Chatbot Market Overview, 2023-28

A chatbot is a computer program or artificial intelligence (AI) application designed to simulate human conversation through text or voice interactions. Chatbots are often used to automate tasks, answer questions, provide information, and engage in conversations with users. They can be integrated into websites, messaging platforms, mobile apps, and other digital channels to facilitate communication and interaction with users. Chatbots use NLP technology to understand and interpret human language. This allows them to recognize user intent, extract relevant information, and respond in a way that is contextually relevant. Chatbots are designed to automate repetitive and routine tasks. They can perform actions such as answering frequently asked questions, processing orders, making reservations, and providing recommendations without human intervention. Chatbots can operate around the clock, providing support and information to users at any time, which is especially valuable for businesses and organizations that need to offer customer support outside of regular business hours. Chatbots can handle a large volume of interactions simultaneously without a significant increase in operating costs. This scalability is particularly useful for businesses with growing customer bases. Advanced chatbots can provide personalized responses and recommendations based on user preferences, historical interactions, and user data. This enhances the user experience and can lead to higher customer satisfaction. Many chatbots are capable of communicating in multiple languages, making them versatile for international audiences and markets. Chatbots can be integrated with various systems and databases, allowing them to access and retrieve information from sources such as customer databases, product catalogs, and reservation systems. A chatbot is a collaborative application programmed using artificial intelligence technology and specific set of rules. It is intended for the interaction with humans over textual conversation process and is incorporated with various messaging facilities, thus supporting users in various sectors.

According to the research report, “Global Chatbot Market Overview, 2023-28” the market is anticipated to cross USD 15 Billion by 2028, increasing from USD 5.63 Billion in 2022. The market is expected to grow with 18.83% CAGR by 2023-28. The rising acceptance of customer service activities among businesses for the reduction in operating costs is anticipated to ascend the market growth. Various innovations carried out in artificial intelligence, and machine learning technologies are expected to enhance the features of chatbot, which, in turn, would drive demand for the market. The chatbot market has shown a significant growth in the last few years. The need to provide 24x7 customer services and reducing the operational cost by signing the jobs to the chatbot, the rise in customer’s demands for self-service operations has led to the increase of the demand. This can be attributed to the growing preference of individuals toward messaging applications over social networking sites. Chatbots that are developed for integration with messaging applications are also expected to witness significant market demand in the future. Moreover, chatbot are gaining popularity as the businesses continue to automate their sales and customer services. The use of chatbot enables organizations to deliver timely services at reduced costs. It is anticipated that the chatbot industry will experience significant growth throughout the forecast period. This is due to the substantially reduced operating costs that enterprises will experience deploying chatbots. Enhancements to chatbot functionality brought about by developments in artificial intelligence and other machine learning methods are likely to be a primary factor propelling growth in the chatbot market. Today there is a significant rise in the usage of messaging services, which is expected to surpass the social networking sites in terms of the number of users. There is also a significant development in the Natural language processing field, which made the interactions between computer and human languages more streamlined. The entire ecosystem of the chatbot comprises various cross-linking features that help in optimum usage of the application.

The global chatbot market is segmented into five major regions including North America, Europe, Asia-Pacific, South America and Middle East & Africa. Among them, Asia-Pacific is expected to grow with more than 24% CAGR by 2023-28. The use of chatbots in the day-to-day operations of customer service is gaining popularity among a growing number of large businesses. Chatbots are being utilized in many high-volume customer service operations by various industries. The substantial growth prospects of chatbots in this region can be attributed to the tremendous benefits to enterprises, such as reductions in operating costs, improvements in customer satisfaction, and enhancements in operating efficiency. The Asia-Pacific region for chatbot market shows significant growth, as the region holds more than 50% of the global population, and hence any key technological shifts, such as AI and IoT are likely propel the market growth in the region. Massive expansion of information and communications technology infrastructures in the emerging countries, like India and China are projected to drive the market, during the forecast period. For example, in April 2020, Yellow Messenger, world’s fastest growing virtual assistant company, has announced that they have raised $20 million from an investor to cater the surging market’s demand. The significant growth prospects of the chatbot market can be attributed to the substantial benefits it offers, such as the reduction in operating costs of the enterprises, enhancing customer satisfaction, and improving the operating efficiency of the enterprises. Asia Pacific region is followed by North America, where it is the major hub of the services industry. Many large enterprises are increasingly adopting the chatbot in their routine customer service activities.

