Europe cautious, but will double GenAI investment in a year: Infosys

Spending shaped by concerns around ethics and bias, says research arm of Indian IT company

Europe is doubling down on generative AI (GenAI) investment although in a more cautious manner than North America, according to new research from the Infosys Knowledge Institute (IKI).

The research arm of Infosys forecasts that European companies will increase GenAI investments by 115 per cent to $2.8 billion next year.  

The pace of investment is slower than in North America where spend is expected to reach $6 billion. This more cautious spend is largely due to concerns around ethics and bias driven by the more regulated European market.

However, European companies remain optimistic about GenAI’s impact on their business and are much more confident in their ability to train and recruit talent. IT major Infosys has been steadily increasing its investments in AI and GenAI over the past few quarters.

 

Infosys had earlier said it is working on about 80 projects related to GenAI and ‘Topaz’, its comprehensive offering on GenAI, is resonating well with clients.

For Infosys, Europe is the second largest market that grew 5.4 per cent year-on-year (Y-o-Y) in constant currency and contributed 26.5 per cent to the company’s total revenue as of the second quarter. In comparison, North America, its largest market, grew 1 per cent Y-o-Y in constant currency and contributed 61.1 per cent to the top line.

“GenAI is driving phenomenal transformation across industries, and investment is happening at a rapid pace. Against the backdrop of an ever-evolving regulatory landscape, organisations must embed responsible AI techniques to not only improve data quality and management, but effectively manage ethics and bias risks. Our research has shown that for European businesses to derive business value, they must develop and evolve an AI-first operating model that prioritises business transformation and skills development, and enables them to maximise human potential,” said Balakrishna D R (Bali), global head of AI and industry verticals, Infosys.

For the Generative AI Radar 2023 – Europe report, IKI surveyed 1,000 respondents from companies across 11 Western European countries (Belgium, Denmark, Finland, France, Germany, Iceland, Luxemburg, Netherlands, Norway, Sweden and the UK).

The research highlighted that France and Germany are expected to double spending on GenAI, to nearly $730 million and $610 million, respectively, in a year.

In both the countries, about 50 per cent of companies have either implemented GenAI or have created business value from it. This compares with about 40 per cent in the UK, Benelux, and Nordics.

The UK is expected to move past Benelux into third place in the next 12 months, more than doubling spend to nearly $510 million. Nordic companies are expected to increase spending at the highest rate in the next 12 months – more than 2.5 times their current spending, to more than $470 million.

European companies are deploying GenAI, but only a few have created business value. Despite high levels of experimentation and implementation with GenAI, only 6 per cent of European companies generated business value with their GenAI use cases.

France, Germany and the UK lead the region, with about 10 per cent of companies reporting value delivered by their GenAI projects.

European companies are more focused on ethics and bias, and more confident about managing and controlling GenAI than North American companies, according to the research.

European firms identified ethics and bias as the second biggest challenge, after data privacy and security. North American companies are less concerned with ethics and bias.