Conversational AI Market Size, Share & Trends Analysis Report By Component (Solutions, Managed Services, Professional Services), By Type, By Deployment, By Technology, By End-user, By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global conversational AI market size was valued at USD 6.18 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 23.6% from 2022 to 2030. The key factors influencing the growth of the market are rising demand, reduced chatbot development costs, AI-powered customer support services, and omnichannel deployment. AI-powered messaging apps and speech-based apps are rapidly uprooting contemporary mobile and web applications and are consequently expected to emerge as a new mode of communication. Conversational artificial intelligence is the utilization of chatbots and other digitalized platforms to serve customers with a platform where they can solve their problems and interact with virtual assistants. This even aids businesses in growing by adopting new techniques to communicate with customers.

In addition, omnichannel conversational AI serves customers with many choices based on their preferred platform and their previous preferences. According to a recent study, customers with an online presence retain around 40% more than actual customers. On average, nearly 90% of customer engagement retention is seen in organizations with immensely strong all-channel, while weak all-channel organizations show around 33% customer engagement retention. In recent years, the market penetration has been directly influenced by the increasing requirement of AI-based chatbots for keeping informed and connected during COVID-19.

The low-cost chatbot generation, coupled with omnichannel deployment, is paving the way for the market growth. Similarly, the growing demand for customer support services enhanced by AI also positively influences the market growth. Furthermore, rapid technological innovations and advancements in AI-based technologies play a crucial role in fostering the market. The cognitive competencies of a conversational AI bot can be utilized in online assistance to consumers in their purchase journey.

Nowadays, conversational AI products offer support for a restricted number of languages, and most virtual assistants and chatbots are better compatible with English. However, conversational AI offerings have initiated serving support for regional languages, and the implementation of these products is gaining significant prominence across the globe. Prominent market participants are focused on enhancing their product and service offerings. For instance, recently, support for seven new languages for actions on Google Assistant has been offered by Google. With this upgrade, Google currently delivers support for 16 languages.

Furthermore, in November 2021, Google introduced a new product, Bot-in-a-Box, to extend its operations in conversational AI. The Bot-in-a-Box platform permits companies to submit a chatbot with a current customer FAQ document to keep the service simple, whether from an internal document or a web page. With these new applications from Google Cloud, it becomes easier for corporations to launch chatbots using current customer FAQs.

Component Insights

The solutions segment held the largest revenue share of over 60.0% in 2021. The leading share is attributed to companies' large-scale implementation of in-house conversational AI technologies. Managed services and professional services are projected to expand at a prominent growth rate during the forecast period. The services play a crucial part in the way conversational AI solutions function. With diverse and rich human languages, human interactions are often complex. Customers from distinct demographic classes express the same intent/sentiment differently. Hence, chatbots are required to be trained to learn the common intent.

Many companies offer diverse and large training datasets for a chatbot used for sufficient training chatbots to recognize various ways people express the same purpose. Major players in the market, like Accenture, offer wholesome AI training and system integration services to enable businesses to implement AI advancements in their communication services. Accenture's Conversational AI Platform is created to handle organizations' usual problems when implementing conversational AI solutions. These challenges include delivering at pace, enhancing from proof of concept to enterprise-level, and how to operate a living system. By centralizing the maintenance, design, creation, and publishing of conversational experiences in a common platform, organizations can enable scaling across the enterprise by breaking conventional silos.

Moreover, AI-enhanced support solutions can serve users with the availability of services and 24/7 assistance, making businesses capable of providing reliable customer support. For instance, in January 2022, Visionstate Corp. introduced its new Vicci 2.0, a state-of-the-art conversational chatbot artificial intelligence (AI) powered customer service kiosk. Visionstate is implementing this technology into its Vicci 2.0 platform to serve on-site customer service influenced by artificial intelligence. The Vicci 2.0 platform can support a wide range of consumers through its ability to be modified to support various languages.

