Microsoft – IDC Study: Artificial Intelligence to more than double the rate of innovation in India by 2021

India Gate

By 2021, Artificial Intelligence (AI) will more than double the rate of innovation improvements (x2.2 times) and employee productivity gains (x2.3 times) in India, according to the country’s business leaders. The study from Microsoft and IDC Asia/Pacific, Future Ready Business: Assessing Asia Pacific’s Growth Potential Through AI[1] surveyed 200 business leaders and 202 workers in India.

Graphical representation of AI impact on rates of innovation and employee productivity improvements today and in three years
AI impact on rates of innovation and employee productivity improvements today and in three years

While 77% of business leaders polled agreed that AI is instrumental for their organization’s competitiveness, only one-third of organizations in India have embarked on their AI journeys. Those companies that have adopted AI expect it to increase their competitiveness by 2.3 times in 2021.

“Today, every company is a software company, and increasingly, every interaction is digital. To be successful in this new world, organizations need to be fast adopters of best-in-class technology, including AI. In addition, they need to start building their own unique digital talent and ensure that all of this is based on trust and security,” said Dr. Rohini Srivathsa, National Technology Officer, Microsoft India. “AI is the defining technology of our time that significantly accelerates business transformation, enables innovation, boosts employee productivity, and ensures further growth. Economies and businesses that have yet to embark on their AI journey run a real risk of missing out on the competitive benefits that are enjoyed by leaders.”

Why adopt AI?

For the organizations that have implemented AI initiatives, the top five business drivers to adopt the technology were (in priority order): Higher competitiveness (24% of respondent chose it as number one driver); accelerated innovation (21%); better customer engagement (15%); higher margins (14%) as well as more productive employees (9%). 

Ranganath Sadasiva, Director, Enterprise, IDC India, said: “Last year, organizations that have adopted AI saw tangible improvements in those areas in the range of 8% to 22%. They forecast further improvements of at least 2.1 times in the three-year horizon, with the biggest jump expected in higher margins, and higher competitiveness.”

Graphical Representation of how AI improves margins, competitiveness, innovation, customer engagements and productivity of employees - today and in three years
AI improves business today and in three years

India needs to build on AI investment, strategy and data

The study evaluated six dimensions critical to ensuring the success of a nation’s AI journey. It uncovered that India needs to build upon its investment, data, and strategy in order to accelerate its AI journey.

AI Readiness in terms of Data, Strategy, Investments, Infrastructure, Capabilities and Culture.
AI Readiness in India (Scale of 0.00 – 4.00)

“To succeed in AI race, India needs to substantially improve its readiness.  Organizations’ leadership should make AI a core part of their strategy and develop a learning agility culture. They have to continuously invest in this transformative technology for the long-term success, sometimes without immediate returns Ranganath Sadasiva said. “There is an urgent need for talents and tools to develop, deploy and monitor AI models, along with the availability of a robust data estate with the adequate governance.”

Business leaders who are adopting AI face three top challenges: A lack of advanced analytics or adequate infrastructure and tools to develop actionable insights; data strategy and data readiness are not seen as strategic priorities; and lack of thought leadership and leadership commitment to invest in AI.

The study showed that to move ahead on their AI journeys businesses have to create the right organizational culture. Approximately half of workers surveyed, as well as a substantial proportion of business leaders believe that cultural traits that support AI journeys, such as risk-taking, proactive innovation, as well as cross-function partnerships among teams, are not pervasive today. “Overall, workers in India are more skeptical than business leaders about the cultural readiness of their organizations,” added Sadasiva.

Bar chart shows the comparison between the perceptions of Business Leaders and workers, regarding the power of AI to empower, innovate, go beyond and collaborate at the workplace
Cultural Traits in an Organization to Support AI Journeys

Business leaders must now embrace a new culture, where innovation and continuous learning are core components of the organizational culture. It sets the stage for agility, adaptability and growth,” said Dr. Srivathsa.

Organizations need to address skills challenge for an AI-enabled workforce

The study found that India business leaders and workers hold positive viewpoints about the AI’s impact on the future of jobs. More than half (64% of business leaders and 63% of workers) believe that AI will either help to do their existing jobs better or reduce repetitive tasks.

Bar Chart indicating the perception of business leaders & workers on how AI augments jobs
Perception of AI’s impact on jobs (Business Leaders and Workers)

“When it comes to creating or replacing jobs, 16% of business leaders believe that AI will create new jobs, but 18% also feel that the technology will replace workers. Interestingly, workers are more optimistic, with only 4% expecting AI to replace jobs, and 21% to create new ones. At the same time, 12% of workers expect no impact to their jobs in three years from now,” said Sadasiva.

The study also found that workers are more willing to reskill than business leaders believe they are. 32% of business leaders perceive that workers find it challenging for them to reskill and upskill, but only 12% of workers saw it as a challenge.

“Microsoft’s vision for AI is first and foremost about people. AI technology cannot progress without them. This means that millions will need to transform themselves into skilled workers as well as learners that an AI future needs,” said Dr. Srivathsa. “It is heartening to see that 85% of businesses prioritize skilling and reskilling of workers in the future. They plan to invest as much, or even more, in human capital than in new technology. Even so, 65% of business leaders have yet to implement plans to help their employees’ to acquire the right skills, which is worrying in today’s context. They must have the urgency to support the fundamental shift in training workers for the future.”

“The jobs of today will not be the jobs of tomorrow, and we have already seen demand for software engineering roles expand rapidly beyond just the tech sector. However, building an AI-ready workforce does not necessarily mean an acute need for technological skills,” she added.

The top three future skills required by business leaders in India include analytical skills, digital skills as well as entrepreneurship and initiative-taking. The demand for these skills is higher than the existing supply.

The study also uncovered that business leaders value soft skills more than workers expect. The biggest skills gaps identified were in:

  1. Interpersonal skills and empathy (27-pt difference between business leaders and workers)
  2. Entrepreneurship and initiative-taking (20-pt difference between business leaders and workers)

AI Leaders: Robust strategy, capabilities and skills provide an edge

The study identified 6% of organizations which are AI Leaders in Asia Pacific. These organizations have already incorporated AI into their core business strategy and nearly doubled their business benefits today as compared to other organizations. Compared to the rest of the organizations in Asia Pacific:

Bar chart indicating how AI leaders influence AI adoption among followers
Traits of an AI Leader against Followers

You can read the in-depth study on “Future-ready Business: Assessing India’s Growth Potential through AI” below.

[1] About the study Future Ready Business: Assessing Asia’s Growth Potential Through AI

  • 1,605 business leaders and 1,585 workers participated in this study, including 200 business leaders and 202 workers in India.
    • Business leaders: Business and IT leaders from organizations with more than 250 staff were polled. Respondents were decision makers involved in shaping their organization’s business and digital strategy.
    • Workers: Respondents screened have understanding of Artificial Intelligence today, and do not play a role in decision making process within their organization.
  • 15 Asia Pacific markets were involved: Australia, China, Hong Kong, Indonesia, India, Japan, Korea, Malaysia, New Zealand, Philippines, Singapore, Sri Lanka, Taiwan, Thailand and Vietnam.
  • Industries polled included agriculture, automotive, education, financial services, government, healthcare, manufacturing, retail, services and telco/media.

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