Analysis · AI & Deep Tech

Fractal CEO calls for more R&D and startup collaboration

By Startup Enthusiast · 18 August 2026

What they do

Fractal helps global companies transform business functions through AI-led transformation

Co-founder Srikanth Velamakanni said Indian IT firms must increase R&D spending and work with startups to compete in the AI era

He urged young people to consider entrepreneurship as AI lowers the capital needed to build businesses

Fractal Co-Founder and Group CEO Srikanth Velamakanni spoke at a NASSCOM and CNBC-TV18 discussion about Indian IT and AI.
He said Indian IT services companies need to increase R&D spending and work more with startups and academia to compete in the AI era.
He said large tech companies should look beyond traditional consolidation and use startups for new technology and innovation.
He said the Indian IT services industry must work more effectively with startups — incubate, invest, take them to the world.
He said the industry needs to focus on 'right to win' as AI changes the technology landscape.
He said large IT services firms should selectively invest in smaller tech companies with capabilities in emerging areas, not just acquire for scale or revenue.
He said the Indian tech industry has not figured out startup collaboration like the global pharma industry does.

Velamakanni called for higher R&D spending: India spends about 0.7% of GDP on R&D, and the Indian tech industry spends around 0.5%.
He said the industry should move towards spending 1-2% of revenue on R&D.
NASSCOM President Rajesh Nambiar agreed R&D spending is a weakness for India and the tech sector.
Velamakanni said the technology industry is entering a new growth cycle driven by AI; the previous S-curve (cloud, social platforms) is approaching saturation.
He said '2026 is just the beginning' for AI, pointing to rapid improvement in AI models and ability to perform complex tasks.

Fractal helps global organizations transform critical business functions through AI-led transformation, strong AI foundations, and human-centered adoption.
Fractal has an enterprise agentic AI platform to operationalize AI beyond pilots and drive enterprise transformation.
Fractal established an India BU to meet increasing demand from large enterprises.
Fractal's Vaidya.ai powers the BMC Health AI Chatbot on WhatsApp for Mumbai.
Fractal was named Preferred Services Partner for Claude.
Fractal launched Cogentiq E-Commerce: AI that acts on profit signals in minutes.
Fractal earned a CDP 'B' rating for continued governance in climate action.
Fractal introduced LLM Studio on NVIDIA's AI Infrastructure and software stack.

Velamakanni urged young people to consider entrepreneurship as AI reduces capital required to build and operate businesses.
He said people entering the workforce should prepare for multiple careers, not a single profession.