Conversational AI Market: Global Industry Analysis And Forecast (2023-2029)

Conversational AI Market size was valued at USD 8.74 Bn. in 2022 and the total Conversational AI revenue is expected to grow by 21.5% from 2023 to 2029, reaching nearly USD 34.19 Bn.
Conversational AI Market Overview:
Conversational AI refers to the technology underlying automated messaging and speech-enabled systems that enable computers and people to interact in human-like ways. It can converse like a person by recognizing voice and text, comprehending intent, decoding multiple languages, and reacting in a human-like manner. Thanks to the wide applications, In contrast to the relatively limited capabilities of a traditional chatbot, a Conversational AI chatbot may answer commonly asked questions, troubleshoot problems, and even make small talk. Moreover, unlike a static chatbot, which is often found on a company's website and is confined to textual interactions, conversational AI interactions are intended to be accessible and done across a variety of mediums, including audio, video, and text, and the demand for the market has been increasing.To know about the Research Methodology :- Request Free Sample Report

The report explores the Conversational AI market's segments (Component, Type, Deployment Mode, Technology, Vertical, and Region). The Data has been provided by a thorough analysis of the rapid advances that are currently taking place across all industry sectors. Facts and figures, illustrations, and presentations are used to provide key data analysis for the historical period from 2017 to 2020. The report investigates the Conversational AI market's drivers, limitations, prospects, and barriers. This MMR report includes recommendations for investors based on a thorough examination of the Conversational AI market's contemporary competitive scenario.

The conversational artificial intelligence (AI) market report provides details on Trade regulations, value chain optimization, market share, and the impact of global market players, changes in market regulations, strategic market growth analysis, market size, category market growths, application niches, and dominance, product approvals, new product launches, and technological innovations in the market. The research study provides an in-depth analysis of the market and contains meaningful insights, helps our clients in acquiring knowledge of the many growth factors expected to be prevalent throughout the market, and develops different strategies to help identify core application areas and the gap in the target market.
Conversational AI Market Dynamics:
The rising demand for AI-powered customer support services is a major driver of the market.

Customers seeking assistance through call centers, websites, emails, and applications were referred to as using customer services. However, as AI technology advances, enterprises are implementing conversational AI solutions to provide effective quality service to customers. Organizations' approach has moved from offering customer service via emails or messages to Digital chatbots that help enterprises improve customer quality of experience. AI-powered chatbots utilize NLP technology to conduct human-like conversations and provide real-time assistance to clients. They help organizations in gathering business knowledge about consumer preferences, perspectives, and purchasing activities, allowing organizations to give preemptive insights and more tailored experiences depending on account activity. AI-powered chatbots and virtual assistants may also be used by businesses to automate repetitive and manual activities such as placing an order, balancing inquiries, general queries, technical help, and other customer services. Organizations may achieve better productivity improvements while using fewer people by utilizing automation.

Inadequate understanding of conservational AI solutions is a key restraint for the market.

Conversational AI solutions are becoming more popular across industries since they provide a variety of benefits such as content consumption, customer service, and other productive interaction models. However, customers are unaware of the benefits of chatbots, virtual assistants, and digital personal assistants. People are unlikely to utilize virtual assistants due to a lack of understanding about their usefulness and the complicated adoption procedure. As a result, many economies' SMEs are hesitant to adopt virtual assistants for commercial activities. As the industry gains traction all across the globe during the forecast period, an improved degree of awareness is expected to be seen, even in emerging nations, driving the deployment of conversational AI solutions.

Adoption of advanced AI technologies to enhance existing conversational AI services is a key opportunity for the market.

The increasing usage of AI and NLP technology has enabled businesses to create intelligent agents, offer services, and conduct jobs that are integrated with numerous platforms. There is still room for additional skill sets, such as gesture detection, to be included in conversational AI products. By incorporating gesture detection capabilities into the conversational AI solution, users are allowed to operate smart, conversational devices without having to touch or talk. In situations when there is a lot of noise or disruption, or the user's accent or tone is unintelligible, gesture recognition could assist users in controlling smart, conversational devices. Conversational AI services support only a few languages, and most chatbots and virtual assistants are only functional in the English language. Adoption of conversational AI solutions would increase globally if they were to support regional languages as well.

