India’s AI Market Set to Reach $6 Billion by 2027, IDC Reports

India’s adoption of Artificial Intelligence (AI) and Generative AI (GenAI) is projected to surge, with spending expected to reach $6 billion by 2027, according to a new report by the International Data Corporation (IDC). The report forecasts a compound annual growth rate (CAGR) of 33.7% from 2022 to 2027 for AI-centric systems, including software, services, and hardware.

IDC's projections extend beyond India, anticipating global AI spending to exceed $512 billion by 2027, more than doubling the market size from 2024. These trends were highlighted during IDC’s Directions India conference, held on June 12, 2024, where over 160 senior executives from India’s leading technology vendors and IT service providers gathered.

Returning to India after a decade, IDC Directions focused on “The Digital Business Impact of AI Everywhere.” The event covered global and local AI trends, outlooks, and predictions, providing technology vendors and service providers with strategies to drive productivity, enhance customer experiences, and generate new revenue streams through AI initiatives.

Linus Lai, Vice President of Digital Business at IDC Asia/Pacific, noted in his keynote address that 76% of Indian enterprises are already exploring GenAI proofs of concept (POCs) or have investment plans in place. Lai emphasized, “This AI moment is not a one-hit-wonder. Its implications for India are widespread and strike at the heart of cultural and business model transformation with data as its most valuable asset.”

Dr. Christopher Marshall, Vice President of Data, Analytics, AI, Sustainability, and Industry Research at IDC Asia/Pacific, discussed building a defensible business strategy for the AI era. “India is the sleeping giant in Generative AI. Its scale, skills, and startups are set to transform not just AI in India but also in the world,” Marshall stated.

During the event, analysts predicted that by 2025, 40% of services engagements will incorporate GenAI-enabled delivery, shifting human-delivered services towards strategy, change, and training to prepare organizations for AI integration. IDC recommended that Indian service providers continue evolving internally while supporting customers through their AI transformations. To lead in the CX services market, analysts advised providers to offer CMOs more GenAI-fueled end-to-end services.

As India positions itself as a global leader in AI technology, the insights from IDC’s report and conference highlight the country’s vast potential and the transformative impact of AI on its business landscape.