CHATBOT MARKET

GMI Research analysis indicates that the Chatbot market size was estimated at USD 6.0 billion in 2023 and is slated to register a double digit CAGR of 22.7% over the period 2024-2031 and is projected to reach USD 30.9 billion in 2031 due to the increased need for continuous customer service and the growing reliance on messaging platforms.

Major Market Drivers and Emerging Trends

The chatbot market size is primarily attributed to the increasing need for advanced customer support in various industries. A chatbot is a software application created to simulate human conversation via text and performing various tasks. Many businesses are adopting digital platforms for customer service, shifting away from conventional approaches to automate responses and streamline routine functions.

Chatbots are becoming increasingly popular in digital businesses as they efficiently process data and deliver prompt responses to interactions between customers and companies. Chatbots are now a key feature in customer service strategies as they help to streamline CRM processes and lighten the workload for support teams. Integrating NLP and machine learning with conversational chatbots with AI helps businesses understand customer needs and offer 24/7 assistance which in turn drives sales and generates lead.

The other factor supporting chatbot market growth is the growing reliance on messaging services. There has been a notable surge in the adoption of messaging services with expectations that they will soon overtake social media sites in user count. With WhatsApp leading at two billion active users followed by WeChat at 1.263 billion as of January 2022, the platforms offer an optimal environment for chatbot integration. By leveraging this trend, brands are able to engage with users more personally and efficiently on platforms where they already invest considerable time.

Generative models are also increasingly being integrated into chatbots which contribute significantly to the global chatbot market growth. There have been impressive advancements in AI particularly in LLMs and generative AI. They leverage deep learning algorithms to produce new content by drawing insights from patterns within extensive datasets. By utilizing generative AI, businesses gain access to crucial data-driven knowledge for intelligent decisions which reduce development and marketing cycle costs while rapidly uncovering solutions to intricate challenges. Generative AI along with its predictive analytics in chatbots enable businesses to rely on advanced algorithms to make quicker and more precise decisions. Generative AI further enables companies to quickly test new possibilities and explore different concepts which significantly reduce the time required.

Component Insights: Solutions registered the largest market share

The solutions segment is expected to hold the largest market share due to the growing use of in-house chatbot systems. However, services are essential for chatbot functionality as human interactions are intricate and the diversity of language adds to the challenge. People from diverse backgrounds may articulate the same intent differently which makes it essential to train chatbots to recognize the underlying intentions. Therefore, the service segment is expected to grow as chatbots are trained to understand common intent.

Technology Insights: Natural Language Processing is projected to experience the highest CAGR

This growth is largely driven by the rising demand for more effective customer engagement and streamlined automation in diverse industries. The rapid progress in NLP is making it possible for chatbots to hold more natural interactions thereby improving user experiences in various industries. Due to its ability to interpret and create natural responses, NLP is key to enhancing user experience which gives it a major presence in the industry. Recent advancements in NLP have further streamlined the way computers understand and process human language.

Deployment Model Insights: Cloud registered the largest revenue share

The cloud segment is predicted to dominate the chatbot market share driven by its flexibility and scalability. The cloud segment is particularly advantageous for businesses with variable demand and requires the ability to scale efficiently. It allows businesses to easily modify AI chatbot services according to real-time requirements without incurring substantial costs for hardware. Market expansion is driving a trend where small and medium businesses are increasingly adopting cloud solutions which indicate a transition towards more flexible and adaptive service models.

While on-premises solutions demand a higher initial expense, they are ideal for sectors where compliance and data security are critical which makes them crucial in enterprise deployments.

Usage Insights: Mobile platform dominated the largest share

The mobile platform segment is poised to take the largest market share driven by the advantages chatbots in social media offer to businesses and the time savings they provide to consumers. Chatbots for social media are primarily designed to offer immediate customers support at any hour regardless of business working times.

Organization Size Insights: Large enterprises lead the market

Many large enterprises create chatbots based on predefined rules with plans to upgrade them in the future to support more advanced functions. The use of machine learning in chatbot development platforms allows businesses to build AI interfaces capable of delivering valuable business intelligence.