Inaccuracy in virtual assistants and chatbots is a major challenge for the market.

Conversational AI solution producers in the industry are developing chatbots and virtual assistants using open platforms with constricted user-specific functionalities. An API is intended for broad use and does not include any special functionality. As a result, chatbots constructed using generalist APIs may fall short of the required accuracy standards. Chatbots and virtual assistants are created with a certain set of instructions so can only deliver replies to inquiries that are recorded in a database. The ultimate conversational AI system should respond in such a way that the user could distinguish whether he or she is speaking to a human or a virtual assistant. Organizations are seeking to improve the accuracy of chatbots and virtual assistants by incorporating sophisticated AI capabilities into their platform offerings and addressing a greater variety of use cases and user inquiries. Chatbots and virtual assistants would require some time to achieve the essential accuracy, which would be comparable to humans. As a result, the lack of accuracy is constituting a challenge to the growth of the conversational AI market.
Conversational AI Market Segment Analysis:
By Component, the Solutions segment held the highest market share of about 50% in 2022 and is expected to dominate the global Conversational AI Market at the end of the forecast period. Followed by Managed services segment and professional services segment are expected to grow rapidly during the forecast period. The dominant proportion for the Solutions segment is ascribed to organizations' large-scale use of in-house conversational AI technology. AI-enhanced support solutions may provide users with system availability and 24/7 consultation, allowing organizations to provide dependable customer care. Due to this, the population is impressed and the demand is increasing eventually. The services are essential to the effectiveness of conversational AI systems. Human relationships are frequently difficult due to the diversity and richness of human languages. Customers from various demographic groups convey the same express purpose in different ways. As a result, chatbots must be educated to understand the common purpose.

By Type, the Chatbots segment held the biggest share in terms of revenue of around half of the market in 2022 and is expected to maintain its dominance throughout the forecast period.

This is due to its capacity to make a significant contribution to customer service. These are mostly used for data collection. Customers may also interact with chatbots to get information, clarification on any service or product, or to schedule appointments. In the industry, various conversational AI service providers are generating digital assistants and chatbots with constrained user-personalized qualities. For example, Astro, (a unique and distinct type of robot), was introduced in September 2022. It is designed to assist clients with duties such as keeping in contact with home and family monitoring. With the rising penetration of NLP and AI technology improvements, businesses are increasingly capable of providing services, installing intelligent assistants, and combining tasks with many other platforms. There is a huge possibility to incorporate breakthroughs, such as gesture detection, into conversational AI services.



By Vertical, the retail and e-commerce segment is expected to grow rapidly during the forecast period owing to the Retail and e-commerce sectors would better serve customers by using convincing, descriptive, and intelligent conversational AI tools and strategies. The BFSI segment is estimated to increase substantially during the forecast period based on a variety of factors such as the use of AI chatbots in the financial and banking services industry, which are utilized to aid consumers in making secure payments and participating in the communication. Several additional elements, such as providing warnings and signals in the case of any suspected occurrence of fraud, are likely to take place by sending notifications directly to clients and banks, as well as assisting staff who undertake complicated activities repetitively. Tasks such as handling internal documents are expected to have an impact on market growth during the forecast period.
Conversational AI Market Regional Insights:
North America had the highest revenue share of more than 35% in 2022 and is expected to grow significantly. The country's significant adoption of impending technological developments, as well as the constantly expanding need for customer support services powered by artificial intelligence, are driving the market growth. Most large corporations in North America are investing in technology developments to meet and assist their consumers' needs. The increased awareness of health issues amongst the population drives demand for conversational AI. North America's healthcare industry is growing in the use of augmented and virtual reality, robots, and AI (artificial intelligence). This would aid in the delivery of intelligent services and technology for evidence-based health care, with an emphasis on preventative and collaborative treatment.



