Microsoft CEO Satya Nadella Highlights India's AI Potential and Challenges

Thinking with AI, but working with colleagues 'new workflow': Microsoft CEO Satya Nadella

Satya Nadella emphasised India's potential to create cost-efficient AI solutions, highlighting its math talent and the opportunity for frontier research on AI tailored for Indian languages and industries. Microsoft and India AI will collaborate to advance AI technologies, focusing on healthcare, education, accessibility, and agriculture, while promoting rural AI innovation.While high capital requirements may be a barrier for India in developing homegrown foundational AI models, there is space for the country to make smart strategic choices, Microsoft chairman and CEO Satya Nadella said here on Wednesday. "What if India defined the mission as, what was last year's $10 billion run, we will do in a billion," Nadella said, highlighting the country's potential to create cost-efficient AI solutions. This is something that the world would reward as it would be a game-changer, he said. We are one mathematical breakthrough away from the "next big thing" that is more compute-efficient than the transformer architecture that powers large language models (LLMs), and India has the math talent, Nadella said. He was responding to the ongoing debate about whether India should build indigenous LLMs, or focus its energy on creating applications on top of available models. Referring to Microsoft's own example, Nadella said artificial intelligence (AI) can help improve operational efficiency by 10-15% each year on every line item, which would amount to about 100% improvement in 5-6 years. Thinking with AI, but working with colleagues, will be the "new workflow", and people can build a "swarm of agents" to help them, he said. At the same time, the industry must take the responsibility to ensure that the negative unintended consequences of AI don't outrun the benefits, Nadella said. For instance, the returns to labour versus just capital is a policy and political decision that each country would have to look at, he said. In conversation with Nadella, union minister of state for IT Jitin Prasada said the benefits of AI must reach the grassroots. "You can't have big exhibitions in these drawing rooms and big cities unless it transcends down to the last mile and transforms the lives of the Indians who reside in the villages," he said. In addition to being the use case capital of the world, India is also the talent and intellectual capital, making it well-positioned to take on the AI growth story, Prasada said. While the government is satisfied with existing laws and intermediary guidelines under the IT Act to tackle the harms arising from AI, if needed, it will not hesitate to bring in a new law, the minister added. Nadella highlighted the opportunity to create real impact across the length and breadth of India and across every sector of the economy with AI. "We are deeply committed to that progress and to that impact," he said in a keynote address. He also said India should do frontier research on AI to make it great for Indian languages and Indian industry. Microsoft on Wednesday said it has signed a memorandum of understanding (MoU) with India AI, a division of the Digital India Corporation, to collaborate on advancing AI and emerging technologies in the country. Together, Microsoft and India AI aim to leverage AI to drive innovation, enhance productivity, and foster inclusive growth across the country, it said in a statement. Under the MoU, Microsoft will skill 500,000 people, including students, educators, developers, government officials and women entrepreneurs by 2026. "With AI, the speed of diffusion is incredibly fast and it has come to India on day one -- we have got the same access to AI tools and capabilities (as anywhere else)," said Puneet Chandok, president at Microsoft India and South Asia. "It's a huge democratising force leading to India's startups being much more ambitious, curious and fearless," he added. Getting the "tokens per dollar per watt" equation right is key in this space, he said. Every sector in India is being reinvented with AI today, Chandok told ET, adding that Microsoft's intent is to bring best practices, ideas, technology and best platforms to help scale the impact of India's AI mission. The company said its partnership with the government will focus on developing AI-enabled solutions in domains like healthcare, education, accessibility and agriculture by working with startups and social enterprises, advancing foundational models with Indic language support for India's unique requirements, and providing research collaboration opportunities through Microsoft Research India. Microsoft will also establish an AI Centre of Excellence called "AI Catalysts" to promote rural AI innovation and support 100,000 AI innovators and developers through hackathons, community-building solutions and an AI marketplace, it said. Its Founders Hub programme will support eligible AI startups with access to technology, business resources, and mentorship. Additionally, the company will set up 'AI Productivity Labs' in 20 National Skill Training Institutes and NIELIT centres in 10 states to train 20,000 educators. Microsoft announced partnerships with public sector enterprise RailTel, healthcare provider Apollo Hospitals, financial services firm Bajaj Finserv, edtech startup UpGrad and the Mahindra Group for AI in automotive, farm, and financial services sectors to "further unlock productivity and efficiency gains" while delivering business impact using its cloud, Copilot and other AI solutions.