Application Insights: Customer support captured the largest share

By automating customer support functions, businesses are leveraging chatbots to achieve significant cost reductions. Implementing chatbots will significantly reduce labor expenses by automating parts of customer support which leads to substantial savings. Responding promptly with chatbots helps meet customer expectations and significantly minimizes the risk of customer churn.

Vertical Insights: Retail and Ecommerce holds the largest market share

Ecommerce chatbots incorporate online messaging and voice assistants to deliver a seamless and enjoyable shopping journey for customers. It combines the functionality of ecommerce platforms with individualized customer service to offer a seamless shopping experience. Ecommerce bots are also valuable for lead generation as they effectively interact with website visitors or app users and transform them into potential customers through smart engagement.

The BFSI sectors are also progressively benefiting from the integration of chatbots into their operations. Chatbot adoption results in more effective cross-selling and a decrease in customer service expenditures. Chatbots in the financial sector need to prioritize security and deliver a seamless user journey. The rapid advancements in AI and the growing popularity of messaging platforms are further propelling segment growth. In the financial sector, chatbots boost customer experience by offering services including automated assistance along with intelligent payment processing. The industry also utilizes AI chatbots to automate routine tasks and offer tailored banking services.

Chatbots have also been instrumental in supporting the healthcare industry. Various medical insurance providers and public health organizations around the world are utilizing chatbots to assist patients by offering appropriate advice and recommendations.

Regional Insights: North America captured the largest share

With its strong AI adoption, North America is the major contributor to revenue in the global chatbot market. The domination is driven by its extensive use of emerging technologies like NLP, voice recognition and chatbots. As businesses increasingly adopt chatbots for efficient customer engagement and service, North America is likely to see significant growth in chatbot market demand.

Following North America, the Asia Pacific region which is known for its thriving services industry holds the next position in the market. Many large organizations are progressively incorporating chatbots into their daily customer service functions. The impressive growth potential in different regions is largely due to the considerable advantages chatbots deliver to enterprises including greater customer satisfaction and lower costs.

Top Market Players

Various notable players operating in the market include Microsoft Corporation, Google LLC., IBM Corporation, Amazon Web Services, eGain Corporation, Nuance Communication, Inc., Creative virtual Ltd., Artificial Solution International AB, Next IT Corp., Chatfuel, among others. The chatbot market across the globe is defined by a combination of major tech corporations and specialized AI startups. Strategic partnerships and acquisitions are driving the rapid market consolidation as the leading players are recognized for their focus on innovation along with operational efficiency.

Key Developments:

• • In 2023 Baidu revealed plans to complete internal testing of its project named ERNIE Bot which is a large language model powered by AI.
  • In 2023 Northwell Health launched the Pregnancy Chats which is a personalized chatbot platform powered by AI that is crucial in their advanced initiative to combat maternal mortality. It further illustrates how chatbots are able to tackle vital healthcare challenges beyond just answering basic questions.
  • In July 2022, Tata Consultancy Services (TCS) announced its collaboration with Walton Centre NHS Foundation Trust to develop digital solutions which focusses on enhancing specialist productivity and reducing patient’s wait time TCS will create develop AI-based chatbot which will interact with patients referred to neurology and collect details of condition and symptoms through set of questions.
  • In May 2022, Glenmark Pharmaceuticals Ltd., announced the launch of its Whatsapp based chatbot, which is designed to assists patients with fungal infection and promote disease awareness.
  • In February 2021, Kore.ai developed virtual a virtual assistant platform in Japan. This platform is designed to enhance experience of users in their native language.
  • February 2021, Nuance Communications, Inc, announced that it has acquired Saykara, Inc, a start-up based in U.S which focusses on developing of mobile AI assistant to automate clinical documentation for physicians.
  • In October 2020, Artificial Solutions, one of the leading specialists in enterprise-strength conversational AI, announced that it has added new updates to Taneo Languages. This update will enable enterprises to provide high-quality conversations in less time with minimal effort.
  • In January 2019, IBM Corporation entered into a strategic partnership with Ingenico Group, for developing payment payment-enabled chatbot to provide personalized experiences to its users. Ingenico group is based in Europe, which focusses on delivering technologies for conducting secure electronic transactions.

