European firms struggle to generate value from Generative AI

Ethics, Bias and Regulatory concerns slowing European adoption.

  • 2 months ago Posted in

Europe is doubling down on generative AI (GenAI) investment but is on a more cautious path than North America, according to new research from the Infosys Knowledge Institute (IKI), the research arm of Infosys. The research forecasts that European companies will increase GenAI investments by 115% in the next year, to $2.8 billion.

The pace of investment is slower than in North America where spend is expected to reach close to $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 generative AI’s impact on their business and are much more confident in their ability to train and recruit talent, as well as manage and control generative AI systems.

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 United Kingdom). The research, which is also supported by interviews with business leaders and AI practitioners, highlights the following insights.

• France and Germany lead spending and adoption

o France and Germany are expected to double spending on GenAI, to nearly $730 million in France and almost $610 million in Germany, in the next 12 months.

o In both countries, about 50% of companies have either implemented GenAI or have implemented and have created business value from it – compared with roughly 40% in UK, Benelux, and Nordics.

o UK is expected to move past Benelux into third place in the next 12 months, more than doubling spend to nearly $510 million.

o Nordic companies are expected to increase spending at the highest rate in the next 12 months – more than 2.5x their current spending, to more than $470 million.

• European companies are deploying GenAI, but few have created business value

o Despite high levels of experimentation and implementation with GenAI, only 6% of European companies generate business value with their GenAI use cases. France, Germany and the UK lead the region, with about 10% 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

o European companies identified ethics and bias as the second biggest challenge, after data privacy and security. North American companies are less concerned with ethics and bias – where it was the fourth biggest challenge behind issues such as data privacy, unusable data and lack of skills.

o European companies also have more boards of directors involved in GenAI policies, reflecting their concerns around regulations. In Europe, boards of directors set regulations and policies at more than 30% of companies and are primary sponsors nearly 20% of the time.

o More than 70% of European respondents are confident in GenAI management abilities.

Balakrishna D. R. (Bali), Executive Vice President, Global Head of AI and Industry Verticals, Infosys, said “Generative AI is driving phenomenal transformation across industries, and investment is happening at a rapid pace. Against the backdrop of an ever-evolving regulatory landscape, organizations 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 prioritizes business transformation and skills development, and enables them to maximize human potential.”

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