Conversational Systems Market Analysis by Type (Voice Assisted, Text Assisted, and Others); by Deployment (On-Premise, and Cloud); by Enterprise Size (Small, Medium, and Large Enterprises); and by Verticals (IT & Telecommunication, BFSI, Government, Retail, Energy, and Power) – Global Supply & Demand Analysis & Opportunity Outlook 2023-2035
Buy Now Report ID: 4181 | Published Date: Feb 22, 2023
The global conversational systems market is estimated to garner a revenue of ~USD 333 Billion by the end of 2035 by growing at a CAGR of ~30% over the forecast period, i.e., 2023 – 2035. Further, the market generated a revenue of ~USD 140 Billion in the year 2022. The growth of the market can be attributed to the increasing adoption of natural language processing, artificial intelligence chatbots, and advancements in cloud services during the forecast period. As per International Finance Corporation, over 70 billion IoT devices were available across the globe in 2020 and are further projected to be tripled in the upcoming 5 years. The increasing demand for good customer service in all sectors is rising the need for chatbots. It is estimated that people who faced bad customer service lost trust and left the brand. The chatbots here help to generate automatic responses to the customers which makes them feel recognized. It also advertises new products with notifications and reduces employee costs through conversational AI implementation.
The market growth can be further attributed to the increasing deep neural networks, and machine learning technology used for application across various verticals like retail, BFSI, IT, telecommunications, and healthcare segments. Based on the data provided by UNESCO, AI was projected to generate an almost added value of USD 4 trillion by 2022. The global conversational systems market is based on artificial intelligence that can understand various languages and will start written or verbal communication with the customer. Hence, all these factors are estimated to hike the growth of the market over the forecast period.
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Base Year |
2022 |
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Forecast Year |
2023-2035 |
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CAGR |
~30% |
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Base Year Market Size (2022) |
~ USD 140 Billion |
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Forecast Year Market Size (2035) |
~ USD 333 Billion |
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Regional Scope |
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Growth Drivers
Increasing Demand for AI Customer Service Owing to Fast Response - For instance, in 2020, about 7 out of 10 businesses were observed to be planning and implementing AI customer service solutions. Artificial intelligence has improved customer interaction with brands. AI-enabled customer service is beneficial in improving trust, perceiving sacrifice, and building a relationship commitment. The rising use of virtual assistants to replace customer service agents is enhancing the brand and customer experience. Also, increasing the consumer-friendly approach by clearing queries immediately with a relevant response.
Higher Adoption of Artificial Intelligence Chat Bots as it is Cost Efficient - As of 2018, approximately 75% of organizations were noticed to be utilizing AI chatbots.
Up-Surged in Dialog Exchanging Tools with Rising Advancements in Technology - It was observed that the Government of China increased its expenditure on R&D by more than 10% in 2021 to become the world’s first AI innovation center.
Growing Demand for Texting Insights like Chatbots and GIFs. - The chatbots automate a portion of the sales and customer service procedures, allowing the organization to save a significant amount of money by minimizing operating costs. This is one of the main factors influencing the demand and development of chatbots. For instance, approximately 65% of the increment was observed in the adoption of chatbots by multiple organizations between 2018 and 2020.
Growing AI Applications in Business and Marketing Across the World - The utilization of chatbots is expected to reduce business costs to around USD 6 billion by the year 2022.
Challenges
The global conversational systems market is segmented and analyzed for demand and supply by type into voice-assisted, text-assisted, and others. Out of these sub-segments, the voice-assisted segment is anticipated to hold the largest market size by the end of 2031 during the forecast period on account of advancements in Artificial Intelligence (AI) technologies. Increased adoption of new technologies along with improving customer experience is estimated to drive market growth in the telecommunication segment during the forecast period. Data provided by the World Bank states that with the usage of chatbots banks globally will save about USD 7 billion in operating costs by 2023. The voice-assisted chatbots are really useful in this fast-growing world of digitalization. The automatic AI-generated replies in the customer service sector are useful to navigate people on the right path without the need for a virtual assistant. This can help people by responding to a command on the smartphone or electronic device by recognizing the voice.
