FOMO Fuelled Massive AI Investments; Indian CEOs Now Worry Over Delivering ROI

Amid the massive drive to invest in artificial intelligence (AI) and integrate it into enterprises, CEOs—especially in India—are feeling the heat to demonstrate tangible results. A new survey shows that top Indian executives feel more pressure to show ROI (Return on Investment) from AI than their US and UK counterparts. Yet, with companies expected to allocate nearly 20% of their tech budgets to AI adoption in 2025, CEOs are wary of falling behind.

According to a survey by US-based contract lifecycle management (CLM) firm Icertis, the biggest source of strain for Indian C-suite executives is the pressure to show ROI from AI investments, with 56% citing it as a significant stressor—much higher than in the US (45%) and UK (38%).

Nearly 80% of Indian C-suite executives also said they feel pressured to understand AI concepts and struggle to identify which AI investments will have the biggest impact on their business. The study surveyed over 1,000 executives from companies with more than 5,000 employees across the US, UK, and India, including around 300 from India.

Importantly, nearly half of Indian executives said AI is already impacting their bottom line, and another 32% expect it will by the end of 2025, according to the Icertis report. But many believe the full potential of AI is yet to be realised.

What’s Behind the AI ROI Worries?

In June this year, Boston Consulting Group (BCG) projected India’s domestic AI market would more than triple to $17 billion by 2027, making it one of the fastest-growing AI economies globally. BCG earlier noted that 80% of Indian firms view AI as a core strategic priority, and 69% plan to increase tech investments in 2025—with one-third setting aside over $25 million for AI initiatives.

Yet, Indian CEOs report that only 20% of AI projects have delivered the expected ROI so far, and just 15% have scaled enterprise-wide, according to an IBM report released last week.

So, why are CEOs still investing? The IBM study found that 69% of CEOs admit the risk of falling behind drives investments in some technologies—even before they fully understand the value these technologies offer. However, only 39% agree with the idea that it’s better to be “fast and wrong” than “right and slow” when adopting new tech.

The Cost of AI and Its Concerns

In February, a Lenovo report stated that tech leaders expect AI to consume nearly 20% of their tech budgets in 2025, driven by accelerated adoption of generative AI use cases.

While only 11% of enterprises are currently using GenAI-powered applications, this figure is projected to jump to 42% within a year. IT operations, software development, and marketing are expected to see the highest adoption of GenAI.

According to IBM, 44% of CEOs say their organisations struggle to balance funding between daily operations and innovation during times of uncertainty, and 74% are calling for more flexible budgets to seize digital growth opportunities. By 2027, 84% expect AI investments focused on efficiency and cost savings to yield positive returns, while 78% foresee gains from AI-driven growth and expansion.

This momentum is supported by the Indian government’s push to boost AI adoption and data centre capacity. Under the IndiaAI mission, a ₹10,000 crore investment will create national AI compute infrastructure, including access to over 10,000 GPUs for model training and research.

India’s startup ecosystem is also thriving. Of the 4,500+ AI startups in the country, 40% have been launched in the last three years. These startups are driving innovation across healthtech, agritech, logistics, and fintech. To support this growth, India plans to add 45 new data centres by 2025, adding 1,015 MW of capacity to the current 152-centre network, with major investments from corporates like Reliance Industries and Adani Group.

AI Washing Is Flooding the Market

Despite the AI boom, Icertis highlights a growing concern among Indian executives about AI washing—the exaggeration of AI’s role in products and services. About 62% of Indian executives said they were “extremely inundated” with AI washing, compared to 46% in the US and 36% in the UK.

The term, inspired by the earlier trend of greenwashing, is plaguing global corporates. In February 2024, US SEC Chair Gary Gensler warned that AI washing can violate US securities laws, mislead consumers, and harm investors.

He urged companies to disclose the specific operational, legal, and competitive risks of their AI use, along with its actual business purpose. The US Federal Trade Commission (FTC) issued a similar warning a year earlier, cautioning against false or unsubstantiated AI claims.