Arab Finance: Two-thirds of organizations rank physical artificial intelligence (AI) as a high priority over the next three to five years, as companies accelerate efforts to deploy more autonomous robotics, according to a report by the Capgemini Research Institute.

The report, titled “Physical AI: Taking human-robot collaboration to the next level,” found that 79% of organizations are already engaging with physical AI, with 27% deploying or scaling solutions.

Physical AI refers to a shift in robotics from traditional automation to systems capable of autonomous action in real-world environments. The technology is gaining traction across industries, with strong interest reported in high tech (93%), warehousing and logistics (69%), and agriculture (59%).

Advances in foundation models, simulation technologies, and edge computing are helping accelerate deployment, while falling hardware costs and new business models such as robotics-as-a-service are further supporting adoption.

Sixty percent of executives said physical AI would enable robotics applications that were previously impossible or impractical, with use cases ranging from hazardous operations and logistics to healthcare support and disaster assessment.

The report said physical AI is also emerging as a key enabler of reindustrialization efforts in Europe and the United States. Around 43% of executives cited reshoring and domestic production as drivers of interest, while workforce shortages — more than labor costs — were identified as the primary factor behind investment, particularly in sectors such as agriculture, retail, logistics, and automotive.

Japan leads globally in prioritizing physical AI within automation strategies, with more than three-quarters of executives identifying it as a priority, ahead of the United States, the report said.

Despite growing momentum, scaling remains a challenge. Nearly two-thirds of executives expect physical AI to reach large-scale deployment within five years, but only 4% say they have already achieved scale. About eight in ten cited barriers, including limited technological and operational readiness.

Humanoid robots, while attracting significant interest, face hurdles including technical immaturity, high costs, and training complexity, with more than 60% of executives unclear on their return on investment.

Concerns about societal acceptance also persist, with more than six in ten executives saying public resistance could hinder adoption, particularly in Europe.

“Physical AI marks a shift from systems that describe the world to systems that can act within it,” said Pascal Brier, Chief Innovation Officer at Capgemini. “The opportunity is real, provided we focus on what works at scale and deploy responsibly with safety, transparency, and human oversight.”