Organisations bullish on AI and GenAI, increasing tech spending for efficiency, cost savings, and superior customer experiences.
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Despite ongoing macroeconomic uncertainties, clients remain bullish on artificial intelligence, with many organisations not only maintaining but increasing their tech spending on AI and GenAI, driven by the promise of enhanced efficiency, cost savings, and superior customer experiences. Analysts shared that, on the other side, service providers are responding by expanding their portfolios with AI-powered business solutions and consulting services, covering end-to-end deployment of technologies.
“We are seeing people double down on their AI investments. As they look for productivity and cost savings, they also look to scale their companies’ revenues. AI is among the unique technologies that can hit at the intersection of all three. According to CIO surveys done by the IBM group, everybody is doubling down on AI investments, and now, they are looking for that return on AI. So the only change over the last 12 months is that people are stopping experimentation and focusing on where the value is to the business,” Arvind Krishna, IBM’s Chairman and CEO, highlighted during a virtual press briefing on the company’s new agentic AI developments.
Rohit Pandharkar, Partner, Technology Consulting, EY India, echoed this sentiment, adding that the spending on AI is ramping up compared to last year.
“We are seeing huge interest in spending on areas like employee productivity bots, AI training and upskilling, AI-driven cost savings in areas like customer care, coding, and back office operations. The reason is that AI projects fund themselves due to a clear ROI and cost savings with a few months of payback. Thus, spending is increasing because of the need to improve cost savings and productivity, and at times, customer experience too.”
While AI has been established for years, GenAI is advancing quickly and is expected to deliver increasing value over time. Biswajit Maity, Sr Principal Analyst at Gartner, observed that clients’ sentiments regarding spending on AI and GenAI are generally optimistic, with many organisations planning to increase their investments as they continue to view AI as key enablers of operational efficiency, cost reduction, and superior customer experience.
This is also reflected in Gartner’s 2024 Digital Business Buying Drivers Survey, where 59 per cent of services buyers indicated plans to increase AI-related spending over the next 12 months.
Service providers are responding to this demand by expanding their portfolios with AI-powered business solutions and consulting services, covering end-to-end deployment of technologies. GenAI-related revenue is expected to be core to their revenue growth. All these factors contribute to the growing demand for and optimism around the adoption of AI and GenAI.
“While there is optimism about the potential of GenAI, many enterprises are still grappling with understanding its value and risks. For instance, while 57 per cent of providers expect GenAI to contribute significantly to their revenue growth, organisations express challenges in seeing its business impact at scale. Discretionary spending remains under scrutiny, and organisations are prioritising AI and GenAI use cases demonstrating measurable value. We remain optimistic about the adoption of AI and GenAI. The expectation is that as organisations navigate these challenges and begin seeing tangible benefits from their AI initiatives, spending will continue to grow, albeit with a focus on proven use cases and clear ROI,” Maity said.
Published on May 12, 2025