India Can Forge Its Own Future In AI, Frontier Tech: Microsoft's Satya Nadella

Nadella announced earlier this week that Microsoft plans to invest $3 Bn towards building up the AI sector, the company's largest-ever investment in India Microsoft chairman and CEO Satya Nadella believes India must look to forge its own future when it comes to frontier technology such as AI and foundational models, leveraging its strengths in science R&D and its talent base. Speaking in a fireside chat with Jitin Prasada, Minister of State in the Ministry of Commerce and Industry, and Ministry of Electronics and Information Technology (MeitY), the Microsoft chief said that capital investment is a real entry barrier, but India has the opportunity to move beyond these restraints by focussing on scientific and mathematical breakthroughs that could change the dynamics of the AI industry. "I don't think the last known big breakthrough in AI frontier has happened. I always say we are one mathematical breakthrough away from that entire edifice being thrown out and going after something else," Nadella said during his short visit to India, where the CEO also met Prime Minister Narendra Modi as well as founders of prominent Indian startups. When asked whether the central government's IndiaAI Mission should focus on building models for the Indian market using open source LLMs or build its own AI foundational model, Nadella added that there needs to be a balanced approach, which involves building on existing infrastructure and adding new models to the mix wherever the opportunity comes up. India-specific models can be integrated with global platforms to unlock new applications and services. Doubling down on Microsoft's strategy around building up AI products and capabilities in India, Nadella announced earlier this week that the company plans to invest $3 Bn towards this sector, Microsoft's largest-ever investment in the country. "India is rapidly becoming a leader in AI innovation, unlocking new opportunities across the country. The investments in infrastructure and skilling reaffirm our commitment to making India AI-first, and will help ensure people and organizations across the country benefit broadly," Nadella said. Microsoft is looking to scale up its data centre operations across India, setting up a fourth facility which will go live in 2026. The company also aims to train 10 Mn people by 2030 with AI skills as a part of its ADVANTA(I)GE INDIA initiative launched last year. Calling India the AI use-case capital of the world, Nadella said that the country is in a unique position to influence events since the combination of digital public infrastructure and private innovation can allow AI to be used at scale. "In India, AI isn't just being talked about; it's being applied -- with rapid diffusion and impact. India is unique in combining digital public goods like India Stack with entrepreneurial energy, talent, and demographics," the Microsoft CEO added.

Creating 'rich tapestry of agents' using AI models focus area

During his visit to India, Microsoft CEO Satya Nadella discussed the continued relevance of Moore's Law in AI advancement, highlighting collaborations with Indian startups and enterprises using AI to enhance productivity and streamline processes. Nadella noted India's potential to become the world's leading developer ecosystem by 2028, with widespread use cases ranging from chatbots to tax filing solutions."Fill it with software." That's what Bill Gates, cofounder of Microsoft, told colleagues in the early years of the Internet age to capitalise on the exponential increases in computing power even as computing costs fell -- a phenomenon commonly known as Moore's Law, said Satya Nadella, Microsoft's chairman and CEO, on Tuesday during his India visit. He was talking to Infosys cofounder and chairman Nandan Nilekani in Bengaluru, on the sidelines of an event where the company, the world's third biggest by market value, announced fresh local investments. "It is true even today, when you think about the scaling laws empowering AI, and pretraining in particular, it is Moore's Law at work again," Nadella said. Nilekani joked that it could be termed as "Nadella's law," to which he replied that he just wants to ride the technology wave. On questions on AI overtaking humans, Nadella said that it will be a "jugalbandi between AI and humans." For India's businesses and 17 million developers, Nadella said that in the next 12 months, the focus will be on the tools that they can build with the models, which will help create a "rich tapestry of agents". Nilekani said that India will be the use case capital of the world. And Nadella outlined the impact being created by some of India's leading startups and enterprises building out the use cases using AI. Nadella spent the morning interacting with key customers such as ICICI Lombard, Bank of Baroda and Clear and select CEOs such as Salil Parekh of Infosys and InMobi's Naveen Tiwari. He sharing notes with them on the key products being developed using Microsoft and OpenAI tools. For instance, online travel platform MakeMyTrip, which has had over 77 million users, deploys a generative AI-powered conversational chatbot Myra to engage with customer queries and assist across all stages of travel planning and booking. Others are widening the web of inclusion. Fintech startup Cleartax created a Gen AI Whatsapp bot to simplify tax filing for India's 20 million gig workers, innovating with agentic AI to reduce the number of tokens required per conversation. Within the first month of launch, over 200,000 gig workers filed their taxes, including 150,000 first-time filers, facilitating tax refunds worth $3.5 million. A use case like this can apply to anybody, not just gig workers, Nadella remarked adding that maybe he will use it to file his taxes too since the process is very complicated. Boosting productivity Meanwhile, IT services company Cognizant using Microsoft's Copilot has reduced the time employees spend on emails by 10%, alongside a 27% increase in employees leaving meetings early and a 73% boost in document creation, which they say enables people to focus on high-value tasks and deliver more value to clients. The company has also developed over 50 use cases tailored for different apps to drive productivity improvements. "Essentially, all of that is aggregating to better knowledge creation and diffusion inside of Cognizant," Nadella said. "Document creation is not our goal, but to be able to synthesise better is one of the things that will be great as we even evangelise." Similarly, Persistent Systems developed Contract Assist, an AI-driven solution to streamline internal contract management negotiations. This solution has reduced emails during negotiations by 95%, and cuts navigation or negotiation time by 70%, according to the company-- a task that currently takes approximately 20-25 minutes. Financial services players, early adopters of digital technologies, are also taking the next step with AI adoption. Insurance provider ICICI Lombard leverages the technology in health claims processing where an AI copilot helps adjudicators not just summarise 40-80 page documents but compare them to standard protocols, cutting down the 20 minute time adjudicators spend on average by about 50% and improving consistency. State-owned Bank of Baroda's AI-driven virtual relationship manager is helping 16,000 customers understand its products and onboard, while its 75,000 staff use a bot called "GyanSahay.AI" for better knowledge management and customer service delivery. Around 30,594 AI projects are being developed from India, Nadella noted, highlighting that India is set to surpass the US as the largest developer ecosystem by 2028.

