India global capabilities centers and the generative AI opportunity
Over the past two decades, India’s economic story has been one of stability and growth. Powered by a youthful and educated demographic, an enabling business environment and favourable geopolitics, per Goldman Sachs research, India is expected to be the third largest economy with $10 trillion in GDP in the coming years. Services exports is a key pillar of this expansion. In this the Global Capabilities Center (GCC) industry will be a significant contributor with revenues projected to reach $110 billion by 2030. As global organizations continue to innovate, GCCs in India – with their proven track record in engineering-driven transformation – are becoming global centers of excellence for generative artificial intelligence (GenAI). This reflects the larger opportunity that lies ahead for India to be a leading voice in the global development and responsible deployment of GenAI.
GenAI is expected to add a cumulative $1.2 – 1.5+ trillion to the country’s GDP over seven years. Goldman Sachs research expects a less than 1 percentage point productivity impact for India from AI over a ten-year adoption timeline, given the higher proportion of employment in sectors with low AI exposure such as agriculture and construction. Nevertheless, from building foundational models to creating new service lines in nascent spaces like AI safety and testing, the opportunity set remains expansive. Equally, there is tremendous potential for domain-specific GenAI solutions for India’s most difficult challenges. GenAI can turbocharge the National Education Policy through personalised learning in vernacular languages for a heterogenous society like ours, which – while having the largest school-going population in the world – lacks commensurate school infrastructure. GenAI can also unlock significant access to low cost healthcare with AI-aided drug discovery and diagnostics.
A confluence of critical factors is essential for India to truly capture the AI opportunity – both in context of ‘India for India’ and ‘India for the world’. At a national level, comprehensive investment is required across the stack from energy, compute and data centers to foundational models, applications and security. Retaining and developing India’s intellectual and technological expertise needs to be prioritised with sandbox environments for researchers, developers and entrepreneurs to experiment with bigger and bolder use cases. In parallel, the existing workforce needs to be equipped to leverage emerging technologies. Amplify India’s innovation quotient including through industry and government sponsorship of academic research and partnerships. Robust policy, including cybersecurity legislation, will become increasingly important. As these themes play out, it will spur funding momentum which stood at $4 billion in 2022-23.
We are off to a strong start. India has a supply of more than 2 million STEM graduates annually. With 14x growth over the last seven years, India ranks among the top 5 nations in individuals skilled with AI. There are more than 100 GenAI startups working on conversational AI, multimodal AI tools and language models in the country. IndiaAI Mission and its outlay of INR 10,000+ crores of investment over the coming five years is a timely first step.
GCCs will play a pivotal role in India’s AI journey. Providing safe environments through in-house incubators to ‘test and fail fast’ is essential, overlaid with global leadership roles and commensurate ownership. These have been key enablers of the success of Goldman Sachs’ India GCCs over the last 20 years. Our Bengaluru and Hyderabad offices, with ~8,500 employees, are a microcosm of the global organization. Over half of our people in India offices are engineers, and they work on a variety of projects including software development, quantitative strategies, AI-related capabilities and other strategic initiatives that collectively support business growth, enhance client experience, and enable greater operating efficiency. Today, these offices serve as centers of excellence for AI at Goldman Sachs.
The concurrent evolution of GCCs and the GenAI ecosystem is a watershed moment. Played right, in hindsight this could be an inflection point – the next pivot in the evolution of GCCs – bringing together the firepower of our technical expertise, the prowess of Indian academia and empowered Indian talent to drive global organizational transformation. Currently contributing over 1% to India’s GDP and directly employing 1.7 million people, GCCs have a responsibility beyond our organizations. We have a role to play in taking our country from the India of 2024 to Viksit Bharat 2047 – a future that is sustainable, inclusive and prosperous for every Indian. Will GCCs harness GenAI to go from Global Capability Centers to Global Transformation Hubs? That chapter is yet unwritten, but today, the pen is steadily in our hands.
Gunjan Samtani, global chief operating officer of Engineering at Goldman Sachs and country head of Goldman Sachs Services India.
