One in five businesses in emerging markets 'not ready for AI adoption'

Lack of training data and high-capacity computational systems to power high-tech systems are significant barriers, G42 report finds

Nearly 48 per cent of surveyed business leaders believe their governments are still in the early stages of AI readiness. Reuters

About one fifth of businesses in emerging markets say they are not ready to adopt artificial intelligence due to gaps in infrastructure, talent and resources. This is despite 70 per cent of company executives reporting access to fundamental IT capabilities, including consistent and stable internet connections.

The findings were part of a new report by the UAE-based technology company G42 in collaboration with Economist Impact, which surveyed 700 senior executives from medium to large companies across seven emerging markets: Azerbaijan, Egypt, India, Indonesia, Kazakhstan, Kenya and Turkey.

Almost 81 per cent of respondents described limited or no access to training data, while 84 per cent identified high-capacity computational systems to feed and power AI systems as significant barriers.

Wendy Gonzalez, chief executive of US-based training data company Samasource and a contributor to the report, said components such as cloud computing, graphics processing units and adequate processing capacities are critical drivers for AI implementation, particularly in emerging markets.

Talent paucity threatens long-term growth

The report highlighted a severe shortage of AI talent in emerging markets, with 45 per cent of surveyed businesses citing this as a main obstacle. Companies struggle to find workers with a mix of technical skills, such as data literacy and system programming, and soft skills like critical thinking and communication.

“AI talent is no longer solely about complex mathematics and programming,” said Mark Manantan, director of cybersecurity and critical technology at the Pacific Forum. “Today, softer skills integrated with technical competencies are equally critical.”

Adding to the problem is the 'brain drain' phenomenon. For example, India had 770,000 students leave the country for higher education in 2022, while political and economic instability in Turkey drove 139,530 of its citizens to emigrate in the same year, the largest demographic being people aged 25 to 29.

“Talent is critical,” said Maymee Kurian, group human capital and culture officer at G42. "In a field such as AI, which is highly innovation-driven and evolves at lightning speed, it’s crucial to find the right talent that can keep up with those changes but also bring new perspectives."

Larger firms are more likely to develop custom AI tools to add to customer experience. Reuters

Uneven AI readiness

The report found disparities in AI readiness between larger and smaller companies.

Larger firms, defined as those with more than 1,000 employees, are better equipped to adopt AI solutions. They are also more likely to develop custom AI tools, with 53 per cent of large companies taking this approach compared to 39 per cent of smaller firms.

These custom tools can drive personalised employee and customer experiences, as well as enhance decision-making. In one example, MakeMyTrip, an Indian travel company, is developing an AI-powered chatbot in partnership with Microsoft to address language barriers for domestic users.

However, while some companies invest in tailored AI solutions, many remain hesitant due to uncertainties around measurable outcomes.

The lack of a clearly defined return on investment for AI solutions is one of the major obstacles identified in the report. Nearly 30 per cent of respondents indicated that unclear return-on-investment metrics hinder their ability to adopt AI technology.

“Developing clear processes and metrics will help companies assess progress and the business value of implementing AI systems,” said Mohit Kapoor, chief technology officer at Mahindra Group.

Despite these challenges, businesses acknowledge the potential benefits of AI. Increased productivity and efficiency were identified by 59 per cent of respondents, while 42 per cent reported improved customer satisfaction and 38 per cent highlighted cost reduction.

Harmonising innovation and regulation

The report underscored the need for governments in emerging markets to take a proactive role in addressing AI readiness. National strategies, such as Rwanda’s AI road map and the IndiaAI initiative, aim to enhance infrastructure and provide AI education in both a formal and informal way.

While businesses are keen to explore AI, regulatory uncertainty in many emerging markets remains a challenge. Nearly 48 per cent of surveyed business leaders believe their governments are still in the early stages of AI readiness and 28 per cent say national policies do not sufficiently support AI technology.

The report calls for balanced regulation that encourages innovation while addressing risks. Bitange Ndemo, Kenya’s ambassador to the European Union, advocated “sandboxes” to foster safe experimentation with AI technology.

Policymakers in emerging markets must focus on strengthening AI readiness through infrastructure investment, enhancing education with both Stem and critical-thinking skills, and crafting robust AI strategies to guide businesses. Despite budget constraints, these markets may adapt more quickly due to minimal legacy infrastructure, the report noted.