Conversational AI Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Conversational AI Market Size

Conversational AI Market Trends & Drivers

Surging Demand for AI-Powered Customer Support Services

The increasing need for AI-powered customer support services is one of the major factors supporting the growth of the industry. Conversational AI solutions, such as chatbot, IVA, and intelligent IVR, have been adopted for automating these services. Moreover, the deployment of AI-enabled conversational tools engages end users by gathering relevant information about them before redirecting it to a human agent, which results in enhancing work efficiency and creating personalized experiences for the users. These tools also assist users in making better decisions related to the purchase of products or services.

As more and more companies are integrating conversational AI solutions in their business operations, the organizations would be benefitted from continuous client interaction, 24x7 availability, increased engagement, and minimal errors, which, in turn, drive the market growth.

Positive ROI for Companies Deploying Conversational AI Solutions Drives the Market

Conversational AI solutions have had a positive impact on businesses in several ways, prominently in improving customer experience. There is a one-time cost that has to be incurred by businesses toward the deployment of conversational AI chatbots, which are beneficial for them in a long run. The chatbots can enhance user engagement by resolving basic queries of consumers instantly and improve productivity by passing on complex problems to human agents. A chatbot can be engaged in multiple conversations at a time to solve multiple queries at an instance; therefore, the requirement to hire personnel at a large scale is eliminated. This results in huge cost savings for businesses and also improves ROI.

Rising Implementation of Chatbots and IVAs for Healthcare Applications Is a Key Industry Trend

Applications of chatbots and IVAs are gaining traction in the healthcare industry, which help patients in a variety of ways, including booking appointments and follow-ups, monitoring patients’ health status, and delivering customized experiences. Thus, healthcare providers, such as pharmaceutical companies, hospitals, and clinics, are concentrating on the adoption of chatbots for continuous patient engagement.

Conversational AI Market Analysis

Cloud-Based Deployment Generates Significant Revenue

The cloud deployment category accounted for a significant revenue share 2022, and it is further expected to maintain its dominance in the coming years. This is ascribed to the growing prominence of cloud-based technologies and services among businesses across the globe, as it offers customization, anytime and anywhere access facilities, and cost-effectiveness.

Service Category To Show Faster Growth

The service category will witness faster growth during the predicted period, advancing at a CAGR of 23.1%. This can be due to the increasing demand for enhanced customer support across major verticals such as BFSI, media and entertainment, and travel. Moreover, services, such as support and maintenance, system integration, training, and consulting, play a crucial role in the functionality of conversational AI solutions.

Additionally, the platform category accounted for a significant revenue share in 2022, and it is expected to maintain its position in the coming years as well. This is due to the increasing deployment of chatbots and IVAs across all industries for client engagement, continuous support, and personalized service experience.

Chatbot Is a Prime Revenue Contributor

The sales of chatbots accounted for the largest revenue share, of around 46%, in 2022, and the category is further expected to maintain its dominance during the forecast period. This is attributed to the increasing adoption of chatbots, owing to their number of benefits such as continuous customer support, faster response time, less scope for errors, higher accuracy of data, and improved satisfaction levels. Moreover, developers are focusing on the launch of chatbots, which can be utilized by enterprises to automate service operations, further boosting the market growth in this category.

Retail and E-Commerce Industry Holds the Largest Share

The retail and e-commerce category accounted for the largest revenue share in 2022, and it is also expected to maintain its position during the forecast period. This is ascribed to the surging demand for better shopping experiences related to customer service and product selection, the rising focus on the introduction of more ways of engaging with clients, and the increasing need for automated business operations in the retail and e-commerce industry.

On the other hand, the BFSI category will register the fastest growth in the coming years. This can be attributed to the rising customer preference for digital banking solutions, as these assist consumers in making their payments safely and their interaction simple.

NLP Contributes Majority of Revenue

The NLP category, based on technology, held the majority of revenue share in 2022, and it is further expected to maintain its position during the predicted period. This is mainly attributed to the increasing integration of NLP technology, which allows chatbots to understand, analyze, and prioritize queries based on complexity, thus enabling them to respond to consumer queries faster as compared to a human agent.

However, the demand for machine learning technology will register the fastest growth in the coming years. This can be because it enables conversational AI solutions to learn from previous responses based on several queries, thereby enhancing the capability of a machine in answering questions.

Personal Assistant Category To Witness Fastest Growth

The personal assistant category will witness the fastest growth during the forecast period. This can be attributed to the increasing demand for personalized customer services and IVAs as personal assistants, which understand open conversations and transform them based on the specific requirements of users.

Moreover, the customer support category held the largest share in 2022, and it is also expected to dominate the market in the coming years. This is primarily due to the increasing deployment of chatbots and IVAs for providing 24x7 consumer support, and the rising need for automated customer services.

Geographical Analysis

North America Is the Market Leader

The North American conversational AI market accounted for the largest revenue share, of around 40%, in 2022, and it is further expected to maintain its dominance during the forecast period, advancing at a significant CAGR. This is due to the surging demand for enhanced customer support services, technological advancements, the presence of a large number of industry players, growing health consciousness among people, and surging usage of advanced technologies in the healthcare sector, in the region.

Moreover, the U.S. contributes a higher revenue share to the regional market, owing to the increasing investments in AI and machine learning technologies, the rising focus on the implementation of chatbots and IVAs in integration with social networking sites, and the surging demand for more ways of continuous engagement with customers, in the country.

On the other hand, the APAC market will witness the fastest growth during the predicted period. This growth can be attributed to the rising demand for streamlined customer service operations, the growing focus on the reduction in human interaction, the increasing implementation of chatbots in industries including healthcare and retail and e-commerce, and the surging government spending on AI-based initiatives, in the region.

Furthermore, the rapid adoption of conversational AI solutions by banks and financial institutions in emerging economies of the region, as consumers are increasingly shifting toward digital banking, further contributes to the regional market expansion.

Furthermore, the European market will witness significant growth in the coming years. This can be primarily attributed to the advancements in conversational AI technologies, the increasing trend for intelligent customer engagement solutions, the surging demand for user-friendly services to deliver product information, shifting toward digitization in industries including BFSI, healthcare, telecom, and retail and e-commerce, and the rising need for improved shopping experiences.

Market Breakdown

This fully customizable report gives a detailed analysis of the conversational AI industry from 2019 to 2030, based on all the relevant segments and geographies.

Based on Component

• Platform
• Service
• Support and maintenance
• Training and consulting
• System integration

Based on Deployment

• Cloud
• On-Premises

Based on Type

• Chatbot
• Intelligent Virtual Assistant (IVA)
• Intelligent Interactive Voice Response (IVR) System

Based on Industry

• Banking, Financial Services, and Insurance (BFSI)
• Retail and E-commerce
• Healthcare
• Hospitality
• Telecom
• Media and Entertainment

Based on Technology

• Natural Language Processing (NLP)
• Machine Learning
• Automated Speech Recognition (ASR)

Based on Application

• Customer Support
• Personal Assistant
• Branding and Advertisement
• Customer Engagement and Retention
• Onboarding and Employee Engagement

Geographical Analysis

• North America
  • U.S.
  • Canada
• Europe
  • U.K.
  • Germany
  • France
  • Italy
  • Spain
• Asia-Pacific
  • China
  • Japan
  • India
  • South Korea
  • Australia
• Latin America
  • Brazil
  • Mexico
• Middle East and Africa
  • Saudi Arabia
  • South Africa

Top Conversational AI Companies