Indian companies are embracing AI, and employees report significant productivity boosts. But according to a new Cognizant study, those efficiency gains are not translating into higher revenues, revealing a crucial disconnect for the nation's economy.
The Productivity Paradox
Artificial intelligence is delivering on its promise of making work faster and more efficient in India. A recent study by IT services major Cognizant found that an overwhelming 97% of employees in India reported productivity improvements from using AI, with an average uplift of 15%. Workers are actively preparing for this shift, with 74% having completed AI training—a figure significantly higher than the global average of 56%. Yet, this wave of on-the-ground efficiency has hit a wall at the executive level. The same study reveals that 91% of senior business leaders have seen no impact on revenue, and 84% have not seen AI lower their costs. This creates a puzzling paradox: if individuals are getting more done, why aren’t companies seeing it on the bottom line?
Where AI Is Delivering Gains
The productivity boom is not uniform, with certain sectors and functions adopting AI more successfully than others. The Cognizant survey, which included 700 employees and 75 executives across 10 industries, highlighted healthcare as a frontrunner, where 38% of employees reported productivity gains exceeding 20%. It was followed by communications, technology, and banking. At a functional level, other research confirms that engineering and product teams are the fastest adopters, leveraging AI to test more ideas and shorten development cycles from weeks to days. For many companies, these gains are focused on automating routine tasks like summarising documents, handling basic customer queries, and generating first drafts of code or reports. This frees up employees to concentrate on higher-value, strategic work, which is the intended first step of any AI integration. However, the current evidence suggests many firms are still stuck at this initial stage.
The Revenue Disconnect Explained
The gap between productivity and profit stems from several interconnected challenges. A primary issue is that AI is often used for internal cost-cutting and efficiency rather than for creating new revenue streams. Only 9% of startup founders, for instance, say AI has delivered a measurable impact on sales or conversions. Another significant hurdle is scale. While employees are eager, business leaders report that on average, only 36% of their workforce has access to AI tools. This suggests that AI use is often confined to pilots and specific teams rather than being integrated across the entire enterprise. The difficulty in demonstrating a clear return on investment (ROI) is also causing hesitation. Cognizant's study found that 37% of companies have paused or even stopped AI initiatives because the financial benefits were unclear. Without a clear strategy to connect AI tools to customer-facing outcomes and new business models, the technology remains a cost center rather than a growth engine.
From Efficiency to Economic Growth
Bridging this gap is critical not just for individual companies but for India's broader economic ambitions. Cognizant modelled that under realistic adoption scenarios, AI-enabled productivity could add between $28 billion and $84 billion to India's annual GDP. Realising this potential requires a strategic shift. Experts suggest companies must move beyond simply deploying AI for backnd operations and focus on using it to transform customer facing processes. This includes using AI for personalised marketing, developing new AI powered products and services, and leveraging predictive insights to make faster, smarter business decisions. It also demands sustained investment in building deeper, more specialised AI skills. While general AI training is high, a Deloitte report notes that Indian firms lag global peers in high level AI expertise, which is essential for developing complex, value driving applications.
