Forrester predicts AI to reshape India’s tech landscape by 2025

Technology research firm Forrester has announced a series of predictions for 2025, focusing on the role of artificial intelligence (AI) in shaping the technology landscape in India and the Asia-Pacific region.

Forrester's forecast highlights several key areas where AI is expected to influence India's business and technology sectors. The prediction indicates that there will be a significant shift in how enterprises approach AI return on investment (ROI). According to Forrester, most enterprises focusing on AI ROI may scale back prematurely due to unrealistic expectations regarding the timing of financial returns.

Ashutosh Sharma, Vice President and Research Director at Forrester, stated, "Catalysed by generative AI, companies fearlessly experimented in 2024. In 2025, we predict that the focus will shift more squarely to the bottom line as firms look to turn experiments and lessons learned into profit. We anticipate savvy leaders will look to shore up the fundamentals and build a durable foundation for growth. Pressures to show return on investment (ROI) will drive an emphasis on quick wins and too many prematurely curtailed AI initiatives."

AI implementation challenges are expected to cause setbacks in more than 50% of agentic AI and AI agent efforts. Agentic AI, characterised by its ability to operate independently and adaptively, faces hurdles such as the lack of a clear business case, costliness, insufficient data strategies, and the need for standardised tools.

The report also suggests that the top 10% of IT service providers with revenues exceeding USD $1 billion will begin delivering 30% of their core services through AI-Enabled Platform Services (APS). This shift is predicted to commoditise services, improve service quality, and significantly reduce prices.

For mid-sized service vendors, Forrester anticipates that "Service-as-Software" will force 20% out of the market. These companies are expected to shift towards providing more high-value services and specialising within industry verticals while a growing services marketplace commoditises standard offerings.

Regarding connectivity, Forrester forecasts the introduction of satellite internet in India by 2025, but it predicts it will be "dead on arrival". The report mentions that while companies like Starlink will generate initial interest and create market awareness, they will not enjoy the first-mover advantage. Instead, Indian telecommunications companies will adapt, and improved regional solutions will emerge.

In the insurance sector, fewer than 5% of companies are expected to see significant gains from AI. While India's insurance market is driven by regulatory, technological, and investor influences, AI adoption is expected to remain gradual. A few progressive insurers may lead in AI integration, but most will continue with limited, incremental applications.

Forrester also envisions AI-driven autonomous finance transforming financial advisory services. One in four banks is expected to be at the forefront of this shift, offering more personalised and efficient services. According to Forrester, "Autonomous finance will enable more personalised, seamless, and efficient financial services." Indian banks that use AI to enhance their advisory services are expected to dominate the market.