IT companies up stakes on GenAI as clients demand integrated solutions

IT companies, globally and in India, are betting big on GenAI as clients are increasingly realising the value of it and demanding solutions that are integrated with it

The recent news of Microsoft immediately hiring former ChatGPT boss Sam Altman after being fired from OpenAI, to lead a new advanced artificial intelligence (AI) research team, is a testimony that investments in AI are on the rise. Microsoft has already committed to investing $10 billion in OpenAI, and the magnitude of investments is only expected to rise with Altman on board.

IT companies, globally and in India, are betting big on generative artificial intelligence (GenAI) as clients are increasingly realising the value of it and demanding solutions that are integrated with it.

According to a report titled ‘State of AI in India’ conducted by Deloitte, there is an increased confidence in AI as businesses, including IT sectors, plan a year-on-year increase in their AI investments compared to last year.

Global IT major Accenture said it will invest $3 billion over three years in its Data and AI practice to help clients across all industries rapidly and responsibly advance and use AI. It will also double its AI talent to 80,000 people through hiring, acquisitions, and training.

“Over the next decade, AI will be a mega-trend, transforming industries, companies, and the way we live and work, as GenAI transforms 40 per cent of all working hours,” said Paul Daugherty, Group Chief Executive, Accenture Technology.

Recently, Wipro committed to investing $1 billion to advance AI capabilities over the next three years along with the launch of Wipro ai360, an AI-first innovation ecosystem with the goal of integrating AI into every platform, tool, and solution used internally and offered to clients.

“AI is a fast-moving field. Especially with the emergence of GenAI, we expect a fundamental shift up ahead, for all industries. New business models, new ways of working, and new challenges, too. This is exactly why Wipro’s ai360 ecosystem places responsible AI operations at the heart of all our AI work,” Wipro CEO and MD Thierry Delaporte said during the announcement.

Nasdaq-listed Cognizant Technology Solutions will be investing $1 billion in GenAI over three years. “We expect Cognizant to be a principal beneficiary of the GenAI opportunity and we have more than 100 active AI engagements, as well as hundreds more projects using our AI services,” CEO Ravi Kumar S said.

In May this year, Infosys launched Topaz, an AI-first set of services, solutions, and platforms using GenAI technologies. Infosys CEO Salil Parekh recently said the company is engaged in 80 GenAI projects, focusing on large language models for software development, text, document, voice, and video. “Many of our large clients are working on GenAI programmes,” Parekh said.

Several mid-sized IT companies are also investing heavily in GenAI. For instance, last month, Coforge launched Quasar, a GenAI platform designed to build enterprise AI capabilities. Coforge Quasar comes pre-loaded with a set of more than 100 cognitive and generative use cases, readily available for integration. In July, LTIMindtree launched Canvas.ai, an enterprise-ready GenAI platform designed to help clients jumpstart and scale generative AI capabilities.

Earlier this month, IBM partnered with Amazon Web Services (AWS) to launch an innovation lab in Bengaluru to help mutual clients derive value from the latest technologies such as generative artificial intelligence (GenAI). The innovation lab is aimed at helping clients explore joint IBM-AWS solutions and test prototypes and proof-of-concepts relevant across industries. As part of the extended collaboration, IBM Consulting plans to train and skill 10,000 consultants on AWS GenAI services by the end of 2024.

Analysts believe clients are setting aside a budget for investments in GenAI. “We see clients of IT companies getting 1-3 per cent of their technology budget as a one-time war chest to experiment in GenAI so there’s an opportunity for IT service providers to tap into this pool. We have already seen paid POCs commissioned by some clients with providers, so the time to act is now. Clients are convinced of the early impact of GenAI,” says Nitish Mittal, Partner – Technology, Everest Group.

However, Mittal cautions that GenAI may not immediately help IT companies generate revenue. “Early GenAI monetisation will not be as margin-accretive for providers as they will not be able to industrialise it quickly as they first experiment, before scaling. Eventually, as they get more customers for specific use cases, they will achieve economies of scale and can leverage their global delivery model to increase margins,” he said.