Nearshore Americas

As the AI Craze Escalates, Where is All the Tech Spend Going?

A glance at the conversation around AI would lead anyone to believe that businesses are throwing bag after bag –and, when available, truckload after truckload– of money towards the technology, hoping their investments pay handsomely sometime in the short-to-mid term. A closer inspection of what’s being said and done by business leaders reveals, however, that they have yet to lose their heads over AI.

Recent surveys by some of the world’s top consulting and market analysis firms reveal that, although they see broader AI implementation as an investment priority, business organizations are still being relatively conservative with their AI-related tech spend.

A Deloitte study on AI tech spend showed that the majority of CFOs consulted (62%) plan to dedicate less than 1% of their organization’s total budget to GenAI in 2025; 37% said they would allocate between 1% and 10% of their budgets to that same purpose; and only 1% expect allocations of between 10% and 25%.

Gartner’s numbers show a bit more optimistic outlook for AI spend: 82% of CFOs surveyed said their AI spend for this year will be greater than the one prior. About 71% said they plan an increase of 10% or more in their AI spend for this year, while 58% see the same increase for GenAI spend specifically. 

Boston Consulting’s survey shows that 85% of business leaders plan to increase AI/GenAI tech spend this year, with 89% listing the technology as a top-three business priority for 2024.

It’s going to be a while before we can find reliable patterns in AI spend. Nevertheless, industry insiders (vendors and buyside) are already noticing some trends. 

Angel Vossough, CEO & Co-Founder, BetterAI

“Larger tech companies and enterprises often allocate substantial budgets towards AI, viewing it as integral to maintaining competitive advantage and driving future growth,” commented Angel Vossough, CEO and Co-Founder of AI services firm BetterAI. 

“Many smaller or mid-sized companies, while interested in AI, are being more cautious and restrictive with their budgets,” Ms. Vossough added. “They want to experiment with AI and unlock value but are taking a more incremental approach, often starting with pilot projects before ramping up spending.”

AI, although seen as a major opportunity for business disruption and better positioning, is also regarded by decision makers as a risk. The AI services and applications market isn’t the “wild west” that some expected it to be in its initial years. Governments in relevant markets like Europe and the US are moving swiftly to regulate the deployment of AI in business. In response, buyers and vendors of AI have grown weary of the landscape.

But even then, investment in AI continues. Decision makers know that everyone’s on board now. Paralysis in the face of uncertainty will most probably leave them at a disadvantage that would be very difficult to overcome even in the short term. 

That is why we’re seeing more AI apps implemented in business analytics operations; in HR, for recruiting, engagement and retention; in sales, for hyper-personalized marketing; and in cybersecurity, to monitor anomalies and respond promptly to cyberthreats. 

Customer care has for years been at the forefront of AI automation, to the point that the nightmare scenarios of direct workforce replacement are coming true in CX operations. Such was the case of Klarna earlier in the year. TCS’ CEO is among the top executives who have warned of the dire future of the traditional, “brick-and-mortar” call center. 

“Healthcare and finance industries often have larger AI budgets due to the potential for high-impact applications, while smaller retail businesses may have more limited budgets”—Angel Vossough, CEO & Co-Founder, BetterAI. 

Even industries as heavily regulated as healthcare and finance are ramping up their AI spend.

“Healthcare and finance industries often have larger AI budgets due to the potential for high-impact applications, while smaller retail businesses may have more limited budgets,” Ms. Vossough told NSAM. “This approach helps manage risk while still tapping into AI’s potential, reflecting a prudent yet optimistic engagement with new technologies.”

 

A hard bet

A score of smaller companies –startups, most of them– are betting hard on AI. Such is the case of KWatch.io, a social listening tool that has invested heavily on AI to acquire a competitive edge.

According to company CEO Arthur Delerue, 30% of KWatch’s overall budget (and half of its tech budget) has been dedicated to AI in order to train and develop the company’s own models, as well as to subscribe to the NLP Cloud AI platform. Mr. Delerue expects his company’s AI spend to reach 40% by the end of 2024. 

Arthur Delerue, CEO, KWatch.io

“It is an important amount of money dedicated to AI, and we’re perfectly aware of this. As KWatch.io is still a young tech startup, we thought about this AI investment from the start,” he explained.  It has always been very clear to us that we wanted KWatch.io to be as automated as possible, and AI clearly is central in an automation strategy in 2024.”

AI represents an opportunity for smaller companies to leapfrog their competition and, in some cases, punch very high above their weight, allowing them to grow at breakneck speed. It is no surprise then that some are dedicating almost half of their budgets to developing their AI capabilities.

Others seem to be pointing to VC investment or even M&A activity. We at NSAM have reported on several deals in which a smaller firm is acquired mainly due to its AI expertise. Apple alone acquired 32 AI-focused startups last year.

 

Who handles the money?

With all this talk of AI spend, one has to wonder who’s controlling the flow of money. 

Some companies have designated executives who’re dedicated full-time to their AI strategies. Many of these executives have been termed Chief AI Officers (CAIOs). However, the CAIO seems to be a catch-all term for executives who help organizations figure out what they want to do with AI and how.

CFOs and CTOs tend to have a tighter grip on AI spend in larger organizations. In smaller ones, where responsibilities are more fluent and horizontal, CEOs are more likely to take such decisions.

“As the CEO and a data scientist at BetterAI.io, I currently oversee our company’s AI policy and budget allocation,” explained Angel Vossough. “Given our startup status and the size of our team, we don’t have a top executive dedicated exclusively to AI policy at this stage. However, as BetterAI continues to grow and scale, establishing a dedicated role or team to manage our AI policy will become increasingly important.”

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The hype cycle has put AI at the centers of most conversations in business today. Every tech service seems to be “AI-labeled” at the moment, or promises to be in the near future. 

Nevertheless, the cycle will eventually wind down, allowing decision makers and analysts to have a clearer picture of how AI is being used and where the trends in business are moving when it comes to its implementation.

Cesar Cantu

Cesar is the Managing Editor of Nearshore Americas. He's a journalist based in Mexico City, with experience covering foreign trade policy, agribusiness and the food industry in Mexico and Latin America.

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