Global AI services market to hit $50B by 2025

Global AI services market to hit $50B by 2025

Bulk of the market segment's growth not expected until 2023.

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The global artificial intelligence (AI) services market is expected reach US$50 billion by 2025, which will make it the fastest growing AI subsegment over a five-year period

According to analyst firm IDC, the AI services market was estimated to be US$19.4 billion in 2020, with a year-on-year forecast to grow by 19.3 per cent by the end of 2021. 

For the five years through to 2025, the market segment is expected to grow at a five-year compound annual growth rate (CAGR) of 21 per cent, surpassing that of the software and hardware market segments. It's also predicted to grow faster than the overall market CAGR of 15.2 per cent during the period, to US $500 billion, in 2025. 

The bulk of this growth isn’t expected to take place until 2023. Until then, the hardware segment is anticipated to be the market segment leader for growth.

"AI has emerged as an essential component of the future enterprise, fuelling demand for services partners to help organisations clear the many hurdles standing between pilot projects and enterprise AI," said Jennifer Hamel, research manager of IDG’s Analytics and Intelligent Automation Services programme. 

"Client demand for expertise in developing production-grade AI solutions and establishing the right organisation, platform, governance, business process, and talent strategies to ensure sustainable AI adoption at scale drives expansion across both IT services and business services segments." 

Breaking down the two subsegments of IT services and business services, the IT services market is larger, making up nearly 80 per cent of all AI services revenue. Like the overall AI services market segment, both these subsegments also have CAGRs for the period of 21 per cent. 

IBM, Accenture and Tata Consultancy Services were highlighted as the top three companies for AI IT services revenue in 2020, with each company cracking the US$1 billion market and together making up 26 per cent of the market share combined. 

Meanwhile, the top AI business services businesses last year were Ernst & Young (EY), Accenture and Deloitte, making up a combined 46 per cent share of the subsegment. 

"Overall, the competitive landscape in both services markets for AI remains highly fragmented where many players from across the services value chain continue to invest in technology assets, innovation resources and expertise in applying AI to solve industry- and domain-specific problems for clients,” the firm said. 

As for the other segments, software currently makes up the vast majority of the overall market at 88 per cent. Within it, AI application makes up the largest portion, at nearly 50 per cent of all revenue. 

IDC's research into the global AI market follows its look into the combined global public cloud infrastructure-as-a-service (IaaS) and platform-as-a-service (PaaS) market last week, which is expected to see revenues of US$400 billion by 2025.

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Tags IDCaccentureDeloitteErnst & YoungTata Consultancy ServicesIBM

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