There’s a mere two-year window to capitalize on the advantages of generative AI before competitive disadvantages emerge, according to a new joint research report titled “The Two-year Gen AI Countdown: How businesses are scaling GenAI adoption and avoiding the productivity trap.”

Genpact, a global professional services and solutions firm, and HFS Research, a global research and analysis firm, partnered to produce the report, which found that just 5 percent of enterprises have achieved mature Gen AI initiatives.

Based on a survey of 550 senior executives from organizations with revenues of $1 billion or more across 12 countries and eight industries, the report sheds light on the urgency and challenges of Gen AI adoption.

Key findings show that while most enterprises are in the early stages of their Gen AI journeys, a significant majority are heavily investing in exploring and expanding Gen AI capabilities.

More than half, 61 percent, of enterprises allocate up to 10 percent of tech budgets to Gen AI, the report found.

A majority of respondents, 74 percent, anticipate productivity gains, while 52 percent caution against overemphasis on productivity, citing broader business goals and concerns that it could impact the employee experience.

“Our research indicates the majority of executives view generative AI as a catalyst for value creation, fostering not only productivity, but also customer satisfaction, revenue growth, and competitive advantage,” said Balkrishan “BK” Kalra, president and CEO, Genpact. “The fundamental shift will be in how enterprises think about data and technology; this will shape the future competitiveness and success of organizations globally. At Genpact, we believe the opportunity to drive exponential outcomes is now, by leveraging domain expertise alongside data, tech, and AI to unlock value and innovation for our clients.”

Organizations Are Doubling Down on Investment

Investment data indicates 51 percent of executives are reallocating funds, primarily from IT infrastructure and software development, while 50 percent set aside dedicated funds for Gen AI, with 42 percent planning to reinvest anticipated efficiency gains.

Among the industries surveyed, healthcare, retail, and high-tech are most inclined to redirect existing funds toward Gen AI investments, the analysis found.

In contrast, banking, capital markets and the insurance sectors prefer to allocate additional dedicated budgets for their Gen AI initiatives, indicating a strong commitment to Gen AI’s potential.

The life sciences sector adopts a dual strategy, counting on forecasted Gen AI-driven savings for funding while remaining open to external funding and partnerships, the report noted.

“As companies step into generative AI’s uncharted waters, the journey holds huge promise, but it is not without its perils,” said Sreekanth Menon, global lead for AI, Genpact. “The challenge for most enterprises is they remain anchored in proofs of concept that can be impressive, but rarely reach operational scale. Having access to insights that can chart a course toward Gen AI’s full benefits — beyond productivity alone — is invaluable.”

Beyond Productivity Gains

Though 74 percent of executives anticipate Gen AI driving productivity gains, there are concerns with overemphasizing productivity at the expense of broader business goals.

“The considerable investment in Gen AI showcased in this research underscores its pivotal role as a primary catalyst for future value generation,” said Phil Fersht, CEO and chief analyst, HFS Research. “The dawn of the generative AI era signifies not just efficiency gains, but also the creation of tangible business value. Enterprises ought to gauge the influence of Gen AI by its capacity to forecast and tailor experiences before solely focusing on productivity gains.”

The Data Quality Imperative

The success of Gen AI initiatives hinges on the quality of data, the report noted.

Organizations targeting Gen AI outcomes within two years are grappling with challenges such as data quality and strategy, underscoring the urgent need for a robust data strategy.

Shifting Engagement Models for Success

Executives emphasize the need for a shift in engagement models to accommodate the AI era.

Current time and material driven models will be rendered ineffective, the report stated, with 80 percent recognizing the necessity of transitioning to performance- and purpose-driven commercial models with partners to fully capitalize on Gen AI’s potential.

Maturity Levels

The research divides enterprises into four Gen AI maturity levels reflecting the commitment of investments and the extent of Gen AI deployment within their businesses. Across these maturity levels, the report found that the perceived top benefits of Gen AI differ.

Pioneers (5%): Leading integration and setting benchmarks, Pioneer organizations are seeking direct growth outcomes from Gen AI, such as increased market share and competitive advantage.

Fast Followers (27%): Strategically deploying Gen AI for efficiency gains, Fast Followers are focused on using Gen AI to enhance customer experience.

Wait and Watch (45%): Delaying investment, Wait and Watch enterprises aim to leverage Gen AI primarily for operational efficiency and productivity.

Deniers (23%): Skeptical of Gen AI, Deniers are missing out on potential innovations (not included in report).

The report urges “organizations to act swiftly and decisively, using Gen AI to spur innovation, create value and maintain competitiveness in an increasingly AI-driven world.”