Support and maintenance offerings are experiencing significant growth in the global chatbot market for several key reasons. Firstly, as chatbots become integral components of customer support and business operations, organizations are realizing the importance of ensuring their chatbot solutions run smoothly and effectively. They rely on these chatbots to provide 24/7 customer assistance, automate tasks, and engage with users across various digital channels. To maintain high-performance levels, businesses require ongoing support to address technical issues, optimize chatbot functionality, and keep up with software updates and evolving user needs. Moreover, the complexity of chatbot deployments has grown, with more sophisticated natural language processing (NLP) capabilities and integrations with existing systems. This complexity necessitates expert support for configuration, customization, and troubleshooting. Additionally, as chatbots handle sensitive customer data and information, ensuring security and compliance with data privacy regulations is paramount, leading to increased demand for maintenance services that include security audits and data protection measures. Lastly, user expectations for chatbot interactions continue to rise, emphasizing the importance of fine-tuning chatbots for improved user experiences. Consequently, businesses are investing in support and maintenance offerings to deliver seamless, reliable, and high-quality chatbot interactions that meet evolving customer demands.

Voice bots are experiencing substantial growth in the global chatbot market due to several converging factors. Firstly, the proliferation of voice-enabled devices and smart assistants, such as Amazon's Alexa, Google Assistant, and Apple's Siri, has created a vast ecosystem for voice interactions. Users have become more comfortable with voice commands, which have paved the way for voice bots to become a natural extension of this trend. Additionally, voice bots offer a hands-free and convenient way for users to access information, perform tasks, and interact with applications, making them especially appealing in contexts like driving, cooking, or when hands and eyes are otherwise occupied. Moreover, advances in natural language processing (NLP) and speech recognition technologies have greatly improved the accuracy and understanding of voice commands, making voice bots more effective and user-friendly. Businesses are increasingly recognizing the potential for voice bots to enhance customer engagement, streamline operations, and provide personalized services. In fields like healthcare, voice bots have the potential to assist with diagnoses, medication management, and telemedicine, while in the e-commerce sector, they can facilitate voice-driven shopping experiences. Furthermore, the COVID-19 pandemic has accelerated the demand for contactless and touchless solutions, and voice bots fit perfectly into this context by reducing the need for physical interactions with devices or screens. As the technology continues to mature and as more industries discover innovative use cases for voice bots, their adoption is likely to grow, making them a prominent feature in the evolving global chatbot market.

Video communication is experiencing substantial growth in the global chatbot market for several compelling reasons. Firstly, the COVID-19 pandemic accelerated the demand for remote work, education, and virtual interactions. Businesses, educational institutions, and healthcare providers increasingly turned to video conferencing as a means of communication and collaboration. In response to this surge in demand, chatbot developers integrated video communication capabilities into their offerings, allowing users to initiate video calls, webinars, or virtual meetings directly through chatbots. Secondly, the combination of chatbots and video communication enhances customer engagement and support. Video chatbots provide a more immersive and personalized experience, allowing users to interact with businesses or service providers in a more human-like manner. For industries like e-commerce, real estate, and customer service, video chatbots enable product demonstrations, virtual property tours, and face-to-face support, creating a more interactive and engaging customer experience. Furthermore, video communication capabilities within chatbots have found utility in telehealth and healthcare settings. Patients can use video chatbots for remote consultations with healthcare professionals, reducing the need for physical appointments and increasing accessibility to medical services. This has been particularly beneficial during the pandemic, enabling patients to receive medical guidance while minimizing the risk of virus transmission. Lastly, as artificial intelligence and machine learning continue to advance, video chatbots are becoming more sophisticated. They can employ computer vision technologies to analyze visual data during video calls, allowing for facial recognition, emotion analysis, and object detection. These capabilities open up a wide range of applications in areas like security, retail, and personalized marketing.

