New Delhi, Feb 20 : India's artificial intelligence (AI) market is likely to grow at 25 per cent compound annual growth rate (CAGR) to reach $17 billion by 2027, with similar growth in AI investments, a Nasscom report said on Tuesday.

India's AI market is growing with AI/ML capabilities, including GenAI, emerging as the top category of IT spend expected to be made by IT buyers in 2023, according to the report by Nasscom in partnership with market research firm BCG.

This growth is fueled by multiple factors which include increasing enterprise tech spending, India's growing AI talent base and a significant increase in AI investments, said the report.

"Indian tech companies, with the advent of generative AI, are expanding their portfolios beyond traditional IT and business process management to include AI-driven analytics, intelligent automation, and personalised customer interactions," said Debjani Ghosh, President, Nasscom.

"Accelerating this journey will require massive scale investment on AI skilling, investments in ethical and secure AI development practices and governance frameworks," she added.

India today has the second highest installed talent base with 420,000 employees working in AI job functions.

The country also has the highest skills penetration with three times more AI skilled talent than other countries.

"The country ranks among the top 5 nations with a 14 times growth in individuals skilled with AI in the last seven years. As the investments in AI continues to increase, the demand for AI talent in India is also expected to grow at 15 per cent CAGR till 2027," said the report.

Recognising the importance of human capital in the AI journey, leading firms have invested heavily in upskilling and reskilling their workforce in AI and related technologies, with some organizations allocating $1 billion over the next three years dedicated to upskilling.

"Indian companies are starting to keep pace with the growth of AI and the tech sector is creating future-ready organizations with dynamic and evolving Centers of Excellence driving the AI agenda," said Rajiv Gupta, MD and Senior Partner, BCG.

/IANS