India's got HuCap, we need to tap it

Satya Nadella praises India's tech workers for their role in AI technology adoption. He believes they will help push tech boundaries and contribute to economic growth. India has potential to lower AI costs with a skilled workforce and could impact its economic trajectory if it manages the AI transition smoothly.Satya Nadella's endorsement in ET of India's human capital - HuCap - provides a counter-argument to the broad narrative of a low-skilled workforce. Admittedly, tech workers constitute a very small segment of India's working age population. But the Microsoft megaboss makes a telling point about their capacity to disperse a frontier technology such as AI. India is, of course, a key market for a company betting big on AI, with potential to push the tech frontier ahead through adoption. The obvious India advantage lies in bringing down AI's cost through a growing pool of trained (wo)manpower, which reinforces Silicon Valley's dependence on its tech workers. In the Nadella world view, shared widely by tech bros, India contributes to technological advance by bringing to the table HuCap with skills to adapt rather than invent. This places India in a complementary, rather than a competitive, role to US companies racing against Chinese and European rivals for commercial application of AI. Microsoft's focus on enterprise productivity makes India's economic growth an area of special interest. Combined effects of investments in digital infra, a vibrant startup ecosystem and favourable demographics have the potential to alter India's economic trajectory if it manages the AI transition without undue labour market disruption. An alternative approach would be for Indian companies to make investments in foundational AI tech that is struggling to monetise. Doubts have been raised whether building large local language models is worth the effort. Demand from business for AI solutions will drive investment. For now, Indian software developers, rather than Indian tech companies, are pushing the envelope. Spread of AI is unlikely to be even across industries. Embedding transformation managers in business serves technology diffusion better. Generative AI has to emerge from stasis after the initial investor euphoria. Business needs to be convinced about the changes it has to incorporate to ramp up productivity through AI.

India should build foundational models for AI, but investment is real entry barrier: Nadella

India must get into frontier work in artificial intelligence and build foundational models, but investment is a real entry barrier and just one mathematical breakthrough can change entire dynamics, Microsoft Chairman and chief executive officer (CEO) Satya Nadella said here on Wednesday. During his second day of Microsoft India AI Tour, Nadella said that India can do great work in the area of Indic languages and transforming its industries using artificial intelligence. "There's no reason why India can't do frontier work, but you can even define frontier pretty unique. So for example, I don't think the last known big breakthrough in AI frontier has happened. I always say we are one mathematical breakthrough away from that entire edifice being thrown out and being going after something else," Nadella said. He said academics in India, the research institutions, including Microsoft Research, have a very fantastic math team and algorithms team. "Let's not be bound, quite frankly, with what is considered frontier. So I would say India definitely should also do frontier work. Also use the frontier in order to, post training, to make it great for Indic languages, make it great for Indian industry, and so on," Nadella said. In response to a question by additional secretary in the IT ministry Abhishek Singh on whether India should build its own AI foundational model, Nadella said that India always has an option to do that but the real entry barrier in making foundational models is investment. He said the other way to look at the investment barrier is to lower the cost with the help of research, which is always open for India. "I think that is the design space here is there for India to make some smart, strategic choice. And I'm not saying you shouldn't do like you know, but then you have to be mindful that it is a capital intensive business if you want to be on the frontier," Nadella said. At present, India is using AI engines or the foundational models developed by OpenAI, Google etc. At the event, Microsoft announced strategic partnerships with RailTel, Apollo Hospitals, Bajaj Finserv, Mahindra Group, and upGrad to help their teams and customers benefit from cloud and AI innovation. The company also signed an agreement with India AI to advance AI and emerging technologies in the country and establish AI Centre of Excellence and AI Productivity Labs to foster inclusive growth.