Recruitment services are experiencing significant growth in the global chatbot market due to several key factors. Firstly, the recruitment process can be time-consuming and resource-intensive, with recruiters often sifting through numerous applications and conducting initial interviews. Chatbots streamline this process by automating tasks such as resume screening, candidate pre-qualification, and interview scheduling. This efficiency not only saves time but also allows recruiters to focus on higher-value tasks like assessing candidates' cultural fit and skills. Secondly, chatbots in the recruitment sector provide a seamless and engaging experience for job seekers. They can answer frequently asked questions, provide information about job openings, and guide candidates through the application process in a conversational and user-friendly manner. This enhances the candidate experience and improves the employer's brand image. Moreover, the global job market is increasingly competitive, leading organizations to seek innovative solutions for talent acquisition. Chatbots leverage advanced natural language processing (NLP) and artificial intelligence (AI) to match job openings with qualified candidates more efficiently, reducing the time-to-fill positions and minimizing talent shortages. They can also provide valuable data and insights into recruitment processes, helping organizations make data-driven decisions to optimize their hiring strategies. Furthermore, as remote work and virtual recruitment become more prevalent, chatbots are well-suited to facilitate remote interviews, assessments, and onboarding processes. This adaptability makes them a valuable tool in the evolving landscape of remote and hybrid work environments.

The Media & Entertainment sector is experiencing notable growth in the global chatbot market due to several key factors. Firstly, the industry's content delivery and consumption landscape have undergone significant changes with the rise of digital media and streaming platforms. Chatbots are being employed to enhance user engagement by recommending personalized content, answering inquiries about programming schedules, and even assisting with content discovery based on user preferences and viewing habits. This personalized approach enriches the viewer experience and fosters loyalty. Secondly, chatbots are revolutionizing customer support and engagement for media and entertainment companies. They enable users to easily report technical issues, request customer assistance, or seek information about subscriptions and billing - all in real-time. This not only improves customer satisfaction but also reduces the workload on customer support teams, ensuring faster responses and issue resolution. Moreover, chatbots in the Media & Entertainment sector facilitate interactive and immersive experiences, such as virtual event assistance, live show or sports game commentary, and fan engagement. They can also automate ticketing, reservations, and purchase processes for concerts, theaters, and events, simplifying the booking experience for viewers and fans. Additionally, as chatbots increasingly incorporate multimedia capabilities, including image recognition and voice interaction, they are becoming valuable tools for content creators and distributors. These chatbots can analyze user-generated content, monitor social media channels for trending topics, and even recommend the most relevant content for promotional purposes, optimizing marketing efforts and content distribution.

Telephone/Interactive Voice Response (IVR) systems are experiencing growth in the global chatbot market for several key reasons. Firstly, businesses and organizations are continually seeking more efficient and cost-effective ways to handle customer inquiries and support requests. IVR chatbots offer an automated, self-service solution that can handle a wide range of customer queries and tasks, such as checking account balances, making reservations, or providing product information. This automation reduces the need for live agents to handle routine calls, saving time and resources while ensuring consistent and accurate responses. Secondly, advancements in natural language processing (NLP) and speech recognition technology have greatly improved the capabilities of IVR chatbots. They can now understand and respond to spoken language more accurately and conversationally. This has led to a more seamless and user-friendly experience for callers, reducing frustration and enhancing overall customer satisfaction. Moreover, the COVID-19 pandemic accelerated the demand for touchless and contactless solutions, including IVR chatbots. Many businesses and organizations turned to these systems to provide essential services and information without requiring in-person interactions. IVR chatbots became critical for disseminating pandemic-related information, scheduling COVID-19 tests, and offering remote support, further fueling their growth. Additionally, IVR chatbots offer scalability, allowing organizations to handle a high volume of calls simultaneously. This scalability is particularly valuable during peak call times or when dealing with sudden surges in inquiries, such as during product launches or promotional events.

Market Drivers

• Automation and Scalability: The need for automation and scalability is a significant driver in the chatbot market. Businesses are increasingly looking to automate repetitive tasks and processes across various functions, including sales, marketing, and customer support. Chatbots excel in this regard by offering scalability, allowing companies to handle a growing volume of interactions without a linear increase in resources. This scalability leads to improved operational efficiency and cost savings.
• Personalization and Customer Engagement: Chatbots enable businesses to deliver personalized interactions and engage customers on a one-to-one basis. By analyzing user data and preferences, chatbots can offer tailored recommendations, content, and solutions, creating a more engaging and immersive user experience. Personalization enhances customer satisfaction, drives conversions, and fosters brand loyalty.