Type Insights

In terms of revenue, the chatbots segment accounted for a dominant share of over 65.0% in 2021. The segment is estimated to retain its leading position over the forecast period owing to its ability to play a central role in customer support service. They are primarily used for collecting data. In addition, customers can engage with chatbots to obtain clarity about any product or service or if they need to book any appointments. There are numerous conversational AI service providers in the market, developing virtual assistants and chatbots with restricted user-personalized characteristics. For instance, in September 2021, Astro, a new and different kind of robot, was launched. It is structured to help customers with tasks like keeping in touch with family and home monitoring.

Similarly, in January 2020, AWS created Amazon Lex chatbot integration, available in Amazon Connect in the Asia Pacific AWS (Sydney). These chatbots assist consumers in scheduling an appointment, changing passwords, and bringing up requested account balances. Instead of calling out a number from a list of options, this is done by vocalizing a prompt. Companies are becoming capable of adding services, implementing intelligent assistants, and integrating tasks with several other platforms with the increasing penetration of NLP and AI technological advancements. There is immense opportunity to incorporate new advancements, like gesture recognition, in conversational AI services.

Deployment Insights

In terms of revenue, the on-premise segment held the dominant share of over 60.0% in 2021. This is attributed to the flexibility delivered to the customer, due to which the transaction is done only once. The costs are relatively cheaper than expenditures incurred on the cloud by the consumer. The cloud segment is projected to witness prominent growth during the forecast period owing to the rising prominence of cloud-based technologies and services in businesses across the globe.

Initially, consumer services meant consumers were looking for aid from applications, emails, call centers, and websites. Although, with enhancements in the utilization of AI technology, businesses are implementing conversational AI solutions and technologies to provide customer service effectively. For instance, in May 2020, NVIDIA introduced NVIDIA Jarvis, its new conversation AI product, a GPU-accelerated application framework. It allows businesses to utilize speech and video data to manufacture state-of-the-art conversational AI services customized for their customers, industry, and products.

Similarly, in November 2020, Kore.ai launched a new version of its Virtual Assistant Platform. Version 8.0 of the Kore.ai Virtual Assistant platform comprises few bug fixes, enhancements, and new features. This platform is meant for bot developers, tech enthusiasts, or business users who want to learn how it can uplift the current user-bot interactions and advancements in the bot platform.

Technology Insights

The NLP (Natural Language Processing) segment held the leading revenue share of more than 45.0% in 2021. NLP can ensure the processing of large quantities of natural language data. It also enables streamlining of the documentation processes to enhance their efficiency, including documentation accuracy. For instance, Similarly, SAP (Systems, Applications, and Products in Data Processing) SE (Societas Europaea), a global operating software company based in Europe, developed current applications with improved, automated capabilities like automatic translation and the Incident Solution Matching service based on machine learning and artificial intelligence (AI) advancements.

Currently, the focus of businesses has deviated from delivering customer support services through messages or emails to AI-enhanced chatbots. These chatbots aid companies improve consumer interaction and experience. AI-enabled chatbots use NLP technology to assist customers and conduct human-like interactions in real-time. They aid businesses in achieving business intelligence regarding purchase behaviors, customer preferences, and opinions, hence making companies capable of delivering more customized experiences and proactive recommendations based on their account activity. For instance, ZeroShotBot launched new conversational AI technology, normalizing chatbots for companies of all sizes. ZeroShotBot provides a new technology for building chatbots that don’t need training data, permitting anybody with zero coding experience to generate a fully functional chatbot.

End-user Insights

The retail and e-commerce segment held a leading revenue share of more than 20.0% in 2021. Through persuasive, more expressive, and intelligent conversational AI tools and techniques, retail and e-commerce industries serve customers better. The BFSI segment is expected to witness significant growth during the forecast period owing to various factors like the penetration of AI chatbots into the financial and banking services industry that is used to assist consumers in making their payments safely and by interacting in communication.

Several other factors like giving any warnings and signals in case of any suspicious incidence of fraud are likely to happen by sending alerts directly to customers and banks, comprising aiding employees performing complex tasks repetitively. The tasks such as managing internal documentation are predicted to influence the market growth over the upcoming years. Voice AI technology is on its way to seeing widespread implementation in the financial sector, specifically in loan collections. The loan recovery space is a crucial area within the banking and finance sector, and AI technology is set to play a critical part.

