Indian firms lead AI adoption among emerging countries but cyber risks persist: McKinsey
Indian companies registered the highest adoption of artificial intelligence (AI) this year among emerging countries, according to a new report by McKinsey Analytics.
Businesses headquartered in India showed the highest adoption of AI in 2021, ahead of China, Latin America, the Middle East, ASEAN nations, north Africa and south Asian nations -- which make up for all the ‘emerging economies’ in McKinsey’s definition. According to the report, 57% of McKinsey’s 1,843 survey participants revealed higher adoption of AI solutions from businesses in ‘emerging economies’ in 2021 -- up from 45 percent last year.
Of the key areas where the application of AI grew, businesses offering service operations ranked as the highest AI adopters, followed by product development and contact centre automation services. McKinsey, in its report titled ‘State of AI in 2021’ also noted that businesses adopting AI are witnessing a clear rise in bottomline benefits as against a boost to the company’s toplines.
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“The share of respondents reporting at least 5 percent of earnings before interest and taxes (EBIT) that’s attributable to AI has increased year over year to 27 percent, up from 22 percent in the previous survey,” the report described.
The bottomline accounts for a company’s net income, which is calculated after removing all operational costs and expenditures from the topline -- the company’s total business revenue, the report explains. It, hence, suggests that instead of AI adoption leading to exponential growth in businesses, the latter is helping companies reduce their incurred costs within the present business areas.
In India, service operations and contact centre automation sectors have reported rising cost benefits for businesses adopting AI. Last month, Shekar Murthy, senior vice president of solutions at Yellow.ai told Mint, "One of the largest insurance companies saw its workforce reduced to 10 percent of peak capacity at the onset of the covid-19 pandemic, while customer query volume increased to 5x. In terms of handling transactions, their chatbot could successfully conclude almost 78 percent of their transactions."
Also read: Enterprises will be better prepared for cyber-attacks in 2022, Trend Micro
Rashi Gupta, co-founder of Rezo.ai, stated earlier this month her company has helped reduce operational costs for a healthcare company servicing over 10 million patients per year, with its AI offering. "These (AI) models are built to scale without a ramp-up phase, give a quick and consistent response to client inquiries, and save operational costs," she said.
While AI is helping businesses, McKinsey cautioned that companies, especially those in emerging economies (including India), are lagging in terms of recognising increasing cyber security risks.
“Risk management remains an area where many have room to improve. Cyber security remains the most recognised risk among respondents, yet a smaller share says so than did in 2020, despite the rising threat of cyber incidents seen throughout the covid-19 pandemic,” the report describes.
This is particularly visible in India and other emerging economy markets, where according to McKinsey, only 47 percent of companies in these markets acknowledged cyber security as an increasing risk when it comes to digitising their businesses. In comparison, every three out of five businesses in emerging markets acknowledged cyber security as key risks to their businesses.