Market Challenges

• Integration Complexity: Integrating chatbots seamlessly into existing systems and workflows can be a complex challenge for businesses. Many organizations use a variety of software platforms, databases, and communication channels, making it challenging to ensure that chatbots can access and interact with the necessary data and tools. Integration challenges can slow down the deployment of chatbots and increase implementation costs.
• User Acceptance and Trust: Building user acceptance and trust in chatbots remains a challenge. Some users may be hesitant to engage with chatbots, fearing that they cannot provide the same level of assistance as human agents. Ensuring that chatbots are perceived as reliable and capable of handling user inquiries is critical to their success. Any negative user experiences or misunderstandings can erode trust and lead to reduced adoption.

Market Trends

• AI-Powered Chatbot Ecosystems: An emerging trend in the chatbot market is the development of AI-powered chatbot ecosystems. These ecosystems involve integrating chatbots with other AI technologies, such as machine learning, natural language processing, and computer vision. This integration enables chatbots to offer more sophisticated capabilities, such as image recognition, sentiment analysis, and predictive analytics.
• Ethical and Responsible AI Chatbots: As chatbots become more prevalent, there is a growing emphasis on ethical and responsible AI practices. Businesses are increasingly aware of the need to ensure that chatbots are designed and deployed in a way that respects user privacy, avoids bias, and adheres to ethical guidelines. This trend aligns with broader societal concerns about the impact of AI on individuals and communities.

Competitive Landscape

The chatbot market vendors have implemented various types of organic and inorganic growth strategies, such as new product launches, product upgradations, partnerships and agreements, business expansions, and mergers and acquisitions to strengthen their offerings in the market. Key players operating in the chatbot market include The International Business Machines Corporation, Microsoft Corporation, Google LLC , Amazon.com, Inc, Salesforce, Inc. , Oracle Corporation, Kore.ai, [24]7.ai, Inc., eGain Corporation, Conversica, Genesys Telecommunications Laboratories, Inc., Zendesk, Inc., Intercom, Inc, Artificial Solutions, Verint Systems, Creative Virtual Ltd, Kevit Technologies Private Limited, Accenture plc, Contus Tech Private Limited and Inbenta.

Key Developments

• March 2023 - Nuance launched the Nuance Mix Answers with GPT-powered functionality for its call center AI solutions. As a component of the Microsoft Digital Contact Centre Platform, the solution would complement the capabilities of Microsoft's low-code bot-building platform, Power Virtual Agents, and collaborate with recent GPT enhancements to give clients choices to suit their needs.
• In 2022, Aivo announced the launch of video conversation AI with Synthesia, which allows companies to interact with customers through video chats with a virtual AI-generated avatar.
• In September 2022, eGain Corporation announced the availability of a pre-built connecto for IBM Watson Assistant which leverages eGain’s BYOB (Bring Your Own Bot) architecture and enables business users to effortlessly plug in the Watson Assistant into the eGain Platform without coding.
• In May 2023, Creative Virtual Ltd. announced the launch of Gluon, a new version of its V-Person technology, which is easier and quicker to build and deploy conversational AI solutions..

Considered in this report:

• Geography: Global
• Historic year: 2017
• Base year: 2022
• Estimated year: 2023
• Forecast year: 2028

Aspects covered in this report:

• Global Chatbot market Outlook with its value and forecast along with its segments
• Region-wise Chatbot market analysis
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

Regions covered in the report

• North America
• Europe
• Asia-Pacific
• South America
• Middle-East & Africa

By Offering:

• Solutions
• Services
• Training and Consulting
• System Integration and Implementation
• Support and Maintenance

By Type:

• Menu based
• Linguistic- based
• Keyword Recognition based
• Contextual
• Hybrid
• Voicebots

By Bot Communication:

• Text
• Audio/Voice
• Video

By Vertical:

• Retail & E-Commerce
• IT & Telecommunication
• Travel & Tourism
• BFSI
• Healthcare
• Media and Entertainment
• Others (manufacturing, construction and real estate, education, government and defense, energy and utilities and automotive)

The approach of the report:

This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources.

Intended audience:

This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Chatbot industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.