundreds of signals on the demand — from traffic patterns to conversions, upcoming events, data from offline sources and even historical occupancy rates to ensure no room goes vacant. Based on predictive occupancy, the demand exceeds significantly, thereby resulting in an increase in room prices.
AI In Retail:
India is Asia’s third-largest retail market and the world’s fourth-largest after the US, China and Japan. The adoption and use of AI in this sector is on a rise with a significant majority of retailers in India deploying AI or automation technology not just for decision-making but also as part of their operations. At the storefront and behind-the-scene in fulfilment centres, retailers are looking to save costs and boost revenues by deploying AI and automation. AI is deployed in customer-facing aspects and optimizing the supply chain backend to enable web-based sales.
While big retailers in India — Future Group, Shoppers Stop, Reliance Retail and Tata Group are still to hit the mature AI adoption curve, the adoption of technologies represents a big leap forward for the sector. Globally, AI represents a $300 billion+ opportunity for retail companies. Deploying and scaling AI should be the next big objective for these retail majors in India.
Every season, a leading fashion brand launches thousands of products and expects them to get sold at full price. But in reality, they end up discounting all along with End of Season Sales accounting for almost 50% of the total sales. GoFrugal built an AI-based recommendation engine that suggests salesperson how much discount to offer as per the customer profile. By looking at the customer profile, their prior purchase pattern, the engagement with the store, salesperson and product (looks, touch, pick, try) — the ML algorithm can recommend an offer which has been created for just that one garment for that one customer and valid for just that moment. The solutions manage the problem of too much discounting or too less discounting.
Bestseller — the leading fashion company that owns brands like Jack & Jones, Vero Moda & others uses IBM Watson AI capability to predict the right merchandise for the consumer at the right time. With Watson mining deeply into big data, the retailer can determine the right assortment plan for each store, predict the next best product to incorporate into its mix, and improve the efficiency of its supply chain. They are working with IBM Watson AI to predict the next big trend and the most relevant styles, colours and size ratios. Higher relevance means a sharper, better-selling assortment, helping them meet consumer expectations while becoming more efficient.
AI in CPG:
“The world is moving into new ways of doing businesses. Ecosystems of consumption have been formed. There are 4-5 ecosystems formed by Amazon, Alibaba and Tencent in America and China. We are building our own ecosystem with payments, wallet and insurance. In the future, there will be more consolidation in order to form the right ecosystems, he said. “We want to make our ecosystem strong with alliances and partnerships.”
Kishore Biyani, Future Group CEO
The Consumer Packaged Goods market sees a promising growth in the use of AI both globally and at India level. With AI-powered decision-making systems and recommendation engines being developed on a large scale, the industry is ripe for transformation. Experts and decision-makers in the CPG companies can rely on competitive pricing, prevention of customer churn, and optimization of budget allocation in marketing to enhance their margins at the outset. A BCG report states that CPG Companies are leveraging advanced analytics and AI solutions for local assortments, personalized consumer services and experiences, optimized marketing and promotion ROI, and faster innovation cycles.
While there are many brands in India who have adopted AI-powered solutions, Nestle India stands out for an interesting experiment. They introduced NINA, a virtual nutrition assistant in collaboration with an Indian chatbot service provider which could interact with users in a human-like manner and offer real-time, personalized advice on nutrition that is balanced, scientifically correct and customized to their unique needs. This was a huge hit – and a different campaign from the rest.
d) Partnership Ecosystem
“We don’t see large enterprise customers going to specialised AI vendors, rather they will expect their current vendors to adopt/bring AI features to their existing solution stack. As compared to established IT companies and digital disruptors, AI Consultancies and service firms are better positioned to educate the customers, offer pilots and scale up the use cases.”
Kumar Vembu, CEO and Co-Founder, GoFrugal
Partnership ecosystems open a great window of opportunity for organizations around the globe to scale fast and seize the opportunity to drive revenue growth and develop innovative business models. Today, CIOs face incredibly high expectations not just to enable digital transformation, but to build sector-specific solutions/services that can leverage new digital technologies. These digital technologies — AI/ML are also enabling companies to move into adjacent markets and drive revenues. There is a huge scope of opportunity in traditional sectors like banking, insurance, retail and other industry verticals like manufacturing, automotive and logistics to move fast in order to sustain innovation. Large multinationals and companies are finally seeing the value in developing these partnerships to define their own digital strategy and build new business model innovation.
Digital has changed the rules of engagement:
We are seeing businesses pursue two distinct approaches to digital transformation — outside-in and inside-out. While an outside-in approach is largely driven by the market and demand for new digital services, an inside-out approach is about modernizing the core systems and architecting their business for change.
This outside-in approach results in an ecosystem expansion, leading to scope for partnerships with startups, subject matter experts, stakeholders to fill capability, domain expertise, talent gap and to improve the overall corporate strategy.
This presents a huge opportunity for AI consultancies and technology providers to capitalize on this trend by expanding their role in building partner ecosystems and collaborate with companies to create new revenue streams. In the context of AI, the ecosystem can be built for many things — deliver best-in-class products/services, engage diverse participants to build talent, strengthen relationships with peers and add to the diversity of industries.
“You can’t drive Transformation alone. You need partners, co-innovation with customers, continuous re-skilling of talent”
Tiger Tyagarajan, CEO, Genpact
Organizations are leveraging partnership ecosystems by:
- Focusing on creating new revenue streams, driving business growth through collaboration with AI Consultancies/Technology Partners
- Collaborating with technology partners to plug the capability gap and kickstart business model innovation
- Leveraging partnerships to improve business efficiency internally and remove data silos
India’s third-largest bank — Axis Bank went a step ahead and launched Thought Factory, an Innovation Lab in Bengaluru to give Axis Bank a fintech advantage and a better understanding of today’s “technologies and better focus of tech solutions”. The innovation lab partners with fintech startups to deliver the much-needed agility to stay ahead of the curve.
Note: This is the First Part of a three-part series of our study ‘State of Enterprise AI In India 2019’ brought to you in association with BRIDGEi2i. Stay tuned for Part II and Part III.
Check Part II of the three-part series here.
Check Part III of the three-part series here.
