AI in Customer Service Market - Forecasts from 2024 to 2029

AI in Customer Service Market - Forecasts from 2024 to 2029

The AI in customer service market is projected to grow at a CAGR of 23.93% over the forecast period, from US$473.659 million in 2024 and is expected to reach US$1,384.688 million by 2029.

AI customer service is a type of artificial solution designed especially to provide and interact with the consumers of any organization. The services offer a reduction in the company's operating revenue, as this can interact with multiple customers or inquiries at any given time. These services also improve customer satisfaction, offering a quick response and convenient services through chat or voice assistance.

The increase in global online retail sales is forecasted to boost the demand for AI customer services. In the retail industry, AI customer services offer convenient and quick customer support, enhancing the customer experience. These services also help businesses reduce operating costs and increase customer acquisitions. The US Census Bureau reported that the nation's e-commerce or online retail sales continually expanded over the past few quarters. The e-commerce sales in the third quarter of 2023 were recorded at about US$279.739 billion, which increased to US$283.293 billion in the fourth quarter of 2023, finally reaching US$289.204 billion in the first quarter of 2024.

Further, the market is anticipated to develop exponentially, which is inferable to the rising adoption of machine learning, natural language processing, and other AI solutions to understand and decipher client behavior and offer personalized assistance to them. In addition, favorable efforts to bolster virtual assistant and voice-based communication in establishing real-time connections with customers have provided new growth prospects for the market.

AI IN CUSTOMER SERVICE MARKET DRIVERS:

An increase in the global accessibility of the internet is expected to boost the demand for the AI in customer service market.

One of the primary drivers for the development of the global AI customer services market can be connected to the expanding accessibility of the Internet among individuals. With the increase in internet accessibility, businesses like finance, retail, and others have marked their presence on online platforms. These increases in online businesses create the growth of various fast-paced customer services, like chatbots and virtual assistants.

The International Telecommunication Union (ITU) stated in its report that the internet availability among the globe's population has increased constantly. According to the information, approximately 4.9 billion of the population had the availability of the Internet in 2021, which expanded to around 5.1 billion in 2022 and advanced to 5.4 billion in 2023.

The United States region is expected to have a considerable market share. The United States is one of the major AI-adopting countries. With the continuous trend of mechanical progressions and advancements over different industry verticals, the necessity for AI service solutions such as chatbots, generative AI, and virtual assistance is additionally anticipated to provide positive expansion. Major divisions such as banking, retail, and healthcare are expected to witness noteworthy growth in AI adoption, further bolstered by continuous ventures to drive the digitization of various industrial businesses.

Besides, digital client engagement is on the rise in the United States, accelerated by the increasing tech-savvy population. According to Verint’s “2023 State of Digital Customer Experience” report, in which more than 2,000 surveys across the US were conducted to determine customers' preferences for brand engagement, 53% of the respondents aged 18 to 44 preferred digital channels, and 47% preferred phones. Such high engagement has motivated companies to adopt a much wider customer-centric approach to providing a seamless customer experience.

Likewise, retail brands in the United States are also opting for AI and other emerging solutions to better understand their customer’s references and prevent loss. According to the “2023 National Retail Security Survey” conducted by the National Retail Federation and covering 177 US brands, 37% of the respondents are investing in AI-related technologies for fraud detection analytics, while 15% have already started implementing them.

The USA is the hub for technological innovations, and favorable investment in artificial intelligence has provided new growth prospects for such technology. Various US-based AI providers are investing in launches and innovations. For instance, in August 2023, Freshworks Inc. launched its AI-powered “Customer Service Suit” that integrates agent-led conversational messaging, automated ticketing management, and self-service bots.

AI IN CUSTOMER SERVICE MARKET RESTRAINTS:

Data privacy and security concerns among consumers could hinder the AI in customer service market growth.

Data privacy and security concerns are affecting AI customer service due to high-profile breaches and abuse of personal data, which is decreasing consumer trust. Stricter information privacy regulations restrain information collection and utilization, preventing AI customer service improvement and deployment. Moreover, executing vigorous data security measures and complying with regulations increases the operational costs of AI customer service solutions.

AI in Customer Service Key Market Developments:

June 2024 - Target released plans to establish a new GenAI device called Store Companion to its store team members by August 2024. Their GenAI-powered chatbot assists by replying to on-the-job handle questions, coaching new team individuals, and supporting store operations management. The objective is to simplify the teams' jobs, permitting them to work more effectively, offer quicker service, and upgrade the shopping experience by improving visitor engagement.

AI in Customer Service Key Market Players:

IBM - BM is the leading player in AI customer service solutions and provides AI-powered chatbots that enhance customer experience. IBM Watson Assistant is an AI-powered virtual assistant from IBM developed to improve client experience, decrease wait times, progress specialist productivity, and give profitable bits of knowledge by analyzing client interactions and recognizing patterns, subsequently decreasing human agents' workload.
Aisera - The company is a global provider of AI-powered customer service solutions and has strategically positioned itself as a key player in the rapidly growing AI in customer service market. The company's unique solution includes Aisera’s Enterprise AI Copilot, an essential AI tool coupled with AiseraGPT that enables multilingual and personalized conversations across voice and digital channels.
Vonage - Vonage conversational AI is specifically designed for businesses to enhance their customer communication and improve their competitive advantage. The company offers various AI services, including speech recognition, natural language understanding, and text-to-speech, empowering businesses to create custom AI applications.

Market Segmentation:

AI in Customer Service Market is segmented and analyzed as below:

By Technology

Chatbots
Virtual Assistance
Generative AI-based FAQs
Data Insights from Customers

By Deployment

Cloud
On-Premise
Hybrid

By Application

Finance
Technology Company
Government
Retail
Healthcare
Hospitality
Others

By Geography

North America
USA
Canada
Mexico
South America
Brazil
Argentina
Others
Europe
Germany
France
United Kingdom
Spain
Others
Middle East and Africa
Saudi Arabia
UAE
Israel
Others
Asia Pacific
China
Japan
India
South Korea
Indonesia
Taiwan
Others