GenAI Set to Revolutionise India's IT Industry with 45% Productivity Boost

The Indian IT industry is on the brink of a major transformation, with generative artificial intelligence (GenAI) poised to significantly boost productivity across various sectors. A recent survey conducted by EY India has shed light on the potential impact of GenAI on India's $254-billion software industry, projecting a remarkable productivity increase of 43-45% over the next five years.

Key Findings of the EY India Survey

The survey covering 500 roles within the IT industry highlights two key drivers behind the anticipated productivity surge:

1. Internal Integration of GenAI: IT companies are actively embedding Generative AI (GenAI) elements into their operations to enhance efficiency and innovation.
2. Client Project Transition: Many organisations are moving AI-based projects from the proof of concept stage to full-scale production, accelerating AI adoption.

Rapid Adoption of GenAI

• 89% of IT enterprises have already initiated GenAI trials.
• 33% of these projects have progressed to production stages.

This swift adoption underscores the industry's increasing confidence in AI’s transformative potential, reshaping operations and service delivery at an unprecedented pace.

Sector-Specific Productivity Gains

Within the IT industry, the survey highlights varying degrees of productivity enhancement across different sectors:

• Software Development: Expected to witness the highest productivity boost, estimated at approximately 60%.
• BPO Services: Projected to experience a 52% increase in efficiency.
• IT Consulting: Anticipated to achieve a 47% rise in productivity.

These three domains—Software Development, BPO Services, and IT Consulting—are collectively expected to contribute 50-60% of the overall productivity improvement in the tech services sector.

AI's Impact Beyond Productivity

The growing adoption of Artificial Intelligence (AI) extends beyond productivity enhancements. According to executives surveyed by EY India, AI is also driving significant benefits in key business areas:

• Improved Customer Service: AI-powered chatbots and automation streamline customer interactions, leading to faster and more efficient support.
• Lower Operational Costs: Automation of repetitive tasks reduces labor expenses and enhances process efficiency.
• Enhanced Revenue Growth: AI-driven insights help businesses optimize strategies, personalize customer experiences, and identify new revenue opportunities.

Broader Economic Implications

The impact of GenAI extends beyond the IT industry, with potential far-reaching effects on the Indian economy as a whole. By 2030, AI adoption could transform 38 million jobs, potentially boosting the Indian economy's productivity by 2.61% through gains in the organised sector.

Challenges and Opportunities

Despite the promising outlook, the adoption of GenAI is still in its early stages. The survey reveals that only 15% of surveyed enterprises have implemented GenAI in production, while 36% have yet to commence any experimentation.

Key Challenges in GenAI Adoption

• Skills shortages
• Data readiness
• Measuring and allocating AI-related costs

Increasing Accessibility of AI

• Declining deployment costs driven by the open-source movement.
• Growing adoption of purpose-specific small language models.
• Enhanced accessibility, particularly for small and medium enterprises (SMEs)

Looking Ahead

As India's IT industry continues to embrace GenAI, it is poised for significant transformation. The projected productivity gains, coupled with the broader economic impact, underscore the importance of AI adoption in maintaining India's competitive edge in the global IT landscape. To fully capitalise on this potential, industry leaders and policymakers must focus on addressing skills gaps, improving data readiness, and developing frameworks for measuring AI's return on investment. As GenAI continues to evolve, its integration into India's IT sector promises to usher in a new era of innovation, efficiency, and growth.