Conversational AI Market - By Component (Solutions, Services), By Type (Chatbots, Intelligent Virtual Assistant), By Deployment Mode (Cloud, On-premises), By Technology, By End User, By Application & Forecast, 2024 - 2032

Conversational AI Market Size

Conversational AI Market was valued at USD 9.9 billion in 2023 and is estimated to register a CAGR of over 21.5% between 2024 and 2032. Conversational AI plays a pivotal role in enhancing user engagement by offering interactive and human-like conversations. This technology fosters deeper connections between businesses and customers through real-time interactions. It enables personalized recommendations, gathers feedback, and tailors responses based on user data, creating a more immersive & satisfying experience. As users feel heard and understood, they are more likely to stay engaged, leading to increased customer loyalty, retention & positive brand perception. This improved engagement can also translate into higher conversion rates and sales for businesses, propelling the conversational AI industry growth over the forecast period.
 

The escalating customer expectations for swift, personalized interactions have catalyzed the rapid expansion of conversational AI solutions. By enabling businesses to provide instantaneous & tailored responses and automate repetitive tasks, these technologies have become cost-efficient solutions. Moreover, their ability to operate round the clock, seamlessly integrate with the existing systems, and offer scalable support have further propelled the adoption of conversational AI solutions.

The subject of data privacy and security poses a significant challenge to the conversational AI industry growth. As these systems handle sensitive user information, maintaining a robust safety measure against data breaches and unauthorized access is paramount. Striking a balance between providing personalized experiences and protecting user data is a complex task, particularly considering evolving data protection regulations. Ensuring that conversational AI platforms consistently meet these high standards of security and privacy will remain a key challenge for businesses & developers in the industry.
 

COVID-19 Impact

The COVID-19 pandemic had positive impacts on the conversational AI market. With lockdowns and social distancing measures in place, businesses turned to AI-driven chatbots and virtual assistants to maintain customer engagement & provide essential services remotely. The increased demand for online interactions and self-service options accelerated the adoption of conversational AI across industries, highlighting its ability to offer efficient and contactless solutions. This trend is expected to continue as businesses recognize the value of digital communication and automation.
 

Conversational AI Market Trends

Conversational AI search engines are driving lucrative growth in the conversational AI industry by enhancing user experiences and information retrieval. These engines enable users to interact with search queries using natural language, making information access more intuitive and efficient. For instance, in April 2023, Google announced its intentions to integrate conversational Artificial Intelligence (AI) into its primary search engine, responding to the increased competition from AI chatbots such as ChatGPT. This move signifies a notable shift that has the potential to reshape user interactions with search platforms as it seeks to incorporate conversational AI capabilities directly into the search experience. As user demand for conversational interfaces grows, this technology is set to play a pivotal role in expanding the market, offering personalized, conversational & user-friendly search experiences.
 

Conversational AI Market Analysis

Based on deployment mode, the market is divided into cloud and on-premise. The on-premise segment held a market share of over 60% in 2023. Collaborative projects to develop on-premise generative AI are propelling the conversational AI industry by simplifying the adoption of advanced AI models. By offering businesses easier access to generative AI capabilities, such as improved customer service & market intelligence, it encourages more widespread implementation of conversational AI solutions. For instance, in May 2023, Dell Technologies and NVIDIA collaboratively launched an initiative aimed at simplifying the development and deployment of generative AI models within on-premises environments. The objective is to enable businesses to enhance the various aspects of their operations including customer service and enterprise search in an extensive manner.
 

Based on end-user, the market is categorized into BFSI, healthcare, IT & telecom, retail & E-commerce, education, and media & entertainment, automotive and others. The retail & e-commerce segment held a market share of 22% in 2023 and is estimated to grow significantly till 2032. The retail and E-commerce industry is propelling the overall market by leveraging these technologies to enhance customer experiences. Conversational AI solutions, such as chatbots & virtual assistants, facilitate personalized customer support, product recommendations, and seamless transaction processes. As consumers increasingly shop online, businesses are adopting conversational AI to engage with customers, improve conversion rates, and streamline operations. This growing adoption in the retail and E-commerce sector underscores the pivotal role conversational AI plays in reshaping the future of customer engagement and boosting market growth.
 

North America led the global market with a share of over 32% in 2023. Technological advancements and the emergence of conversational AI startups in the U.S. are significantly driving growth in the North America conversational AI market. These startups are introducing innovative solutions that capitalize on the latest AI developments. With a focus on enhancing customer engagement and automation, they are also attracting substantial investments. This influx of innovation and investment is positioning North America as a hub for conversational AI, spurring market expansion and offering businesses advanced tools to improve customer interactions & operational efficiency.
 

Conversational AI Market Share

Some of the major players operating in the conversational AI industry are:

• Amazon Web Services Inc.
• Google LLC
• IBM Corporation
• Jio Haptik Technologies Limited
• Conversica Inc.
• Microsoft Corporation
• Oracle Corporation
• FIS Global
• SAP SE
   

These companies focus on developing conversational AI systems that can handle multiple languages and dialects, allowing providers to enter new markets and serve a more diverse customer base.
 

Conversational AI Industry News

• In August 2023, Inbenta acquired Horizn, a software company based in Toronto that specializes in providing seamlessly embeddable interactive product demonstrations. This acquisition involves the incorporation of Horizn's technology into Inbenta's Artificial Intelligence (AI) customer experience platform.
   
• In August 2023, Kore.ai, a prominent provider of enterprise conversational & generative AI solutions, unveiled the integration of its Experience Optimization Platform with Zoom Contact Center. This integration offers Zoom Contact Center customers the capability to utilize an intelligent virtual assistant driven by the Kore.ai XO platform.
   

The conversational AI market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments:

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Market, By Component

• Solutions
• Services
  • Support & Maintenance
  • System Integration & Implementation
  • Training & Consulting

Market, By Type

• Chatbots
• Intelligent Virtual Assistant (IVA)

Market, By Deployment Mode

• Cloud
• On-premises

Market, By Technology

• Natural Language Processing (NLP)
• Machine Learning & Deep Learning
• Automatic Speech Recognition

Market, By End User

• BFSI
• Healthcare
• IT & Telecom
• Retail & E-commerce
• Education
• Media & Entertainment
• Automotive
• Others

Market, By Application

• Customer Support
• Personal Assistant
• Branding and Advertisement
• Customer Engagement & Retention
• Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • ANZ
  • Southeast Asia
• Latin America
  • Brazil
  • Mexico
  • Argentina
• MEA
  • Saudi Arabia
  • UAE
  • South Africa