The adoption of enterprise AI products in India appears to be gaining momentum, as over 47 per cent of companies have reported moving their generative AI pilots into live, functioning use cases.Another 23 per cent of Indian enterprises are currently experimenting with these products, according to a new report launched by accounting firm Ernst & Young (EY) in partnership with the Confederation of Indian Industry (CII) on Sunday, November 16.
The survey report, titled ‘Is India ready for Agentic AI? The AIdea of India: Outlook 2026’, has been drafted by gathering inputs from C-suite executives and senior leaders in 200 organisations in the country, ranging from government bodies to public sector undertakings, startups, Indian enterprises, global capability centres (GCCs), and the Indian arms of multinational corporations.
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The survey also found that despite optimism, corporate spending and investments on AI/ML tools remain low.
While 76 per cent of business leaders believe that GenAI will have a significant business impact and 63 per cent feel ready to leverage it effectively, more than 95 per cent of organisations allocate less than 20 per cent of their IT budgets to AI, as per the survey.
It found that only four per cent of surveyed Indian enterprises have allocated amounts exceeding 20 per cent of their IT budgets toward AI. “There is a clear imbalance between conviction and commitment, which is becoming a defining factor in how quickly enterprises extract measurable returns from AI,” the survey noted.
The EY-CII joint survey comes amid rising fears among enterprise leaders over the lack of returns on AI investments.Story continues below this ad
While tech giants such as Microsoft, Google, and Amazon have continued to roll out enterprise AI products that they say are capable of automating everything from back-office accounting to customer service, recent studies show that businesses are struggling to adopt the technology effectively, let alone see gains in productivity and efficiency.
Investments in generative AI by businesses are expected to increase 94 per cent this year to $61.9 billion, according to IDC, a technology research firm. But the percentage of companies abandoning most of their AI pilot projects rose to 42 per cent by the end of 2024, up from 17 per cent the previous year, according to a survey of more than 1,000 technology and business managers by S&P Global, a data and analytics firm.
A recent study conducted by Massachusetts Institute of Technology (MIT) grabbed headlines after reporting that 95 per cent of 300 US-based firms that had invested somewhere between $35 billion and $40 billion in generative AI saw little to no returns, largely due to flawed enterprise integration of AI.
Impact on jobs
The unreliability of enterprise AI tools, including the tendency of large language models (LLMs) to make stuff up, might make it seem like the technology is still far away from replacing workers.Story continues below this ad
However, evidence suggests that companies are not waiting for the technology to mature before implementing it. Over 91 per cent of business leaders said that rapid deployment of AI tools was the single biggest factor influencing their “buy versus build” decisions, as per the EY-CII survey.
The report further noted that in the next 12 months, Indian organisations are expected to focus their GenAI investments on operations (63 per cent), customer service (54 per cent), and marketing (33 per cent) use cases. Additionally, 64 per cent of enterprises reported selective workforce transformation in standardised tasks due to AI. However, 59 per cent of respondents also highlighted a shortage of workers skilled in AI.
“While mid-office and innovation-led roles are expanding rapidly, enterprises are rebalancing their operating models around AI, creating what the report calls “AI-first architectures of work”, a new working model where humans and machines collaborate to elevate decision-making, speed and precision,” the report read.
A majority of Indian businesses (60 per cent) are also teaming up with startups to leverage AI models and tools, rather than relying solely on an in-house strategy, according to the survey, with another 78 per cent adopting hybrid models.