AI gains strategic ground in Indian boardrooms amid budget strains – Here’s why
June 19, 2025
Indian CEOs are accelerating AI adoption with a focus on ROI and strategic impact, despite challenges like budget constraints and skill gaps.
Indian CEOs are increasingly placing their bets on Artificial Intelligence (AI) as a cornerstone of long-term business growth, despite mixed results so far. According to the IBM Institute for Business Value’s annual CEO study, Indian business leaders are more open than ever to investing in AI and digital opportunities but they also recognize the need for budgetary flexibility. They also cited lack of expertise and knowledge as a top barrier to innovation in their organization. CEOs in India, it added, are investing in AI with purpose while having a clear metric to measure innovation ROI.
The annual report, which surveyed 2,000 CEOs globally, highlighted that Indian companies are fast embracing AI technologies. It said that 51 per cent of Indian CEOs confirmed that they are actively adopting AI agents today and preparing to implement them at scale.
According to the report, 58 per cent of CEOs in India believe that having a unified data system across the company is essential for cross-functional collaboration. Also, 71 per cent say their company’s own data is crucial for getting the most out of generative AI. However, 53 per cent admit that recent fast-paced investments have resulted in scattered and uncoordinated technology systems.
So, what’s driving this aggressive adoption? Per the report, a mix of strategic foresight, competitive pressure, and the evolving promise of AI beyond just cost-cutting.
From cautious optimism to committed action
While only 25 per cent of Indian AI initiatives have delivered expected ROI so far and 15 per cent have scaled enterprise wide, this has not dampened enthusiasm of CEOs. Instead, they are increasing outcome-driven adoption. Around 62 per cent of company leaders are prioritizing AI use cases with clear return potential and 66 per cent said that their organization has adopted clear metrics to measure innovation ROI effectively.
“Indian CEOs are at the forefront of a massive transformation fuelled by technological advancements like generative AI and Agentic AI. It is no longer if they should adopt AI but where it can deliver the strongest competitive edge, and accelerated growth,” said Sandip Patel, Managing Director, IBM India & South Asia.
Interestingly, the IBM report maintained that 64 per cent of CEO respondents said that their organisation is realising value from generative AI investments beyond cost reduction.
Budget tug-of-war: Innovation vs operations
Despite a strong willingness to act, limited financial flexibility continues to be a major hurdle. Around 44 per cent of the CEOs who participated in the survey admitted that their organization struggles to balance funding for existing operations and investment in innovation. The IBM report stated that 74 per cent of the CEOs said that they need more leeway in budget allocation to capture long-term digital growth opportunities.
Even so, 84 per cent of Indian CEOs expect their AI investments focused on efficiency to yield positive returns, while 78 per cent anticipate a positive return from their investments in scaled AI growth and expansion.
While we established the inclination of Indian CEOs towards investing in AI and technology, the IBM study said that respondents agreed that their organisation’s success is directly tied to maintaining a broad group of leaders with a deep understanding of strategy and the authority to make critical decisions.
Meanwhile, 61 per cent of CEOs acknowledged that differentiation will depend on having the right expertise in place in the right positions with the right incentives. In fact, 54 per cent of CEO respondents said they are hiring for roles related to AI that did not exist a year ago.
Further, to bridge the skill gap, 68 per cent of CEOs also indicated that their organizations are planning to use automation more extensively.
[The Financial Express]
