Indian businesses betting big on small language models: Report

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Indian businesses are increasingly adopting small language models (SLMs) to meet the demand for more efficient, faster and targeted solutions, Deloitte’s Tech Trends – India Perspective report has said.

Integrating SLMs, AI-based simulations and task-specific artificial intelligence agents will drive the development of more personalised and context-aware solutions across industries, it said.

"AI serves as the backbone, enabling and accelerating breakthroughs across industries. It is not just about AI in isolation; it is about how it drives a wave of innovation and fuels advancements in complementary technologies," Deloitte said in a release on April 29.

An SLM is an AI model designed to process and generate text but it is smaller in size and tailored for specific tasks or industries, often using less data and computational resources compared to a large language model (LLM).

In India, the integration of AI is already taking root across the tech ecosystem.

India, however, must enhance its infrastructure, particularly high-performance computing and sustainable energy solutions, to accelerate growth while empowering its workforce through skill development and building ethical AI frameworks.

Another interesting trend is the growing role of context-aware intelligence in transforming how industries operate and interact.

"Indian enterprises are moving beyond automation to deploy technologies that interpret, adapt, and act in real time, making digital transformation more fluid, inclusive, and future-ready," Abhrajit Ray, Partner and CIO Program Leader, Deloitte India, said.

The rapid growth of Gen AI has put hardware back at the centre of the technology conversation, the report said. What was once considered a settled, largely static and commoditised layer, with only incremental improvements over product cycles, is now being re-examined to meet the demands of advanced AI systems.

From the Internet of Things (IoT) to robotics, AI-powered hardware is transforming industries, enabling smarter devices and more efficient systems, and creating new opportunities for innovation.

Specialised chips for critical applications, including power management, telecommunications, and cryptographic acceleration, are becoming indispensable. This shift marks a new era in which hardware is not just supporting innovation but actively shaping it, driving a deeper integration between AI capabilities and the systems that power them.

The report also talked about how spatial computing, driven by intelligent technologies, is enabling systems to shift from being merely reactive to truly proactive by anticipating needs and addressing challenges before they arise.

Companies are using AI to automate complex workflows, optimise resource allocation, and enhance regulatory compliance, addressing challenges such as cost pressures, workforce evolution and increasingly demanding customer expectations.

However, these innovations are challenging, requiring complex architectural changes to ensure scalability, security and long-term sustainability.

On AI’s role in the IT sector, the report said AI is amplifying the capabilities of tech talent, which, in turn, is encouraging businesses to move from traditional virtualisation models to more scalable, cost-effective, AI-driven solutions.