Synopsis
Indian artificial intelligence startups are facing operational and cost challenges as well as uncertainty over plans to expand into West Asia amid the war in the region, multiple founders told ET. Some are seeing additional impact on margins from the rupee’s steep fall, they told ET.The war is causing logistical challenges for 4baseCare, which uses AI for cancer diagnostics and treatment support, said founder Hitesh Goswami.
The company with labs in India, Dubai and the Philippines has a large customer base in the Gulf, Central Asia and Latin America, he said. With the war, volumes of tests coming from some of these regions have completely stopped or reduced sharply. Samples from Latin America were previously tested in Dubai, “but now with disruptions in flights (in West Asia), we are flying them to India, which is an operational challenge we are facing”, Goswami told ET.
“Since tests are time-sensitive, there is a likelihood that partners in the Latin American region would prefer the samples to be sent to the US, where it can reach in 48 hours instead of India where it could take 5-7 days due to disruptions,” he said.
International operations account for 20% of the company’s revenue. It pegs the disruptions to affect 5-10% of its business, he told ET.
The company is now focusing on other markets, including Southeast Asia, for market expansion. It will also set up labs in Latin America, Turkey and Uzbekistan to decentralise operations in the next six months, advancing the previous 12-month target for this expansion.
Stalled expansion
Some AI startups that were looking to expand into West Asia are facing challenges to proceed with the plans.
Kalyan Sivasailam, cofounder of AI-based radiology platform 5C Network, said the company had initiated talks with hospitals in Oman and Dubai a few weeks before the war broke out to create a network of radiologists in the region.
Those conversations have now stalled due to the uncertainty around the war, he said. “We had potential customers and expansion opportunities in Dubai. Now, many of these are not going to work.”
This means the company now needs to change its plan internally, Sivasailam said. “This is almost like a Covid-19 situation. We don't know how this will pan out and any expansion will require some level of certainty.”
Kousik Rajendran, cofounder and CEO of AI services startup Aivar Innovations, said his company was scaling operations across the US and West Asia to enterprise clients and government transformation projects with a team on the ground. However the geopolitical situation has shifted the timelines for some of those conversations, even though there is demand for such services. But the company is staying close to its clients and leads, he said.
One of its customers was affected when the cloud infrastructure went down in the Middle East. "We mobilised a team of 7-8 engineers to bring their application came back up in a different region,” Rajendran said.
Rupee fluctuation
Companies such as 4baseCare are also facing challenges due to the rupee’s depreciation. Some of the consumables the company buys are in US dollars and the rupee’s devaluation increases cost in the local currency and impacts the margins, said Goswami. The firm has also faced delays in shipment of machinery.
