Indian Mid-Market Businesses Lead the Global Push for AI Adoption
As India emerges as one of the world’s most dynamic technology hubs, its mid-market businesses are at the forefront of global AI adoption. According to a recent survey by SAP, Indian mid-market businesses have prioritized the implementation of generative AI (Gen AI) at a strong or moderate level, ahead of their global counterparts. With 96% of Indian businesses focusing on AI, compared to the global average of 91%, the country is paving the way for technological transformation. This trend reflects India's strategic importance in the global AI landscape, with Indian SMEs (small and medium enterprises) standing out for their agility in embracing cutting-edge solutions.
The Role of AI in the SME Ecosystem
SMEs form the backbone of India’s economy, contributing nearly a third of the country’s manufacturing output and employing millions. For decades, these businesses relied heavily on manual processes, gradually shifting towards digital automation. Rajeev Singh, Vice President and Head of Mid-Markets at SAP Indian Subcontinent, highlights that Indian SMEs have undergone significant changes in recent years. While technology adoption initially focused on basic tasks like digitizing paperwork, today’s SMEs are leveraging AI to drive more profound transformation across operations, supply chains, and customer outreach.
Singh notes that the COVID-19 pandemic served as a turning point, accelerating the adoption of technology among small businesses. In the three years since the pandemic, SMEs have shifted from automation to full-scale digital transformation, integrating AI into their operations to optimize workflows, enhance decision-making, and expand market reach.
The Growth Trajectory of AI in India
The SAP survey indicates that 66% of mid-market businesses in India consider AI a top priority for 2024, just behind preparing for cybersecurity threats (67%). Additionally, AI is being increasingly adopted to improve customer experience, optimize supply chains, and drive skills development. These sectors have become critical as Indian businesses compete on the global stage.
However, Singh acknowledges that while AI has become a buzzword for many SMEs, some are still evaluating how to translate AI technologies into tangible business outcomes. AI is already ingrained in various processes, but businesses are keen to explore its full potential to drive measurable success.
India as the Global Talent Capital for AI
India’s growing prominence in AI is underpinned by its vast and skilled labor force. Singh points out that more than 50% of global tech resources are Indians, solidifying India’s position as a leader in AI talent. With significant AI course offerings and industry-academia collaborations, India is producing a new generation of AI professionals who are equipped to meet the demands of a rapidly evolving technology landscape.
SAP’s innovation efforts in India are noteworthy, with 40% of its global research and development occurring at its Bangalore office. This hub of innovation has propelled India to the forefront of AI development, contributing around 25% of SAP’s patents. The focus on AI is not only driving SAP’s growth but also positioning India as a central player in the global AI ecosystem.
Challenges Faced by Indian Mid-Market Businesses
Despite the immense potential, Indian mid-market businesses face several challenges. These companies, which are often growth engines of the economy, must navigate complex regulatory and data environments with limited resources. They seek to streamline operations, implement industry best practices, and adopt newer technologies, all while managing constrained IT resources.
Mid-market businesses are looking for scalable solutions that offer predictable costs, rapid implementation, and minimal disruption. SAP has responded to these needs by providing tailored cloud technology solutions that help SMEs maintain agility while becoming globally competitive and intelligent enterprises.
Driving India’s Economic Future
As India approaches a GDP milestone of $5 trillion and prepares to surpass major economies like Japan and Germany by 2027, SMEs will play a critical role in this transformation. Accounting for approximately 33% of the country’s GDP and employing nearly 123 million people, SMEs are integral to India's economic growth.
To support this sector, technology companies are focusing on expanding into tier-2 and tier-3 cities, where talent acquisition and AI-driven solutions are becoming increasingly important. Businesses in cities like Baroda, Ahmedabad, and Kochi are seeing increased attention as part of these expansion efforts.
Conclusion: A Bright Future for AI in India
The future of AI in India’s mid-market businesses looks promising, driven by a combination of talent, innovation, and strong organizational priorities. While challenges remain, Indian SMEs are set to continue leading global trends in AI adoption, contributing significantly to the country’s growth as a technology powerhouse.
With a focus on digital transformation, operational efficiency, and customer experience, India’s mid-market businesses are not just keeping pace with global counterparts—they are setting the standard for the future of AI-driven business.
Source: The Economic Times / Chat GPT
