Errors, high cost among reasons GenAI not moving beyond concept stage

livemint.com:

Mint on 12 July, K. Krithivasan, CEO of India’s largest IT services company, Tata Consultancy Services Ltd (TCS), said that delivering differentiations to clients is key, instead of riding a hype cycle. However, the road to adoption is still hazy.

Experts have put a question mark on the adoption of GenAI by outsourcing companies as most of the tests conducted by these companies have not gone into the production stage. “According to industry feedback, more than 85% of proof-of-concepts around generative AI have failed to move into production. We think this is contributing to a disparity between generative AI investment in the hardware and training front versus actual revenue generation by IT service providers and software application providers," read a note by BMO Capital Markets analyst Keith Bachman dated 31 July.

Most IT services companies in their latest earnings commentary have said that they have trained their employees on AI and GenAI, without delving deeper into those training modules. Gartner has said that almost a third of GenAI projects would not see the light of the day beyond the proof-of-concept stage. “At least 30% of generative AI (GenAI) projects will be abandoned after proof-of-concept by the end of 2025, due to poor data quality, inadequate risk controls, escalating costs or unclear business value," the IT research and consulting firm said on 29 July.

While accuracy is a concern, stakeholders are wary of the novelty of the new technology. Analysts said that enterprises were uncertain on actual adoption of GenAI because of its relative newness. “Only 5% of GenAI has moved into production in major enterprises, but this will increase significantly as real business cases emerge.