The automotive industry will witness the highest growth over the forecast period. AI voice assistants can serve vehicle controls, alerts, real-time recommendations, and much more, catering to passengers and drivers for a more convenient daily commute. Healthcare chatbots are one of the most influential and mature AI-powered healthcare technologies established so far, which stands to radically change the way patients, payers, and medical care providers interact with one another. These bots also play a crucial part in providing vital healthcare information to specifically targeted people at the right time. Healthcare or medical chatbots can be implemented to achieve various objectives, from revealing valuable insights and improving healthcare systems to assisting medical personnel and improving patient experience.

Regional Insights

North America held the largest revenue share of more than 30.0% in 2021. The massive adoption of upcoming technological advancements in the region and the rapidly growing demand for customer support services powered by artificial intelligence are fostering market growth in the region. Furthermore, most organizations in North America are investing in technological advancements to satisfy and help their customers' requirements. The rapidly growing health consciousness among the population also fuels the demand for conversational AI. The healthcare industry in North America is advancing to implement augmented and virtual reality, robotics, and AI. This would help deliver intelligent services and technologies for evidence-based health and focus on preventive and collaborative care.

The Asia Pacific region is projected to witness the highest growth during the forecast period due to the increasing awareness among organizations about innovative customer support services and technologies. In addition, increasing development in the e-commerce sector, rising acceptance of technology in the retail industry, technological advancement in consulting and healthcare, and progressing internet penetration in this region are fueling the use and demand for conversational AI.

Key Companies & Market Share Insights

The global market is fragmented, with several medium-large to small-sized market vendors capturing the most revenue share. Major market players adopt numerous strategies such as contracts, agreements, mergers, and acquisitions, implementing more improved technologies in conversational AI applications, and creating, testing, and launching new and enhanced solutions.

For instance, in April 2021, Microsoft acquired Nuance Communications, an AI-based technology company. With the benefit of Nuance’s relationships and expertise with EHR systems providers and by combining Nuance’s solutions with Microsoft Cloud for Healthcare, Microsoft will permit healthcare benefactors with the power of ambient clinical intelligence and other Microsoft cloud services. This acquisition expands Microsoft’s strength in transcription and voice recognition technology. Some prominent players in the global conversational AI market include:

• Google

• Microsoft

• Amazon Web Services, Inc.

• IBM

• Oracle

• Nuance Communications, Inc.

• FIS

• SAP SE

• Artificial Solutions

• Kore.ai, Inc.

• Avaamo

• Conversica, Inc.

• Jio Haptik Technologies Limited

• Rasa Technologies Inc.

• Solvvy

• Pypestream Inc.

• Kasisto

• Cognigy

Conversational AI Market Report Scope

Segments Covered in the Report

This report forecasts revenue growth at the global, regional, and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the global conversational AI market report based on component, type, deployment, technology, end-user, and region:

• Component Outlook (Revenue, USD Billion, 2017 - 2030)

  • Solutions

  • Managed Services

  • Professional Services

    • Training and Consulting

    • System Integration and Implementation

    • Support and Maintenance

• Type Outlook (Revenue, USD Billion, 2017 - 2030)

  • Chatbots

  • Intelligent virtual assistant (IVA)

• Deployment Outlook (Revenue, USD Billion, 2017 - 2030)

  • Cloud

  • On-premise

• Technology Outlook (Revenue, USD Billion, 2017 - 2030)

  • Natural Language Processing (NLP)

  • ML and Deep Learning

  • Automatic Speech Recognition (ASR)

• End-user Outlook (Revenue, USD Billion, 2017 - 2030)

  • BFSI

  • Healthcare

  • IT and Telecom

  • Retail and eCommerce

  • Education

  • Media and Entertainment

  • Automotive

  • Others (Government, Hospitality, Manufacturing, etc.)

• Regional Outlook (Revenue, USD Billion, 2017 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • U.K.

    • France

  • Asia Pacific

    • China

    • Japan

    • India

  • South America

    • Brazil

  • Middle East and Africa (MEA)