Why are enterprises reluctant to adopt GenAI despite the hype around it?

Reluctance to adopt AI at scale boils to fear of change; while technical factors include inadequate training, client hesitation over security

Since late 2022, artificial intelligence (AI) and generative AI (GenAI) have dominated conversations across industries. OpenAI’s breakthroughs showcased the transformative potential of AI, leading to expectations of a dramatic shift in the workplace. However, despite nearly 18 months of relentless buzz, GenAI adoption within enterprises remains sluggish.

 

According to a report by Boston Consulting Group (BCG), while over 80 per cent of Indian developers recognise the productivity benefits of GenAI, only 39 per cent use it proficiently. Even more striking is the low adoption rate among Gen-Z developers, often considered the 'GenAI generation', where proficient usage stands at just 31 per cent.

 

Rajiv Gupta, Managing Director and Senior Partner at BCG, attributes this slow adoption to multiple factors, including inadequate and unfocused training, client hesitations regarding security concerns, and commercial viability. However, he highlights a deeper issue at play.

 

“The elephant in the room is the fear factor,” he explains. “From a developer or employee perspective, it’s the fear of job losses. For organisations, it’s concerns about sunk investments, workforce reductions, and potential disruption. While these fears may be unnecessary, they have nonetheless created a significant barrier.”

 

Vikash Daga, Senior Partner at McKinsey & Company, emphasises that GenAI adoption is more of a human challenge than a technical one.

 

“We’ve been saying this repeatedly — GenAI’s biggest hurdle isn’t technology but human behaviour. The real challenge is getting frontline employees to actively use these tools and extract value from them,” Daga says.

 

This underscores the critical role of change management in driving enterprise-wide adoption. According to McKinsey, only about 10 per cent of enterprises have deployed GenAI at scale, and fewer than 5 per cent have successfully integrated GenAI-driven use cases across their workflows.

 

For Indian IT services firms, which are at the forefront of AI-led transformation, the shift to GenAI and agentic AI will inevitably impact their long-standing pyramid workforce model. This hierarchical structure has historically been a cost-management lever for the industry.

 

“The pyramid structure will remain, but the composition of talent across levels will evolve,” says C Vijayakumar, CEO and Managing Director of HCLTech. “The way we hire and train will change significantly. We will need more specialised talent, and while we will continue hiring at the entry level, the expectations from new recruits will be much higher.”

 

An Accenture report further reveals that while 87 per cent of its client ecosystem has yet to adopt GenAI, the remaining 13 per cent are implementing the right strategies to harness its full potential.

 

Meanwhile, in the business process management (BPM) sector, where assisted AI has begun to make its presence felt, companies report a significant reluctance from customers to fully embrace the technology. 

KEY INSIGHTS

 

*  According to Boston Consulting Group, while over 80% of developers recognise the productivity benefits of GenAI, only 39% use it

 

*  The adoption rate among GenZ developers stands at just 31%

 

*  According to McKinsey, only about 10% of enterprises have deployed GenAI at scale

 

*  An Accenture report reveals that while 87% of its client ecosystem has yet to adopt GenAI, 13% are implementing strategies to harness its full potential