Over 70% of Indian startups now integrating AI into core business functions: Meta report

Over 70% of Indian startups are now integrating AI into core business functions and 67% have adopted omnichannel models to catch up with modern customer journeys that bridge online discovery and offline purchase, a Meta-commissioned report said on Friday.

As India's startup ecosystem moves forward to its second phase of expansion, new enterprises are revolutionizing their growth by digital innovation with AI, omnichannel, creators, and penetration into tier 2 and 3 markets and as much to cross-border geographies, the Meta report in association with premier global professional services provider Alvarez & Marsal India stated.

The research revealed that the startup ecosystem of India has experienced tenfold growth in the last decade with an increase in early-stage funding, digital penetration, and consumer prosperity in the metros as well as non-metro areas.

"In these rapidly changing times we currently live in, thinkahead startups who act fast to innovate will be at the forefront. We, at Meta, are thrilled to be along for the ride, equipping them with cutting-edge AI-powered solutions to grow and realize their grand ideas," said Sandhya Devanathan, Vice President, India and South East Asia, Meta.

Technologies such as AI are also driving the growth of startups and MSMEs within the country.

"We're seeing a significant shift in the manner Indian startups approach scale-not just for growth chasing but building more sustainable businesses with a focus on value creation," Himanshu Bajaj, Managing Director and Head - Alvarez & Marsal India and GCC, said.

AI is emerging as a game-changer for marketing. In marketing alone, 87% of AI adopters experienced a 30% decrease in cost per acquisition (CPA).

Sectors such as healthcare, edtech and beauty lead the way in terms of AI maturity utilizing automation to drive customer service, predictive analytics, and personalisation, the study found.

Tier 2 and 3 markets have become the new playing fields of scale. Nearly all startup businesses polled are expanding into these markets driven by demand, digital penetration, and distribution ease. Service startups are entering these markets nearly a year ahead of product-based counterparts, leveraging WhatsApp, vernacular content, and local influencers to cut through.

Internationalization is no longer the domain of incumbents. The study finds that 52% of startups are expanding cross-border, driven largely by larger total addressable market (TAM) and increasing worldwide demand for Indian-origin goods. The US, Canada and the UAE and UK were the top export markets, as per the report.