Market Segmentation

The Global Chatbot Market has been segmented based on Component, Technology, Deployment Model, Usage, Organization Size, Application, Vertical, and Regions. Based on Component, the market is segmented into Solutions and Services. Based on the Technology, the market is segmented into Machine Learning and Deep Learning, Natural Language Processing and Automated Speech Recognition. Based on the Deployment Model, the market is segmented into On-Premises and Cloud. Based on Usage, the market is segmented into Websites, Contact Centres, Social Media, Mobile Platform. Based on Organization Size, the market is segmented into Large Enterprises and Small and Medium-Sized Enterprises. Based on Application, the market is segmented into Customer Support, Personal Assistant, Branding and Advertisement, Customer Engagement and Retention, Data Privacy and Compliance, On-Boarding and Employee Engagement, and Others. Based on Vertical, the market is segmented into Banking & Financial Services and Insurance, Retail and Ecommerce, Healthcare, Travel and Hospitality, Media and Entertainment, Telecommunications, and Others.

Market Segmentation

Global Chatbot Market by Component

• • Solutions
    • Platform
    • Software
  • Services
    • Managed Services
    • Professional Services

Global Chatbot Market by Technology

• • Machine Learning and Deep Learning
  • Natural Language Processing
  • Automated Speech Recognition

Global Chatbot Market by Deployment Model         

• • On-Premises
  • Cloud

Global Chatbot Market by Usage

• • Websites
  • Contact Centers
  • Social Media
  • Mobile Platform

Global Chatbot Market by Organization Size

• • Large Enterprises
  • Small and Medium-Sized Enterprises

Global Chatbot Market by Application

• • Customer Support
  • Personal Assistant
  • Branding and Advertisement
  • Customer Engagement and Retention
  • Data Privacy and Compliance
  • On-Boarding and Employee Engagement
  • Others

Global Chatbot Market by Vertical

• • Banking & Financial Services and Insurance
  • Retail and Ecommerce
  • Healthcare
  • Travel and Hospitality
  • Media and Entertainment
  • Telecommunications
  • Others

Global Chatbot Market by Region

• • North America Chatbot Market (Option 1: As a part of the free 25% customization)

    • By Component
    • By Technology
    • By Deployment Model
    • By Usage
    • By Organization Size
    • By Application
    • By Vertical
    • US Market All-Up
    • Canada Market All-Up

  • Europe Chatbot Market (Option 2: As a part of the free 25% customization)

    • By Component
    • By Technology
    • By Deployment Model
    • By Usage
    • By Organization Size
    • By Application
    • By Vertical
    • UK Market All-Up
    • Germany Market All-Up
    • France Market All-Up
    • Spain Market All-Up
    • Rest of Europe Market All-Up

  • Asia-Pacific Chatbot Market (Option 3: As a part of the free 25% customization)

    • By Component
    • By Technology
    • By Deployment Model
    • By Usage
    • By Organization Size
    • By Application
    • By Vertical
    • China Market All-Up
    • India Market All-Up
    • Japan Market All-Up
    • Rest of APAC Market All-Up

  • RoW Chatbot Market (Option 4: As a part of the free 25% customization)

    • By Component
    • By Technology
    • By Deployment Model
    • By Usage
    • By Organization Size
    • By Application
    • By Vertical
    • Brazil Market All-Up
    • South Africa Market All-Up
    • Saudi Arabia Market All-Up
    • UAE Market All-Up
    • Rest of world (remaining countries of the LAMEA region) Market All-Up

Major Players Operating the Chatbot (Option 5: As a part of the Free 25% Customization – Profiles of 5 Additional Companies of your Choice)

• • Microsoft Corporation
  • Google LLC
  • IBM Corporation
  • Amazon Web Services
  • eGain Corporation
  • Nuance Communication, Inc.
  • Creative virtual Ltd.
  • Artificial Solution International AB
  • Next IT Corp.
  • Chatfuel