The global chatbot market is predicted to value at $19,570.0 million by 2027, surging from $2,568.3 million in 2019 at a noteworthy CAGR of 28.7%.
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Impact Analysis of COVID-19 on the Chatbot Market
The global market for chatbot services is projected to experience a higher growth rate in the midst of the COVID-19 health emergency due to higher adoption of chatbots by various organizations and companies. Therefore, companies involved in chatbot businesses, like google, Microsoft, and Amazon are implementing various strategies for business development. For instance, in April, 2020, Google announced the launch of a new AI chatbot, Rapid Response Virtual Agent program, for COVID-19 information. The chatbot is designed for organizations such as government agencies, healthcare and public health organizations, as well as travel, financial services and retail industries who need to provide information related to COVID-19 pandemic to people.
On the other hand, some of the notable chatbot service providers are following various strategies to help people during the COVID-19 apocalypse. For instance, in July 2020, the U.S. government agencies teamed up with Microsoft in order to deploy conversational chatbots, powered by the trusted Azure cloud, Bot Service, and artificial intelligence (AI). U.S. local and state governments has announced that they have deployed around 30 such capable chatbots, to serve more than 73 million users of the population. These factors may lead to investment opportunities for the chatbot market worldwide.
Chatbot Market Analysis:
The enormous growth of the global chatbot market is mainly attributed to the integration of AI in chatbots. Hence, several industry verticals such as banking & insurance, retail, and healthcare operating worldwide are adopting chatbot technology to support their customers with enhanced experience. For instance, in September 2019, YES Bank introduced their YES robot which is an AI enabled chatbot for their customers. YES chatbot helps customers to perform transactions of bank by using AI. Moreover, in April 2019, Artificial Solutions entered into a partnership with Deloitte, one of the leading players in audits, consulting, tax, and advisory services, in order to fulfil the demand for natural language applications in the Netherlands with the help of Teneo, a conversational AI platform. These key factors may lead to a surge in the demand for chatbot services in the global market.
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Many bots can answer only few limited questions. Also, the inability to recognize customers intent and to respond them effectively may create a negative impact on global chatbot services, throughout the analysis timeframe.
In recent years, AI has been playing a crucial role in maintaining advancement in the agro-based sector. The use of conversational intelligence through ubiquitous smartphone can be a powerful tool to enhance information access in rural regions for people with limited knowledge and technology experience. Moreover, in April 2018, a team of students at Mumbai’s Vivekanand Education Society’s developed ‘Aham’, a chatbot in ‘software hackathon’. This chatbot is an agriculture-focused app that helps farmers get their queries addressed. Such factors may provide lucrative opportunities for the global chatbot market, in the future.
The services segment of the chatbot market will have the fastest growth and it is projected to surpass $8,825.8 million by 2027, with an increase from $843.6 million in 2019. A chatbot-as-a-service mainly helps business operations to run smoothly. In today’s world where everything is digitally connected, customers are expecting rapid solutions. Chatbot-as-a-Service enables customers to deliver an excellent customer experience rapidly with capabilities such as collecting feedback, answering FAQs, and others. Owing to the above stated factors, the adoption of chatbots is massively increased, which may eventually drive the segment, in the forecast period.
Solution sub-segment for the chatbot industry shall have rapid growth and it is expected to generate a revenue of $10,763.8 million by 2027 during the forecast period. Enormously growing usage of chatbots across various industries such as healthcare, retail, and BFSI, increasing focus on customer engagement through innovative channels, and growing emphasis on the development of advanced chatbots to offer human-like conversational experience are some of the factors flourishing the global market growth.
On premise deployment mode for chatbot market will grab the largest share and is projected to generate a revenue of $8,297.2 million by 2027 during the forecast period. Superior data security, absolute control, and high flexibility are some of the reasons, businesses across the world adopt on-premise chatbots platform. On the other hand, cloud deployment mode for chatbot market will be the fastest-growing sub-segment and is projected to generate a revenue of $11,298.0 million by 2027 at a notable CAGR of 32.9%.
The chatbot market for the social media sub-segment will be a rapidly-growing market. This market registered a revenue of $572.6 million in 2019 and is further expected to reach up to $4,686.4 million by 2027. Chatbots help in boosting the efficiency of social media as it creates more personal engagement with users. Furthermore, creating a more convenient buying experience, discovering customer’s exact wants, expansion of sales pipeline, and shortening of sales cycle are some of the key factors responsible for the increased adoption of chatbots in social media services. In addition to this, certain businesses are adopting chatbots in order to serve great customer experience. For example, in August 2020, Sun Life ASC India, one of the topmost Service Centers in Asia, made an announcement to officially release chatbots for its staff social-media platform. This chatbot has answered around 1500+ questions from over 500 customers since its launch.
Travel & tourism services for global chatbots market is expected to grow at 29.7% CAGR and is further expected to generate $2,591.1 million revenue during the projected period. In recent years, the travel & tourism industry has been coming up with multiple tools such as chatbots, bringing a whole new digital wave in the industry. Chatbots in the travel & tourism industry perform multiple travel-related tasks including hotel bookings, flight bookings, and recommendations to being a tour guide. Such factors are expected to boost the adoption of chatbot technology in the tourism sector.
The Asia Pacific region shall have a lucrative chatbot market that is expected to reach up to $5,049.1 million by the end of 2027. This growth is mainly driven by heavy investments by startups in chatbot and machine learning technology and rapid integration of chatbots in small & Medium-sized enterprises combined with rapid shift of enterprises to enhance the customer-engagement techniques. Also, government supportive initiatives taken by the Asian countries are also expected to create positive impact on the Asia-Pacific chatbot market during the forecast period.
The North American chatbot market will have a dominating share and is expected to reach up to $5,581.4 million by the end of 2027. Strong presence of market leaders such as Google, Microsoft, and ThoughtWorks along with their implementation of effective strategies is one of the major factors driving the North America chatbots market throughout the analysis period. For instance, in June 20220, ThoughtWorks, a U.S. based software consultancy, teamed up with the United States Department of Veterans Affairs, a federal Cabinet-level agency that offers life-long healthcare services to eligible military veterans, in order to develop and release interactive chatbots to help U.S. Veterans get important information regarding COVID-19. Such company initiatives may further lead to massive market opportunities for the chatbots market in the North America region.
- Conversica, Inc
- Yellow Messenger
- 7. Ai
- International Business Machine Corporation
- Amazon Web Services, Inc
- Google Inc.
Porter’s Five Forces Analysis for Chatbot Market:
- Bargaining Power of Suppliers: Chatbot companies are extensively in number worldwide. Thus, the negotiation power of chatbot products/service providers decreases. So, there will not be much threat from the supplier side. Therefore, the bargaining power of the supplier is Moderate
- Bargaining Power of Buyer: Buyers have broad range of options available in the market mainly because of high number of service providers operating in the market.
Hence, the bargaining power of the buyers is HIGH
- Threat of New Entrants: The startups entering this market are providing highly integrated solutions to users. Furthermore, the switching cost of buyers is not extensive. Thus, the bargaining power of new entrants is Moderate
- Threat of Substitutes: There is no substitute available for chatbot so far.
Hence, the threat of substitute is Low
- Competitive Rivalry in the Market: Companies dealing with chatbot services are opting for key development strategies to strengthen their position in the global market. The key players of the market such as The IBM, Microsoft, and others are investing heavily to offer advanced services to the client.
Competitive rivalry in the market is High
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