Indian SMEs leverage economic potential, but most have yet to adopt artificial intelligence

Artificial intelligence (AI) has become an integral part of most major global economies, and India is no exception. Business leadership demands immediate AI adoption to maintain competitiveness. However, 46% of Indian organizations have already faced delays in AI implementation due to identification issues—the highest rate globally. The pressure for deployment is immense and exceeds the discipline required for safe integration.

AI Integration into Operations

For enterprises in major cities, AI agents are no longer a future prospect; they are being integrated into daily workflows. Meanwhile, the process of hiring people remains strictly controlled: background checks are conducted, offers are formalized, registration with EPFO occurs, roles are defined, and clear lines of reporting are established. This contrast is more significant than most IT directors realize.

When a new employee joins a company, a structured process is initiated even before they enter the corporate system. Contracts are signed, a manager is assigned, and access is provided by IT. Someone is responsible for that person's actions and for the data they can view. In highly regulated sectors in India, such as BFSI, pharmaceuticals, and IT services, this audit trail is not optional.

Imagine now that hundreds of new workers are hired overnight: without contracts, without managers, without clear tracking of what they can access or what decisions they are allowed to make, yet they operate within systems, move confidential data, and act on behalf of the organization. This is how many Indian enterprises use AI agents today.

The Compliance Gap

India's regulatory environment is rapidly tightening. The cost of an undetected decision is not just operational, but also legal and reputational risk. Indian organizations are already reporting the highest impact of identification issues on business globally, clearly indicating that security teams have not yet implemented the modern controls necessary to maintain governance amid high velocity.

When something goes wrong, boards of directors and regulators will not ask if the AI was innovative. They will ask who approved it, who owns it, and who is accountable for it. Here lies a quiet but serious governance gap that cannot be ignored, according to the data. Most (63%) IT decision-makers in India believe that gaps in identifying data within AI-related environments will persist. The problem is not theoretical; it already exists, and most organizations are aware of it.

The Identification Crisis

Traditional identity and access models were designed for two types of participants: humans and predictable machines. AI agents introduce a new category. Some agents act on behalf of employees, using delegated access to compose emails, generate reports, or interact with corporate applications. Others operate autonomously, using their own credentials for independent access to systems and data.

In the landscape of Indian IT services and GCCs, where AI agents are increasingly embedded in client service supply chains, the stakes are particularly high. Both types of agents can cause real consequences, but neither fits into existing governance frameworks. The response of many organizations has been to agree to relaxed controls rather than slowing down deployment. A recent study found that 79% of Indian organizations reported accepting persistent access under operational pressure, and 68% stated there were no reliable alternatives to persistent access at all. When access becomes permanent and unverified, visibility disappears, and accountability soon follows.

AI Governance as People Management

Human Resources functions in India, especially in large enterprises and IT organizations, have always operated with strict lifecycle discipline. AI agents deserve the same rigor. Before an agent is allowed to operate, organizations must know about its existence. Only 22% of Indian organizations report continuously detecting unauthorized AI, meaning the vast majority have limited visibility into shadow AI spreading through their systems. Detection is the crucial first step, the digital equivalent of knowing who is on the payroll.

Next comes the onboarding process. Just as HR assigns an employee a number, a position, and a manager, AI agents require unique identifiers, clearly defined ownership, and explicit permissions. India has a relative advantage in this regard, leading the world in identification visibility metrics, with 40% of organizations already using continuous Non-Human Identity (NHI) verification, which is above the global average. The challenge is to translate this visibility into automated access management, and too few are making this leap. Access must be strictly limited to what is required for the task, regularly reviewed, and never granted arbitrarily. And when an agent is decommissioned or abandoned, access must be revoked just like for any departing employee.

Foundation, Not Friction

India's ambitions to become a global AI power are justified. Talent exists, and investment is flowing. But deployment without governance is not a competitive advantage; it is a brewing threat. No responsible organization would allow a new employee to wander freely in the office, access confidential files, and sign documents on behalf of the company without oversight. Yet, this is effectively what happens when AI agents are deployed without structural identification, ownership, and accountability.

AI agents join the Indian workforce regardless of organizational readiness. What is missing is oversight. To turn AI adoption into a genuine competitive advantage, Indian organizations must manage their digital workers as they manage their human employees. The friction arising from doing this correctly is not a barrier to growth; it is its foundation.

IT Secretary S Krishnan emphasized that adapting and preparing skills for the age of artificial intelligence will be a key factor in realizing India's aspiration to leverage its talent in STEM and transform into a global center for artificial intelligence-based solutions.

AI Potential and the Role of GCC

Speaking at the CII GCC Business Summit, Krishnan noted that the adoption of AI in the corporate sector lags globally, creating an opportunity for Global Capability Centers (GCCs) in India to play a decisive role. He added that AI paves the way for moving away from routine tasks, as automation takes over low-level functions, allowing people to focus on higher-value tasks.

Government Support and Talent Focus

According to Krishnan, the government's approach to AI has been 'extremely positive' and initially characterized by an 'optimistic outlook.' He believes that India should strive to become a global node for AI applications and solutions, utilizing its human capital to drive the adoption of this technology in enterprises.

Despite the acceleration of global investments in AI infrastructure and foundational models, the implementation of these technologies in companies remains limited, presenting a significant opportunity for GCCs in India. Krishnan specified that it is the GCCs that must perform the function of transferring and shifting higher-level functions across various segments.

Need for Workforce Reskilling

The Secretary also highlighted that human interaction will remain relevant when deploying AI applications and solutions. He stressed the importance of revising curricula in both educational institutions and companies to prepare the workforce for the new AI era. In this regard, the government is collaborating with industry associations to launch targeted upskilling initiatives.

Krishnan noted that the country's success in leveraging AI and its strengths in STEM depends on the ability to reorient skills. Furthermore, he reported that central authorities and states have implemented a series of reforms—from tax clarity to labor code measures and simplification of business norms—to encourage the creation of GCCs. He added that it is now time to assess how much these changes have accelerated GCC growth and how AI concerns are affecting this pace.