77% Indian startups now invest in AI, small cities brimming with tech skill pool

More than 77 per cent of Indian startups now invest in advanced technologies such as artificial intelligence (AI), machine learning (ML), internet of things (IoT) and blockchain, a report showed on Thursday.

The trend underscores the rapid technological adoption and innovation across the Indian startup ecosystem, now ranked third globally, following the US and China, according to the report by SAP India, in collaboration with Dun & Bradstreet.

Another significant finding is the emergence of tier 2 and 3 cities as innovation hubs, where 40 per cent of tech startups originate, leveraging local talent and cost advantages.

Cities like Chandigarh, Jaipur, Madurai, Indore, Kochi, Warangal, Hubli, Raipur, Visakhapatnam and Guwahati, among others, host 15 per cent of the country's tech skill pool.

This tech-driven evolution solidifies India's global stature as a leading startup powerhouse, supported by robust corporate governance and a conducive regulatory environment, the report noted.

“As companies shift their focus from GMV (gross merchandise value) to GM (gross margin) and seek to forge more sustainable business models with the help of transparent, trusted financial data, technology remains a cornerstone and a key differentiator for startups to achieve these business goals,” said Sanket Deodhar, VP and Head of Digital Natives, SAP Indian Subcontinent.

Around 79 per cent of start-ups believe that adopting enterprise applications integrated with new-age technologies such as AI is essential for scaling and improving unit economics.

Nearly 72 per cent of startups surveyed said that they already have or are looking to invest in new-age technologies.

About 85 per cent of startups believe unit economics is a clear path to profitability and enhancing valuation, the report mentioned.

“India's startup ecosystem is thriving, fueled by a favourable regulatory environment, a growing middle class, and a tech-savvy youth population. 

With almost 3 lakh startups and 113 unicorns across diverse sectors, India ranks third globally in its startup ecosystem,” said Avinash Gupta, Managing Director and CEO–India, Dun & Bradstreet.