India's IT industry is paving the way for its AI future

AI is transforming the world in unprecedented ways, creating new opportunities for human ingenuity and innovation across industries and societies. As one of the fastest-growing economies in the world, India has huge potential to leverage AI for inclusive development and progress, with the country’s IT and IT-enabled services (ITES) industries playing a central role in this transformation.

India’s IT and ITES industries have been major contributors to India’s growth and economic boom, accounting for 7 per cent of the country’s GDP and employing nearly 5.5 million people, making the sector pivotal to accelerating the country’s AI adoption and transformation.

The AI opportunity for IT companies in India

 

The Indian IT industry is a global powerhouse and has been instrumental in positioning the country as a preferred investment destination among global investors and creating huge job opportunities in India, as well as in the USA, Europe, and other parts of the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, AI now offers an entirely new gamut of opportunities for IT firms in India.

Productivity gains from software developers adopting generative AI tools could contribute an estimated $1.5 trillion to the global economy, according to a study by Harvard Business School, Keystone.AI, and GitHub. As one of the countries with the largest pool of developers and the highest AI skill penetration, this potentially makes India’s IT industry and India one of the biggest beneficiaries of productivity gains from AI.

In India, the IT industry is one of the leading adopters of AI, with a 60-65 per cent adoption rate compared to the national average of 48 per cent, according to a recent study by staffing firm TeamLease Digital. To harness the full potential of AI, IT players need to take a holistic and structured approach to AI implementation, by setting up responsible AI councils to strategise and roll out AI across roles and functions.

The Microsoft LinkedIn 2024 Work Trend Index findings show that an overwhelming 92 per cent of knowledge workers in India use AI at work, higher than the global average, indicating how rapidly generative AI is diffusing in IT and other knowledge industries in the country.

Copilots: A game-changer for the industry

Generative AI copilots have revolutionised how employees work by helping them reduce time spent on mundane tasks, boosting their ability to do focused work, and amplifying creativity and ingenuity. Studies show that developers using GitHub Copilot report 75 per cent higher satisfaction with their jobs and are up to 55 per cent more productive.

For employees, Copilot is an invaluable companion that allows them to spend more time on meaningful work and be more productive. For organisations, in a world where agility is a competitive advantage, Copilot helps deliver value to customers faster and improve business outcomes.

Customers across industries are seeing this benefit. Recently, we announced a partnership with Cognizant to make Microsoft’s generative AI and Copilots available to millions of users, to transform enterprise business operations, enhance employee experiences, and accelerate cross-industry innovation.

Generative AI can be a game-changer for virtually every business in every industry, opening up new possibilities for innovation, efficiency, and growth. The across-the-board benefits of generative AI also highlight an important distinction—that it’s not only organisations that are driving adoption but employees as well, who are seeing value in it.

A skilling-first approach to being AI-ready

The IT industry has long invested in training and skilling its workforce and has been a pioneer in championing continuous learning for employees, given the dynamic nature of the industry. However, generative AI has lent a new urgency to these efforts. The rapid diffusion of AI and its ubiquitous applicability have led to a boom in demand for AI skills far outstripping supply and a race for AI-ready talent.

To address this challenge, it is crucial for the industry to adopt a skilling-first approach to AI and invest in upskilling and reskilling at scale. AI skills are already rivalling experience when it comes to candidate selection. According to the 2024 Work Trend Index findings, 80 per cent of leaders in India prefer to hire a less experienced candidate with AI skills over a more experienced candidate without these skills.

The IT industry has been investing in various initiatives and programmes to reskill and upskill its employees and talent pool. Wipro has trained 200,000 in generative AI principles. Nasdaq-listed Cognizant, which, like Wipro, has announced an investment of $1 billion in generative AI, has skilled 35,000 developers in GitHub Copilot and plans to skill another 40,000.

The industry also needs to collaborate closely with academia to ensure a future-ready talent pipeline that can meet the demand for AI skills. India has one of the largest pools of STEM graduates at about 2.5 million, and ensuring they are equipped with the skills needed for the age of AI will be crucial to maintaining the IT industry and India’s leading position as a global hub of technology and innovation.

Historically, the IT sector has played a crucial role in providing employment, contributing significantly to the nation's GDP, and transforming the economic landscape. As the industry continues to evolve, AI adoption and a focus on AI skilling and workforce development will be key to sustaining its growth and competitive edge. The growth and prospects of India’s IT industry underpin the nation’s aspirations to become a global leader in AI and technology and accelerate inclusive development and progress for its people.

---

The writer is GM, ITES, Microsoft India

Disclaimer: These are the personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper.