Impact of Ai Adoption on Productivity Performance in It Smes in Gurugram

Abstract

Artificial intelligence is no longer a distant concept for small and medium enterprises — it has become a real, practical tool shaping how businesses operate and compete. This study takes a close look at how IT-based SMEs in Gurugram, one of India’s most vibrant technology hubs, are adopting AI and what that means for their day-to-day productivity. Drawing on survey data collected from 126 respondents across 50 IT SMEs, the research uses the Technology-Organization-Environment (TOE) framework to understand what drives AI adoption and what gets in the way. Rather than treating adoption as a binary yes-or-no decision, we examine the nuances — how much AI is being used, in what forms, and with what outcomes for efficiency, revenue, and cost management. The findings reveal that AI adoption has a significant positive influence on productivity performance, reflected in improvements in operational efficiency, decision-making quality, and cost management. Importantly, the results highlight that organizational support and technological readiness play a critical role in enabling firms to effectively leverage AI, while external competitive pressures act as an additional driver of performance outcomes. The study demonstrates that the benefits of AI are not automatic but are contingent upon the firm’s internal capabilities and readiness to integrate new technologies into existing workflows. By providing empirical evidence from a regionally focused SME context, this research contributes to the growing literature on AI adoption in emerging markets and extends the application of the TOE framework beyond technology adoption to productivity outcomes. The study offers practical implications for SME managers, emphasizing the need to align technological investments with organizational preparedness and workforce capabilities to fully realize the productivity potential of AI.