Krutrim, recognized as India’s first GenAI unicorn, is making a strategic shift from developing AI models to focusing on cloud services. This change comes after a period marked by minimal product updates and reflects the challenging economic landscape surrounding large-scale AI systems.
On Tuesday, the company announced its transition to cloud services, a decision that follows a comprehensive business overhaul in late 2025. This overhaul involved reallocating resources and pausing its chip design initiatives. The announcement comes over a year after the Bengaluru-based startup launched its Krutrim-2 base model.
Krutrim has experienced a notable absence from public discussions, with no significant product announcements in recent months. Its last activity on social media was recorded in December, and the company did not participate in the AI Impact Summit in New Delhi, which featured major players like Anthropic, Google, and OpenAI.
In contrast, competitor Sarvam showcased its innovations and partnerships during the same event, highlighting a more active approach in the AI sector.
The shift to cloud services follows a series of layoffs at Krutrim, which reportedly affected over 200 employees throughout the past year. Additionally, the company removed its Kruti AI assistant app from app stores in April.
Founded by Bhavish Aggarwal, who also heads Ola and Ola Electric, Krutrim initially aimed to compete with global AI leaders by creating domestic alternatives. The startup secured $50 million in funding at a valuation of $1 billion in January 2024, reflecting early investor optimism for India's AI prospects, despite the country's funding levels being significantly lower than those in the U.S.
In the financial year 2026, Krutrim reported approximately ₹3 billion (around $31.52 million) in revenue, marking a threefold increase from the previous year and achieving its first annual net profit with margins exceeding 10%. However, the company did not clarify the proportion of revenue derived from external customers versus its parent company, Ola, which had previously accounted for about 90% of its revenue.
Despite these challenges, Krutrim is witnessing increasing demand for its AI cloud services, boasting over 25 enterprise clients across various sectors, including telecommunications, financial services, and healthcare. The company noted that most of its GPU compute capacity is already allocated to external workloads.
Sanchit Vir Gogia, chief analyst at Greyhound Research, commented that the pivot to cloud services is a commercially sound decision, though he emphasized the need for verification of Krutrim's profitability claims. He noted that the standard of proof must be elevated in light of these assertions.
As Krutrim adapts to the cloud infrastructure landscape, competitors like Sarvam continue to innovate with new AI models and partnerships, including a recent collaboration with space-tech firm Pixxel to develop an AI-driven orbital data center.
Gogia pointed out that focusing on infrastructure may be a more viable short-term strategy in India's AI market, even as the ambition to create competitive models remains intact.
Krutrim has not responded to inquiries regarding its revenue composition, enterprise customer base, or recent restructuring efforts.
