According to the second edition of Deloitte’s State of AI in India survey, about 88 percent of Indian companies expect to increase investment in artificial intelligence this year, up from 82 percent last year.

“Big bets are being placed on AI across all industries, but within these areas life sciences and healthcare are of great importance, possibly driven by the experiences of the last 2 to 2.5 years,” said Prashanth Kaddi, Partner at Deloitte India, in relation to the pandemic.

Of the survey respondents, 60 percent of respondents were from life sciences and healthcare, 56 percent from financial services, 45 percent from technology, media and telecoms, and 35 percent from consumer services who planned to increase their AI investments by more than 20 percent this year.

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While larger organizations are finding it difficult to get the most out of their AI initiatives due to greater integration and change management challenges, smaller organizations have seen a shorter payback period for such investments.

For example, the survey found that 65 percent of companies with fewer than 5,000 employees paid their dividends faster than expected, compared to companies with more than 20,000 employees.

Kaddi emphasized that adoption tends to be larger in smaller organizations due to the lower levels of decision-making.

However, most companies view AI initiatives as time-limited projects rather than a cornerstone of the overall business strategy, the report says, making such projects more difficult to sustain and scale up once they are launched.

Macroeconomic uncertainties are making companies more cautious about their investments.

“There is also cautious optimism given the global economic situation, and people want to invest wisely,” Kaddi said.

Over the past year, companies in India appear to have shifted their focus from AI decentralization and democratization to adopting platforms, training modules and upskilling programs for employees, the report says.

While companies have made management, culture, and process changes to encourage AI adoption, they have had minimal success in allaying fears of AI replacing jobs. About 77 percent of all respondents across all industries said they feared the increasing adoption of AI would lead to downsizing in their companies. The only exception was the financial services sector.

“There is no either/or. It’s made by people,” said Kaddi. “There will be retraining, that doesn’t necessarily mean there will be cuts.”

Demand for AI talent will continue to outstrip supply, and companies must work closely with academia to rapidly expand the pool, the report said.

“AI is here to stay. Metaverse and the use of AI for greater personalization, edge computing and quantum computing are some of the trends to watch out for next year,” he added.