The Asia Pacific region is expected to grow rapidly throughout the forecast period because enterprises become more aware of new customer support services and technology innovations. Likewise, growing e-commerce activity, rising technology adoption in the retail business, technical innovation in consulting and healthcare, and rising internet penetration in this region are driving the use and demand for conversational AI systems.

The objective of the report is to present a comprehensive analysis of the Conversational AI market to the stakeholders in the industry. The past and current status of the industry with the forecasted market size and trends are presented in the report with the analysis of complicated data in simple language. The report covers all the aspects of the industry with a dedicated study of key players that include market leaders, followers, and new entrants.

PORTER, PESTEL analysis with the potential impact of micro-economic factors of the market have been presented in the report. External as well as internal factors that are supposed to affect the business positively or negatively have been analyzed, which will give a clear futuristic view of the industry to the decision-makers.

The report also helps in understanding the Conversational AI market dynamics, and structure by analyzing the market segments and projecting the Conversational AI market size. Clear representation of competitive analysis of key players by product, price, financial position, product portfolio, growth strategies, and regional presence in the Conversational AI market make the report investor’s guide.
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Global Conversational AI Market


Report Coverage
Details


Base Year:
2022
Forecast Period:
2023-2029


Historical Data:
2017 to 2022
Market Size in 2022:
US $ 8.74 Bn.


Forecast Period 2023 to 2029 CAGR:
21.5 %
Market Size in 2029:
US $ 34.19 Bn.


 Segments Covered:
by Component
Solutions
Services
Professional Services


by Type
Chatbots
Intelligent Virtual Assistants (IVA)


by Deployment Mode
Cloud
On-premises


by Technology
ML and Deep Learning
Natural Language Processing (NLP)
Automatic Speech Recognition (ASR)


by Vertical
Banking Finance Services and Insurance (BFSI)
Healthcare and Life Sciences
IT and Telecom
Retail and eCommerce
Travel and Hospitality
Media and Entertainment
Automotive
Others (government, education, energy and utilities, and manufacturing)



Conversational AI Market, by Region
North America (United States, Canada and Mexico)
Europe (UK, France, Germany, Italy, Spain, Sweden, Austria, Turkey, Russia and Rest of Europe)
Asia Pacific (China, India, Japan, South Korea, Australia, ASEAN and Rest of APAC)
Middle East and Africa (South Africa, GCC, Egypt, Nigeria and Rest of ME&A)
South America (Brazil, Argentina, Columbia and Rest of South America)
Conversational AI Market, Key Players are
1. Google
2. Microsoft
3. Amazon Web Services, Inc.
4. IBM
5. Oracle
6. Nuance Communications, Inc.
7. FIS
8. SAP SE
9. Artificial Solutions
10. Kore.ai, Inc.
11. Avaamo
12. Conversica, Inc.
13. Jio Haptik Technologies Limited
14. Rasa Technologies Inc.
15. Solvvy
16. Pypestream Inc.
17. Kasisto
18. Cognigy
19. Baidu, Inc.

FAQs:

1. Which is the potential market for Conversational AI in terms of the region?
Ans. North America is the potential market for conversational AI in terms of the region.

2. What are the opportunities for new market entrants?
Ans. Adoption of advanced AI technologies to enhance existing conversational AI services is a key opportunity for the market.

3. What is expected to drive the growth of the Conversational AI market in the forecast period?
Ans. The rising demand for AI-powered customer support services is a major driver of the market.

4. What is the projected market size & growth rate of the Conversational AI Market?
Ans. Conversational AI Market size was valued at USD 8.74 Bn. in 2022 and the total Conversational AI revenue is expected to grow by 21.5% from 2023 to 2029, reaching nearly USD 34.19 Bn.

5. What segments are covered in the Conversational AI Market report?
Ans. The segments covered are Component, Type, Deployment Mode, Technology, Vertical, and Region.