India’s mid-market firms lead in AI adoption but face rising complexity costs: Freshworks Report
The report estimates that Indian AI firms are losing Rs 33,000 crore in wasted AI spending annually.
India’s mid-market companies are emerging as global leaders in artificial intelligence (AI) adoption, but they are also paying a significant price in the form of growing complexity and inefficiencies, according to a new study by Freshworks.
The company’s 'Global Cost of Complexity Report: The Mid-Market AI Complexity Trap' found that Indian firms lose 27% of their AI budgets to complexity-related overheads, higher than the global average of 25%. This translates into an estimated Rs 33,000 crore in wasted AI spending annually. Despite these challenges, India leads global mid-market organisations in AI integration, with 36% reporting AI embedded across multiple core business operations, more than double the global average of 15%.
The report, based on responses from over 9,000 mid-market IT decision-makers across six countries, highlighted strong optimism among Indian businesses. About 94% of respondents expect business growth over the next year, while an equal percentage plan to increase AI investments in the next 12–24 months. However, expectations around returns remain demanding, with 74% of Indian executives expecting AI investments to deliver returns within eight months, even though over half of organizations say deployments typically take six to 12 months to go live.
System integration challenges, talent shortages and extensive configuration requirements were identified as the biggest barriers to successful AI deployment. Additionally, 88% of Indian IT leaders said managing AI complexity has increased workloads, while 85% reported dealing with inaccurate or low-quality AI outputs that require rework.
The study also found that Indian firms use an average of 4.6 AI tools, above the global average of 4.2, contributing to technology sprawl. As a result, businesses are increasingly prioritising AI solutions that integrate seamlessly with existing workflows. Nearly 93% of Indian respondents said they prefer AI products with built-in workflows over heavily customised solutions, reflecting a growing focus on faster implementation and measurable business value.