Deloitte Highlights Barriers to AI Implementation in Indian Companies

Indian companies are rapidly integrating artificial intelligence (AI) into their systems and processes to enhance efficiency and innovation. However, this adoption is fraught with challenges, including cyberattacks, data breaches, and regulatory uncertainty about AI technologies, according to a report by Deloitte Access Economics and Deloitte’s AI Institute.

AI Adoption in India Faces Multifaceted Challenges

The report highlights that Indian companies are grappling with various issues while implementing AI. Among the major hurdles are:

• Insufficient Understanding of AI Technology: A lack of comprehensive knowledge about AI and its applications limits its effective deployment.

• Regulatory and Legal Concerns: Ambiguity around AI-related regulations and ethical guidelines hinders smooth implementation.

• Cybersecurity Risks: The increasing threat of cyberattacks and data breaches raises significant concerns for businesses adopting AI solutions.

The report surveyed 102 respondents in India, including chief risk officers, chief compliance officers, and data officers, representing the public, private, and not-for-profit sectors. It also gathered insights from 797 respondents across South Asia, covering industries like finance, education, healthcare, and technology.

Emphasis on Governance and Accountability

Jayant Saran, Partner at Deloitte India, emphasized the importance of robust governance in AI deployment, stating:

“Effective AI governance is not just about regulation or compliance. It is about fostering innovation while ensuring accountability and transparency and, therefore, demands a shift to proactive risk management. The encouraging focus on workforce readiness reflects a critical step forward, but the journey requires continuous upskilling and cross-functional collaboration.”

The report also pointed out that 60% of the global workforce in organizations have the skills needed to ethically and legally use AI solutions, despite the challenges posed by regulatory uncertainties.

The Rising Cost of Data Breaches

As organizations adopt AI, security vulnerabilities remain a critical concern. According to the report, the global average cost of a data breach in 2024 has reached nearly $5 million, marking a 10% increase from the previous year. These alarming statistics underscore the need for companies to implement stringent cybersecurity measures alongside AI adoption.

Need for Clear AI Governance Policies

In the Asia-Pacific region, supporting AI governance entails defining clear roles accountable for upholding AI standards. However, over half of AI policies in the region lack specific timelines for implementing governance goals, leading to fragmented efforts and inconsistent practices.

Workforce Readiness and Skill Development

The report identified workforce readiness as a crucial component in successful AI implementation. Despite challenges, 56% of employees in organizations reportedly possess the skills to use AI responsibly. The need for continuous upskilling and cross-functional collaboration was highlighted as essential for fostering a culture of ethical and effective AI usage.

Key Insights on AI in the Asia-Pacific Region

The report sheds light on several key aspects of AI adoption:

• Security: A growing focus on cybersecurity is essential as AI becomes integral to business operations.

• Governance Frameworks: Establishing clear principles, policies, and roles is necessary to ensure accountable AI usage.

• Skills Gap: Organizations must prioritize upskilling employees to address the talent gap in AI expertise.

About Deloitte

Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax, and related services.  

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Deloitte plays a crucial role in advising businesses and organizations on critical issues, helping them navigate complex challenges and achieve their strategic objectives.

Conclusion

The Deloitte report underscores that while AI offers transformative potential, its implementation requires addressing cybersecurity risks, regulatory uncertainties, and skill gaps. A proactive approach to AI governance, combined with robust workforce development, will be key to harnessing the full potential of AI in India and the broader Asia-Pacific region.