Transforming Small Businesses 2025

4 Talent and workforce capability The successful adoption of AI at scale in SME organizations requires access not only to the right data and technology but also the right skilled workforce. How effectively AI is implemented in these organizations will vary depending on how well the workforce is able to implement, operate and use AI tools and solutions to enhance productivity, efficiency and decision-making. SMEs in India struggle to find the right talent, with a lot of them lacking a digitally skilled workforce. Consultations with stakeholders clearly highlighted this problem, with SME leaders voicing concerns that any initiative to adopt AI is likely to encounter a shortage of capable workers. The problem of talent vis-à-vis AI adoption manifests in these organizations in the form of three critical challenges: upskilling the operational workforce for AI-readiness; attracting AI professionals to implement new technologies; and cultivating an AI-literate leadership. There is a dearth of AI-literate leadership at SMEs. SME owners and managers often lack awareness of how AI can be integrated into business operations to drive efficiency in the organization. Their knowledge of AI is generally limited to popular generative AI (GenAI) tools, without a clear understanding of the potential of AI in all areas of business operations. This lack of understanding leads to inaction, slowing the adoption of AI. SMEs typically operate with a workforce that lacks basic digital skills and has little or no exposure to AI technologies. These workers lack the technical proficiency required to operate digital tools and AI applications. This skills gap makes it difficult for SMEs to implement AI solutions in the organization, as such implementation would have to be accompanied by significant investment in training workers. As SME organizations operate with limited resources, and workers generally work on a fixed- term basis, it is difficult to justify such significant investments in training programmes. Another challenge faced by SMEs is attracting skilled AI professionals who can drive AI implementations in the organization. This is caused by two factors: the demand–supply gap for skilled AI professionals and the unwillingness of these professionals to work in SME set-ups. There is a shortage of AI professionals in the broader job market, with greater and greater demand in the wake of recent euphoria about AI. In addition to this shortage, these professionals typically prefer working for larger organizations that can offer higher compensation packages and a better employee value proposition The successful adoption of AI requires access not only to the right data and technology but also the right skilled workforce. Visuals from a workshop with MSME promoters in Bangalore, Karnataka Transforming Small Businesses: An AI Playbook for India’s SMEs 22