IDC: AI Spending Expected to Double Globally to $110B by 2024
Global spending on artificial intelligence technologies will double to $110 billion by 2024 as AI use grows to bolster the competitiveness and digital transformations of more businesses and other organizations.
That’s the conclusion of a new IDC Worldwide Artificial Intelligence Guide, which examines AI use, trends and markets over the next four years. AI spending in 2020 is estimated at $50.1 billion, but that figure will more than double as new AI use cases and technology improvements continue, according to the guide. The compound annual growth rate (CAGR) for the 2019-2024 period will be 20.1%.
The biggest AI business drivers include delivering improved customer experiences and helping employees get better at their jobs, according to the guide. The leading use cases for AI include automated customer service agents, sales process recommendation and automation, automated threat intelligence and prevention, and IT automation. Those use cases represent nearly a third of all AI spending this year, with other fast-growing use cases including automated human resources, IT automation, and pharmaceutical research and discovery.
The retail and banking industries will spend the most on AI technologies through 2024, followed by discrete manufacturing, process manufacturing, and healthcare, the report states. The fastest growth in AI spending over the 2020-2024 forecast are in the media, federal/central government, and professional services markets.
The expected doubling of global AI spending by 2024 is a bit of a surprise in light of the world-crippling COVID-19 pandemic which struck in mid-March, said Ritu Jyoti, the AI program vice president at IDC.
“When COVID-19 happened, we were all panicky about the AI market,” she said. “Everyone was thinking that everything was going to fall apart, but since then, we have taken a bold step and said AI spending is going to stay strong.”
The reasons for optimism are clear, she said. “AI can fundamentally work in every aspect of the business world, not just in transportation and retail and banking, but in customer experience and more.”
COVID-19 has certainly led to a drop in overall IT spending globally so far, said Jyoti, but AI spending appears to be bucking that trend due to its importance as a critical tool for businesses during the pandemic.
“Customers are looking for resilience,” she said. “When COVID-19 happened, everyone had to work from home.”
Those overnight requirements, however, revealed business process shortcomings for many companies. Many operations, including in-office contact centers, came to a halt because employees couldn’t go to their offices. With those call centers not yet in the cloud, businesses quickly learned their technology couldn't keep their operations going.
“This has increased the adoption of automated customer service” today, said Jyoti. “Previously, it was less. Some things were in motion before COVID-19, and some were accelerated in response.”
COVID-19 will continue to drive AI adoption
The impacts of the coronavirus will drive AI adoption and spending due to business demand for new ways of solving IT problems today, she said.
“Some of this stuff that was in motion, people are continuing to invest," she said. “They are not cutting back on those investments.”
According to the IDC AI spending guide, $14.5 billion in spending in 2020 will be for AI applications, while $14.5 billion will go to AI services spending. Servers for AI will see $11.2 billion in spending this year, dominating AI hardware spending. The fastest spending growth in AI through 2024 will be in software, with a five-year CAGR of 22.5%.
On a geographic basis, the United States will deliver more than half of all AI spending throughout the forecast, led by the retail and banking industries, according to the guide.
The latest IDC Worldwide Artificial Intelligence Spending Guide covers AI markets in the U.S., Canada, Japan, Europe, Middle East and Africa, Latin America, PRC, and Asia/Pacific. The guide covers server and storage hardware, AI applications and AI platforms software, and business and IT services. Use cases include automated customer service agents, automated threat intelligence and prevention systems, fraud analysis and investigation, and expert shopping advisors and product recommendations. The guide covers a wide range of industries, including banking, insurance, manufacturing, construction, retail, wholesale, professional services and more.