Report Overview

A growing focus on developing and providing AI-driven customer support solutions and an increasing emphasis on engaging and retaining customers are projected to propel the expansion of the India Conversational AI Market during the forecast period between 2023 and 2029.

India Conversational AI Market - Industry Trends & Forecast Report, 2029

India conversational AI (artificial intelligence) market size was estimated at USD 274.5 million in 2022. During the forecast period between 2023 and 2029, the size of India conversational AI (artificial intelligence) market is projected to grow at a CAGR of 24.58% reaching a value of USD 1,037.3 million by 2029. Major growth drivers for the India conversational AI (artificial intelligence) market include the rising demand for seamless customer experiences, increased internet and smartphone penetration, a growing e-commerce sector, and the need for cost-effective customer support solutions. The flourishing e-commerce sector in India has played a pivotal role in driving the expansion of conversational AI. As online shopping continues to gain traction, businesses are increasingly turning to AI-powered chatbots and virtual assistants to provide efficient and personalized customer support, ultimately enhancing the overall shopping experience. The market is further benefiting from continuous advancements in natural language processing (NLP) technology. This progress has been accelerated by innovations like Microsoft-backed OpenAI's ChatGPT, which are catalyzing the development of conversational AI solutions at an unprecedented pace. Also, the adoption of conversational AI is not limited to any particular industry, with sectors ranging from e-commerce to finance and healthcare embracing this technology. This widespread adoption reflects the recognition of conversational AI's potential to boost user engagement, streamline operations, and improve customer satisfaction by offering intelligent and personalized interactions. These drivers collectively contribute to the market's robust growth, positioning conversational AI as a transformative force in enhancing user engagement and customer support in the Indian business landscape.

India Conversational AI Market – Overview

India conversational AI Market refers to the specific segment of the artificial intelligence (AI) market in India that focuses on the development, deployment, and utilization of conversational AI technologies. Conversational AI involves the use of AI-powered chatbots, virtual assistants, and natural language processing (NLP) systems to facilitate human-like conversations between machines and users. In the Indian context, this market encompasses businesses, organizations, and service providers that leverage conversational AI solutions to enhance customer experiences, streamline operations, and improve engagement across various industries, such as e-commerce, finance, healthcare, and customer support. The India conversational AI market addresses the growing demand for intelligent and personalized interactions, driven by deepening internet and smartphone penetration, the need for cost-effective customer support solutions, and advancements in NLP technology. It encompasses the development, deployment, and integration of AI-driven conversational tools to cater to diverse user needs and industry requirements within the Indian business landscape.

India Conversational AI Market

Growth Drivers

Increasing Focus on Customer Engagement and Retention

AI voice agents like Siri, Cortana, and Alexa have become increasingly popular, showcasing remarkable advancements. These agents are now smarter, more attuned to emotions, and adept at swiftly and accurately resolving customer queries. Various industries, including education, healthcare, banking, and insurance, are adopting advanced voice agents to elevate their customer support. In this context, the paramount importance of customer engagement and retention cannot be overstated. Businesses are leveraging AI to gain profound insights into customer needs, preferences, and lifestyles. Salesforce’s research indicates that 51% of companies are harnessing AI to hyper-personalize the customer experience, optimizing everything from data analysis to speech recognition. AI voice conversations offer unrivaled convenience, providing 24/7 customer support, reducing wait times, and enhancing the overall customer experience. While human agents have their limitations, AI-powered voice agents can efficiently handle multiple inquiries simultaneously, improving customer satisfaction. In conclusion, the rise of AI voice agents signifies a fundamental shift in the business landscape, where customer engagement and retention are paramount. Businesses that effectively utilize AI to harness customer-centric information and big data are poised to deliver exceptional customer experiences and gain a competitive edge across various industries, with independent AI voice agents democratizing the playing field for businesses of all sizes.

Restraints

Limited Awareness about Conversational AI Solutions

India conversational AI market faces a significant constraint in the form of limited awareness about these innovative solutions. Despite the immense potential and benefits they offer, many businesses and individuals in India remain unaware of conversational AI technology. This lack of awareness hinders the widespread adoption and utilization of conversational AI solutions across various sectors, including customer support, e-commerce, and healthcare. To fully unlock the market's growth potential, efforts are needed to educate and inform businesses and consumers about the advantages and applications of conversational AI, ultimately driving its increased integration into India's digital landscape.

