European firms to increase generative AI investments by 115% in 2024: Infosys report

Representative Image

European companies are doubling down on their generative AI investments next year, growing by 115 percent and expected to $2.8 billion, according to a report by IT services giant Infosys. However, it added that these companies are still struggling to generate value from the hyped technology and are moving more cautiously than North American companies.

The pace of investment in generative AI in Europe is slower than in North America where spend is expected to reach close to $6 billion. Among European countries, France and Germany are expected to lead spending and adoption with nearly $730 million in France and almost $610 million getting invested in Germany, in the next 12 months, the report said.

“In both countries, about 50 percent of companies have either implemented GenAI or have implemented and have created business value from it – compared with roughly 40 percent in UK, Benelux, and Nordics. The UK is expected to move past Benelux into third place in the next 12 months, more than doubling spending to nearly $510 million,” the report said.

In terms of rate of growth, Nordic companies are expected the highest jump with more than 2.5X their current spending at over $470 million in the next 12 months.

Cautious moves

Though these companies are deploying and experimenting with GenAI, very few are seeing actual value creation so far.

“Only 6 percent of European companies generate business value with their GenAI use cases. France, Germany and the UK lead the region, with about 10 percent of companies reporting value delivered by their GenAI projects,” the report quoted.

This cautiousness is also driven by concerns around ethics and bias driven by the more regulated European market. However, European companies remain optimistic about the impact expected on their business and are in their ability to train and recruit talent, as well as manage and control generative AI systems.

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,” he added.

On the business front, Infosys had over 50 active generative AI projects in the pipeline.

It announced three large deals in Q2: a $2-billion contract with an existing customer to provide AI and automation-led development and maintenance services over five years; a $1.5-billion deal with Liberty Global over five years; and an MoU that was signed for $1.5 billion with an undisclosed global company, where the spend is over 15 years.