The global conversational systems market is also segmented and analyzed for demand and supply by verticals into IT & telecommunication, BFSI, government, retail, energy, and power. Amongst these segments, the IT & telecommunication segment is estimated to garner the largest revenue during the forecast period. The increasing adoption of telecommunication in every sector and a growing number of prominent players in conversational systems. The growing need to meet the demand and satisfy the customers with good customer service. The penetration of the internet and the use of mobile and smartphones is estimated to have a positive impact on the telecommunications industry. The rising interest of people in upcoming new technologies and increasing competition among key players. The 5G technology and the Internet of Things are also having a huge impact on the industry’s growth. The increasing need for big data analytics as the data is growing tremendously creating opportunities for the telecom sector. Also, government initiatives to improve infrastructure is estimated to drive market growth during the forecast period as per the market analysis. As per the estimations, the net profit of telecommunication companies across the world is estimated to be 13% in 2022.
Our in-depth analysis of the global conversational systems market includes the following segments:
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By Type |
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By Deployment |
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By Enterprise Size |
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By Verticals |
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The North American conversational systems market, amongst the market in all the other regions, is projected to hold the largest market share by the end of 2035. The growth of the market can be attributed majorly to the increasing development of deep neural networks, machine learning, and other technological advancements. The increasing research and development activities in North America contribute to the growth of the market over the forecast period. The major segment of deep machine learning is software, hardware, and services. For instance, in the United States, the software segment is estimated to reach approximately USD 900 million while hardware and services are projected to reach respectively around USD 350 million and USD 750 million by 2025. The rising advancement in machine learning research and algorithms is rising the demand for deep learning networks. The increasing amount of data to be processed and problems such as object detection, NLP task, and image classification. All these problems need deep neural learning to solve.
International Business Machines Corporation (IBM Corp.) joined forces with MBZUAI to advance AI research with the New Center of Excellence focusing on NLP, AI applications in the healthcare industry, and sustainability.
Google LLC CEO Sundar Pichai has announced the new advancements of Google in enhancing knowledge and computing that include the addition of 24 Google translation languages, auto summarization in chats, visual improvements, auto-translation of YouTube content, and a publicly available machine learning hub for Google cloud customers.
In 2023, market players might incur losses due to huge gap in currency translation followed by contracting revenues, shrinking profit margins & cost pressure on logistics and supply chain.
Controlling Inflation has become the first priority for global economies from last quarter of 2022 and to be followed in 2023. With skewed economic situations, rise in interest rate by governments to control spending and inflation, spiked oil and gas prices, high inflation, geo-political issues including U.S. & China trade war, Russia-Ukraine conflict to intensify the global economic issues.
The interest rates in the U.S. may be less sensitive in 2023 as compared to 2022; sigh of relief for businesses. Positive business sentiments, healthy business balance sheets, growth in construction spending (private construction value in 2022 stood at $1,429.2 billion, 11.7 percent (±1.0 percent) above the $1,279.5 billion spent in 2021, Residential construction in 2022 was $899.1 billion, up by 13.3 percent (±2.1 percent) from $793.7 billion in 2021, non-residential construction touched $530.1 billion, 9.1 percent (±1.0 percent) above the $485.8 billion in 2021.) showcases minimal impact of recession in the country.
Similarly, spiked spending in the European and major Asia economics including, India, China & Japan to showcase less impact on the global demand.
Author Credits: Abhishek Verma, Hetal Singh
Ans: Increase adoption of NLP (natural language processing) and the increase in dialog exchanging tools are the major factors driving the market growth.
Ans: The market is anticipated to attain a CAGR of ~30% over the forecast period, i.e., 2023 – 2035.
Ans: Lack of awareness of technology, high dependency on deployment platforms, and lack of accuracy in virtual assistants like chatbots are estimated to be the growth hindering factors for the market expansion.
Ans: The market in the North American region is projected to hold the largest market share by the end of 2035 and provide more business opportunities in the future.
Ans: The major players in the market are Google LLC, International Business Machines Corporation (IBM Corp.), Microsoft Corporation, Amazon Web Services, Inc., Artificial Solutions International AB, Oracle Corporation, SAP SE, Nuance Communication, Inc., and others.
Ans: The company profiles are selected based on the revenues generated from the product segment, geographical presence of the company which determine the revenue generating capacity as well as the new products being launched into the market by the company.
Ans: The market is segmented by type, deployment, enterprise size, verticals, and by region.
Ans: The voice assisted segment is anticipated to garner the largest market size by the end of 2035 and display significant growth opportunities.
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