India's human capital its biggest satya: Microsoft's CEO Satya Nadella

Satya Nadella emphasises the importance of leveraging India's human capital for global competitiveness and the widespread adoption of AI technology. He highlights the rapid diffusion of technology globally and underscores the role of Microsoft's investments in India, stressing the need for bold entrepreneurial efforts and careful regulation to maximize benefits and create opportunities."There is no denying that anyone who doesn't tap into India's human capital is making a choice (to) not be competitive," according to Microsoft chairman Satya Nadella. In his second decade at the helm of one of the world's most valuable corporations, the soft-spoken 57-year-old who has transformed the software maker into a leader in the AI race, said distinctions such as tech and non-tech will disappear as the world embraces artificial intelligence. Under his watch, Microsoft has registered a near ten-fold expansion in market capitalisation to $3.18 trillion, positioning Nadella as one of the greatest tech CEOs of all time. In an exclusive interview with Surabhi Agarwal & Archana Rai, India-born Nadella urged entrepreneurs to "be bold and lean into the future" in an age when new tech is spreading without any time delay or lag. Edited excerpts: There is a debate about free movement of talent, the clamour over H-1B visa, for instance. Where does that leave India in terms of being able to participate fully in this AI revolution. People are building in India, for India. The job creation opportunity, the ability to both upskill and do (ambitious) things is great (here). At the same time, the United States will make its decisions in the interest of American competitivenes, (which) has always had an element of talent coming in, and that will continue. It will also have certain reforms in some policies and visa regimes. But at the end of the day, America will decide what is in its best interests and its competitiveness. India has a great market internally. It will also participate in the global market because of the talent (it) has. There is no denying that anyone who does not tap into India's human capital is making a choice (to) not be competitive, in some sense. So therefore, all of this will have to be done one country at a time, where they make their decisions that are in their interest. Today's AI revolution is said to be bigger than the industrial revolution. How do you place in context the changes that you are seeing? The right frame is to view it as the next platform shift. There is a fantastic piece of work done by an economist called Diego Comin, where he compared the diffusion of, for example, spindles. It took something like 120 years before they diffused in the Global South, as we call it today. Whereas here, for the first time, you have the ability to take something that may be like steam, like electricity, but diffuse it fast across the entire globe. And so that is something that has never happened in 5,000 years of human history. I have an equation where I call tokens per dollar per watt-whichever community, country, company gets to exercise that well is going to really benefit. It is not just talking about it or celebrating technology for technology's sake. It is a broad skill that is required in order to be able to use it in every sector of the economy-healthcare, education, manufacturing, in frontline work, in knowledge work. And that, I think, is the key difference. On the geopolitical front, competition in AI is rising, China is lowering the cost (for large language models). Is American supremacy (in AI) being challenged? The United States cannot take anything for granted. We need to compete. We need to innovate, to compete. For example, I think about what we were able to do even with some of the AI models, and the point about making them cost competitive -we have reduced the prices of GPT models by about two hundred times. This is hyper Moore's Law in action. It is fine for us to see countries like China or, quite frankly, even in India, there will be people who will develop models, and that is healthy. We have to continue to push both on the capability side and on the cost side, so that we can meet the diverse needs of technology around the world and do so with safety and trust. So, would it be fair to say that we will see a lot of disruption in the Gen AI sector this year? Also, in certain quarters, there is talk that Microsoft is overly weighted towards OpenAI, and now there is this conflict with (Elon) Musk challenging (OpenAI's) change to a for-profit structure. Disruption in our industry is a given. The question is, how do you innovate? I always say, what happened last year is what happened last year, what happens this year is what we stay focused on. Then, you look forward to making sure you are in a position to innovate next year. For us, we are very thrilled about our partnership with OpenAI. We are very thrilled about the work we are doing on our own, and the choices customers have, partners have when it comes to Azure in terms of open-source models, great models from Open AI, models that we have built, like Phi. We will continue to innovate on all layers. A year from now, I do not think the conversation will be about just models. I think it will move to all the other considerations. It will be about what is the UI (user interface) layer with Copilot, about which we are excited. What is the layer around data? In an agentic world, they are all stateful AI applications which require data, they require a real AI app server. So, between foundry, fabric, and Copilot, we feel very well positioned. Recently, the government cautioned that India needs to be careful about how it adopts AI given unemployment is a huge problem here. What is your perspective? Absolutely. At the end of the day, one has to think about the return to labour in terms of total wages. You really want to make sure, frankly, that there is more opportunity. And also, regulate what jobs get what wages in a world where there is abundance of some new technology. These are all things that have to be carefully thought through by policy makers and in democracies. That said, sometimes you overstate the displacement too. Let us take call centre employees. In the beginning of the 2000s, there were around four million call centre employees, and now there are seventeen million, and this is after having introduced so many new technologies-IVRs, multiple generations of them, and then we even introduced self-service bots. Because, with abundance comes more usage, new opportunities. Who would have thought that by putting typewriters in front of a billion people, we would have this explosion of jobs called knowledge work. That is what the PC revolution did. When I see something like GitHub Spark, I kind of look at what is going to happen in software engineering and say, wow, we may have a billion software developers, not one hundred million. Microsoft is investing $3 billion over the next two years in India, a small fraction of the $80 billion being spent globally. This is just the next tranche of our investment and will continue with the density of usage of AI. Our investment is not (made) in isolation. If I think about it, our investment in our data centres is the best stimulus for India's energy sector. We are making an upstream investment, it will stimulate downstream usage, and then the economic benefits (will be) much more broadly spread. Last year, you had said that AI will play a huge role in India moving faster towards its goal of a $5 trillion economy. One year has passed, a lot has changed very quickly in the AI world, in the tech world. What are your thoughts? That is correct. There is a virtuous cycle between some of the programmes and the (government projects) yojanas, the India stack, the digital public goods that are unique in India. But it is that juxtaposition of the programmes and the tech stack. What has happened with UPI-it is just miraculous. And then you couple that with the entrepreneurial energy in the country, plus the demographics. That virtuous cycle is what I think can drive broad-spread economic growth that is inclusive as well, where healthcare is better, education is better, industry is able to benefit-small and large business.

