The increased prioritisation and spending on AI from Indian firms will mean a significant portion of technology R&D budgets will now be dominated by something related to AI, Kalra noted.
India is emerging as a frontrunner in
artificial intelligence adoption, with 80% of companies marking AI as a core strategic priority; surpassing the global average of 75%, according to Boston Consulting Group’s latest AI Radar report.
The study finds that Indian enterprises are planning significant investments, with 72% allocating up to $25 million for AI initiatives in 2025, while 16% plan to spend between $26-50 million, positioning India among the major global spenders in AI
technology.
Amongst key global markets, India ranks ahead of several developed economies in planned AI investments for 2025, with only Japan (53%), US (59%), and Singapore (63%) showing lower percentages of companies planning investments up to $25 million.
The higher percentage of Indian companies in this investment bracket (72%) indicates a more widespread adoption approach across the corporate landscape, though the proportion of firms planning investments above $50 million remains relatively smaller compared to global leaders.
The report, titled “From Potential to Profit: Closing the AI Impact Gap,” which surveyed 1,803 C-level executives across 19 markets and 12 industries, also highlights the growing attention towards autonomous agents; AI systems that achieve goals with minimal human input gaining significant traction as 67% of executives globally consider them for AI transformation.
However, it reveals a concerning gap in India’s AI readiness; particularly in workforce upskilling. Only 26% of Indian companies have trained more than a quarter of their workforce on AI/GenAI tools, falling below the global average of 29% and significantly behind leaders like Singapore (44%) and Japan (38%). BCG, however, anticipates this spending to increase in 2025. Yet, assuming that global counterparts will also keep up with increased spending, this may mean that in India, where supply often outweighs demand in most functions, individual initiative in skill development may continue to play a crucial role alongside organisational efforts.
The upskilling challenge is particularly crucial as organisations grapple with the dual needs of training both users and producers of AI tools. “As learning and development agendas evolve, companies are actively working to upskill their employees on scaling use cases and enabling thinking functions to conceptualise new applications,” said Nipun Kalra, MD & Partner, BCG India, and India Leader, BCG X.
However, contrary to widespread concerns about AI-driven job losses, only 7% of executives globally anticipate a decrease in headcount due to AI automation. “Most CXOs are focused on augmenting existing workforces rather than replacement. The conversation is centred around making functions 30-50% more productive and enabling employees to do more with the same resources, Kalra added.
Meanwhile, despite the increased interest in AI, only 25% of global companies have been able to derive meaningful value from their AI initiatives, the study found, potentially signalling a lack of focused initiatives in a ever-evolving landscape. “While there’s widespread enthusiasm about AI’s intuitive interface, like what we see in ChatGPT, translating this into tangible business impact remains a challenge for many organisations,” Kalra said. “Companies that are surging ahead are the ones that approach AI as a means to an end, focusing on strategic priorities rather than just deploying tools or conducting proof of concept tests, Kalra added.
Globally, leading companies allocate more than 80% of their AI investments to reshaping core functions and inventing new offerings, while others focus 56% of their investments on smaller-scale, productivity-focused initiatives.
In India this has meant that companies in financial services, consumer retail, and manufacturing sectors with consumer facing employees are showing particularly strong adoption trends in autonomous agent adoption, with them having already deployed genAI to transform a core function. “Companies that got comfortable with generative AI in the past year are better positioned to leverage autonomous agents,” Kalra added.
Meanwhile, about 76% of Indian executives acknowledge the need for substantial improvements in AI cybersecurity measures, while 54% cite regulatory challenges as a major factor slowing AI adoption.
Notably, for Indian companies, the lack of control or understanding of AI decisions emerged as the primary concern, ahead of data privacy and regulatory compliance issues. “As companies progress from proof of concepts to full rollout, they’re finding practical solutions to privacy and security concerns,” Kalra added, noting that many scaled use cases actually only send about 20% of their data to external LLMs, with the rest handled by on-premise solutions. This de-averaging effect of scale will start to play out and reduce some of the concerns around safety, and privacy in 2025, Kalra added.
The increased prioritisation and spending on AI from Indian firms will mean a significant portion of technology R&D budgets will now be dominated by something related to AI, Kalra noted. This will also mean a significant shift for India beyond its traditional role as a cost-effective implementation hub towards being an innovative leader. “India’s tech ecosystem is increasingly pivoting towards innovation rather than just being a low-cost player. The focus is shifting towards exporting innovation from India instead of purely being an arbitrage player,” Kalra said.
