Conversational AI startups hear sound of money as demand rises
Indian
voice artificial intelligence
startups are seeing rising business interest as the demand for
conversational AI
services go up across customer service and call centres. This comes on the back of experimental pilots translating into full time projects, as models become more reliable with improving accuracy, say experts.
This is also resulting in increasing investor interest. According to data from Venture Intelligence, venture capital investment in
voice technology startups
shot up to $202 million in 2024 across 12 deals, from $7 million in 2023. This year, $19 million has gone into voice AI startups as of April 16. The startups that garnered large funding include Gnani.ai, Myelin Foundry and Nurix AI.
According to market research firm IMARC Group, the Indian conversational AI market was worth $516.8 million in 2024 and is expected to reach more than $4.9 billion by 2033.
Where are they being used
The areas where some of the use cases are taking off include ecommerce, contact centres, and banking and financial services.
Multiple experts ET spoke with said unlike other countries, India is a voice first market.
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Indians are able to express things better in audio and video, said Mitesh Agarwal, director, customer engineering at Google Cloud. 'You are calling a call centre and like to engage in a natural voice,' he pointed out.
The past year has seen significant development in this aspect.
'The biggest thing has been in the text-to-speech (space where) good models are coming out, which are very natural to hear. I think that has improved the acceptance of customers,' said Chaitanya Chokkareddy, co-founder and chief technology of Ozonetel Communications, a cloud-based call centre solutions platform.
ETtech
This is because the AI models have become more reliable, and the hallucination (responses that are false, incorrect or misleading) is in the range where it's acceptable now, whether it is large language models or the speech recognition models, he said.
Beyond customer support, Ozonetel is working on conversational analytics, which helps get insights from calls. Chokkareddy explained that it is impossible for humans to listen to thousands of calls, but AI can.
Sanjay Varnwal, cofounder and CEO of Spyne, said the company is using voice models to clone the voice of agents and to reach out to customers, for instance, to schedule test drives of vehicles.
Gnani.ai has developed AI agents to recover loan defaults, where it converses with customers in their own languages about payments dues. Gnani.ai cofounder Ganesh Gopalan said the company first launched this with TVS Credit in 2019, and now has more than 100 customers, including gold loan companies, banks and NBFCs.
The other use cases the company works with include marketing, particularly in the lead generation, and contact centre handling routine queries. Currently 95% of the company's business comes from voice. Gnani.ai supports 12 Indian languages.
Google's Agarwal said the number of use cases for voice AI include ecommerce, customer support, internal employee, finance and legal. Google has worked with
ICICI Bank
, which uses Vertex AI for its call centres, Flipkart, Myntra and MakeMyTrip.
While adoption of the technology has been rising, challenges remain.
Not perfect yet
One of the biggest challenges with the adoption of conversational AI was the nature of voice. According to founders in the space, the voice needs to sound natural as if people are talking to a person. 'If they are able to identify the voice as bot, they will drop out,' said Abhishek Upperwal, founder, Soket AI Labs, a startup that is focused on conversational AI.
The voice AI space in India is crowded, with most startups looking at working or doing something in the voice AI space, he said. Despite that, the technology, while continuing to get more traction, is not perfect yet for the Indic languages. For one, AI is yet to master empathy or prosodic features in audio, where research is still ongoing.
There are also concerns around call centre jobs being displaced by AI. Agarwal said the idea is to deflect the calls and not get rid of call centre employees. He said when an event like a Big Billion Day sale happens, the volume of calls shoots up and companies are not going to add 100,000 call centre users to handle that. 'That is a great use case for AI,' he said.
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