Impact of COVID-19 on India Conversational AI Market

Covid-19 pandemic had positive impact on the India conversational AI market. With the pandemic accelerating the shift towards digital engagement, businesses across various sectors, such as healthcare, e-commerce, and customer support, have increasingly turned to conversational AI solutions to meet evolving customer needs and ensure uninterrupted services. This surge in demand for AI-driven virtual assistants and chatbots has driven market growth. However, the economic challenges posed by the pandemic have also led to budget constraints for some businesses, affecting their adoption of conversational AI.

India Conversational AI Market

Segmental Coverage

India Conversational AI Market – By Component

By component, the India conversational AI market is divided into Solutions, Managed Services, and Professional Services segments. The solutions segment held a highest share in the India conversational AI market by component. The solutions segment covers a wide range of applications, including chatbots, virtual assistants, and voice recognition systems, tailored to meet diverse industry needs. They offer businesses the tools to engage with customers, automate processes, and enhance user experiences, driving their widespread adoption across various sectors. Also, the robust capabilities and customizable features of conversational AI solutions make them highly attractive to businesses seeking efficient customer service, streamlined operations, and improved overall satisfaction, contributing significantly to the segment's dominance in the market.

India Conversational AI Market – By Type

Based on type, the India conversational AI market is bifurcated into Chatbots and Intelligent Virtual Assistants (IVA) segments. The chatbots segment held a higher share in the India conversational AI market by type, due to the versatility and widespread adoption of chatbots across various industries. Chatbots offer businesses a cost-effective and efficient way to provide round-the-clock customer support, automate routine tasks, and engage with users in real-time through text-based interactions. Their ability to handle a wide range of queries, coupled with advancements in natural language processing (NLP) technology, has made them a preferred choice for enhancing customer service and operational efficiency. As a result, businesses across sectors are increasingly leveraging chatbots to improve user engagement, reduce response times, and streamline their operations, contributing to the segment's higher market share.

India Conversational AI Market – By Deployment Mode

Based on deployment mode, the India conversational AI market is split into Cloud and On-Premises segments. The on-premises segment holds a higher share in the India conversational AI market by deployment during the forecast period, due to the data security and compliance preferences of many Indian businesses. On-premises solutions allow organizations to have greater control over their data and ensure it remains within their own physical infrastructure, addressing concerns related to data privacy and regulatory compliance. Also, some industries, such as banking and finance, have stringent security requirements, making on-premises deployments the preferred choice. This heightened emphasis on data security and compliance is driving the demand for on-premises conversational AI solutions in the Indian market.

India Conversational AI Market – By Technology

On the basis of technology, the India conversational AI market is segmented as Natural Language Processing (NLP), ML & Deep Learning (DL), Automatic Speech Recognition (ASR) segments. The NLP segment holds the highest share in the India conversational AI market by technology during the forecast period. This prominence can be attributed to the critical role that NLP plays in enabling machines to understand, interpret, and generate human-like text and speech. NLP technology is the backbone of conversational AI, allowing chatbots and virtual assistants to engage in meaningful and context-aware conversations with users. As businesses in India increasingly seek to provide personalized and efficient customer interactions, the demand for NLP-driven conversational AI solutions is on the rise. This technology enables more natural and intuitive communication, enhancing user experiences across various industries, including customer support, e-commerce, and healthcare.

India Conversational AI Market – By Region

Regionally, the India conversational AI Market is divided into North India, South India, East India, and West India.

Competitive Landscape

Major players operating in the India conversational AI market include Haptik, Upshup, Yellow Messenger, Active.Ai, Engati, Kore.ai, Senseforth.ai, Verloop.io, Zoho SalesIQ, and CropIn. To further enhance their market share, these companies employ various strategies, including mergers and acquisitions, partnerships, joint ventures, license agreements, and new product launches.

Recent Developments

• In August 2023 – The Reserve Bank of India, the central bank of the country, proposed to introduce conversational payments on unified payments interface (UPI) through AI in the country.

Scope of the Report

By Component

• Solutions

• Managed Services

• Professional Services

By Type

• Chatbots

• Intelligent Virtual Assistants (IVAs)

By Deployment

• Cloud

• On-Premises

By Technology

• Natural Language Processing (NLP)

• ML & Deep Learning (DL)

• Automatic Speech Recognition (ASR)

By Region

• North India

• South India

• East India

• West India