AI agents will revolutionise SaaS and productivity: Microsoft CEO Satya Nadella

Microsoft's Satya Nadella predicts that AI agents will revolutionise SaaS by automating business processes, creating a tier of multi-agent orchestration. He sees 2025 as a pivotal year for large language models. Nandan Nilekani highlights India's strength in AI application development, emphasizing the need for cost-effective AI solutions for large-scale use.Artificial intelligence (AI) agents will disrupt SaaS (software-as-a-service) models with a lot of backend business logics being automated by agents, said Microsoft chief Satya Nadella. "A lot of the business logic will move to a new tier, which then will be a multi-agent tier that needs to be orchestrated. It's going to be an agent that will orchestrate across multiple SaaS applications," he said in conversation with technology veteran Nandan Nilekani in Bengaluru on Tuesday. "(It will be) kind of like humans are the swarm of agents. That, I think, is the next frontier, and that's where a lot of the productivity will come from. But just like I can build a spreadsheet, I will build thousands, hundreds of agents that are working to help me streamline my own work," he said. Nadella further added that 2025 will be the year of abundance of large language models (LLMs) and their capabilities. Also Read: Microsoft announces $3 billion investment in India, to train 10 million in AI skills "I don't think we're going to be sitting here next year, admiring either the Moore's law or even the LLMs, it will be what we're doing with all that abundance. If there's going to be an abundant commodity, you don't sit there and pray to the abundant commodity. You use it," he said. Nilekani further added that India is emerging as the use case capital of AI with the digital public infrastructure in place as well as the government which can balance responsible AI development and innovation. "India will be the use case capital of AI. I think we have a number of things working for us. One is, we have 15 years of experience in building population-scale digital infrastructure. So we know that game," Nilekani said. "We have a political leadership which is very tech savvy. I know you (Nadella) met with Prime Minister Modi yesterday, and they understand that we have to strike the right balance between AI innovation and safeguards. So in some parts of the world, they say safeguards first, without worrying about the innovation. But I think we know the right balance between responsible AI and innovation, and we have a population which has learned to accept technology," said Nilekani, the chief architect of the digital India stack and cofounder Infosys. He explained that AI is already at play in various digital services. Aadhaar authentication, for instance, uses AI detections for liveliness in biometrics. Banking systems are also using AI-based fraud detection techniques. However, AI inference costs must come down for AI to cater to a billion-population scale, Nilekani said. "I think inference costs have to be super frugal, because you've got a billion people doing all kinds of queries or agenting stuff, it has to work at that scale."