Indian startups turn to small language models to solve for efficiency, privacy, cost

New-age startups are increasingly adopting smaller AI models to protect customer data and avoid the cost of large models, as they adapt their AI strategy to challenges unique to India.

Startups from fintech, healthtech, and legaltech sectors told ET that they have shifted their focus to small language models, or SLMs, to mitigate the triple threat of high cloud costs, India’s patchy digital infrastructure, and new data privacy regulations.

Large language models, or LLMs, have become synonymous with AI adoption, but they come at a cost and work on large swathes of data hosted on cloud services and processed by offshore GPU-powered data centres.