Nearly half of Indian firms live on AI, but budgets remain tight: Report

Nearly 60 per cent of organisations reported active engagement in such partnerships, moving away from in-house-only approaches to leverage external capabilities for agility and innovation. Hybrid deployment models dominate, with 78 per cent of organisations adopting a blend of internal and external resources to accelerate execution.

 

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Further, it revealed that Indian enterprises are increasingly co-innovating with startups and original equipment manufacturers (OEMs).

Nearly 60 per cent of organisations reported active engagement in such partnerships, moving away from in-house-only approaches to leverage external capabilities for agility and innovation. Hybrid deployment models dominate, with 78 per cent of organisations adopting a blend of internal and external resources to accelerate execution.

In terms of workforce impact, the survey revealed a "new workforce pyramid", where 64 per cent of enterprises report selective transformation of roles in standardised tasks. However, this shift is coupled with persistent shortages of skilled AI talent, with 59 per cent acknowledging this gap. While mid-office and innovation roles are expanding, enterprises are restructuring their operating models around AI, creating AI-first architectures, where humans collaborate closely with machines to optimise decision-making, speed, and precision.

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Despite growing optimism, spending on AI and ML remains relatively limited

Over 95 per cent of organisations dedicate less than 20 per cent of their IT budgets to AI, while just 4 per cent exceed that mark, indicating that although confidence in AI's potential is strong, most companies continue to invest cautiously in large-scale AI transformation.

"There is a clear imbalance between conviction and commitment, which is becoming a defining factor in how quickly enterprises extract measurable returns from AI. As organisations operationalise AI, the question of return on investment has taken centre stage.

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The EY-CII report 'The AIdea of India

Outlook 2026' is based on a survey of 200 Indian organisations, spanning over 20 industries, including government bodies, public sector undertakings, startups, global capability centres (GCCs), and Indian arms of multinational corporations. Responses were collected from C-suite executives and senior leaders.

As many as 91 per cent of decision-makers identified rapid deployment as the single most important factor in their buy-versus-build strategies for AI.

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Generative AI (GenAI) use cases live

Nearly half of Indian enterprises have moved beyond AI pilots to active deployment, with 47 per cent reporting multiple Generative AI use cases now live in production, according to a joint EY-CII report.

However, despite strong belief in AI's promise, investment levels remain conservative, with more than 95 per cent of firms maintaining AI and ML budgets below 20 per cent of overall IT spending.