India’s first GenAI unicorn shifts to cloud services as AI model ambitions face reality

Krutrim, recognized as India's pioneering GenAI unicorn, is pivoting its focus from developing AI models to offering cloud services. This strategic shift comes after a prolonged period of silence regarding product updates, highlighting the increasing challenges associated with constructing large-scale AI infrastructures. On Tuesday, the startup announced this transition, which follows a significant business restructuring that took place in late 2025. This overhaul involved reallocating resources and talent, as well as halting its chip design initiatives. The announcement arrives over a year after Krutrim introduced its Krutrim-2 base model, marking a notable change in its operational direction. The company has been relatively inactive in the public domain, with no major product launches in recent months and its last social media update occurring in December. Notably, Krutrim was absent from the AI Impact Summit in New Delhi, where prominent companies like Anthropic, Google, and OpenAI were present. In stark contrast, competitor Sarvam actively showcased its advancements at the event, reinforcing its position in the AI landscape. Adding to the challenges, Krutrim has undergone significant layoffs this past year, reducing its workforce by over 200 positions through multiple rounds. In April, the startup also withdrew its Kruti AI assistant app from app stores. Founded by Bhavish Aggarwal, who also heads Ola and Ola Electric, Krutrim initially sought to establish a strong foothold in India's GenAI sector, aiming to create local alternatives to offerings from global giants such as OpenAI and xAI. In January 2024, Krutrim secured $50 million in funding, achieving a valuation of $1 billion, which underscored early investor optimism in India's AI potential, despite the country's funding levels lagging behind those of the U.S. The startup reported revenues of approximately ₹3 billion (around $31.52 million) for the financial year 2026, marking a threefold growth from the previous year, alongside its first annual net profit with margins exceeding 10%. However, it remains unclear how much of this revenue was generated from external clients versus its parent company, Ola. Krutrim indicated a rising demand for its AI cloud services, claiming to have over 25 enterprise customers across various sectors, including telecommunications, finance, and healthcare. The company noted that a majority of its GPU compute capacity is already allocated to external workloads. Sanchit Vir Gogia, chief analyst at Greyhound Research, remarked that while the pivot to cloud services appears commercially viable, the startup's claims regarding profitability must be validated. As Krutrim transitions its focus, competitors like Sarvam continue to innovate, recently partnering with space-tech firm Pixxel to create an AI-driven orbital data center. Gogia suggests that while infrastructure may offer a more immediate opportunity in India's AI market, the long-term goal of developing competitive AI models remains a priority for Krutrim, which has yet to clarify details about its revenue composition, customer base, and recent organizational changes.