Artificial Intelligence-as-a-Service (AIaaS) Market Analysis North America,APAC,Europe,Middle East and Africa,South America - US,Canada,China,Germany,UK - Size and Forecast 2023-2027

Artificial Intelligence-as-a-Service (AIaaS) Market Forecast 2023-2027

The Artificial intelligence-as-a-Service (AIaaS) market is estimated to increase by USD 28.77 billion and grow at a CAGR of 40.17% between 2022 and 2027. The growth of the AI as a Service (AIaaS) market hinges on several key factors. Firstly, there is a significant increase in investment in research and development (R&D) within the AI sector, driving innovation and the development of advanced AI solutions. Secondly, the shift towards cloud-based solutions is playing a crucial role as businesses seek scalable and cost-effective AI services. Lastly, the rising adoption of AI in predictive analysis across various industries is driving the demand for AIaaS. These factors collectively indicate a positive outlook for the AIaaS market, with ample opportunities for growth and innovation in the coming years.

What will be the Size of the Artificial Intelligence-as-a-Service (AIaaS) Market During the Forecast Period?

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Segmentation

This report extensively covers market segmentation by end-user (retail and healthcare, BFSI, telecommunication, government and defense, and others), type (software and services), and geography (North America, APAC, Europe, Middle East and Africa, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.

By End-user

The market share growth by the retail and healthcare segment will be significant during the forecast period. The market is experiencing robust growth due to the virtuous cycle of ERP software integration and data utilization in various industries, particularly retail. Startups and local businesses are investing in AIaaS to address niche industry challenges and gain a competitive edge through predictive analytics, fraud detection, personalized financial recommendations, optimization, and logistics. Cloud providers offer cloud-based machine learning, multi-cloud functioning, and cloud-based intelligence services, enabling multi-cloud architectures and management strategies. 

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The retail and healthcare segment showed a gradual increase in the market share of USD 195.58 million in 2017 and continued to grow by 2021. Automation capabilities, usability, and accessibility are key factors driving adoption. Virtual assistants and AI-based infrastructure development are transforming sectors like healthcare, Digital India, 3D printing, and the global cloud market. However, data security concerns and the need for skilled people and quality data pose challenges. AI services are offered on a subscription or pay-per-use basis, with upfront costs depending on expertise and computational power. Mistakes and pipeline failures can impact the success of AI implementations.

Key Region

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North America is estimated to contribute 39% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The market is experiencing robust growth due to the virtuous cycle of cloud adoption, AI, ML, and big data analysis. This trend is particularly prominent in regions with a high volume of data generation from industries like telecommunications, manufacturing, retail, and energy. Startups and niche industries face unique challenges, but the adoption of AIaaS offers disruptive solutions. Cloud providers and their cloud-based machine learning services are driving the market, enabling multi-cloud functioning and management strategies. AI services, including predictive analytics, fraud detection, personalized financial recommendations, optimization, and logistics, are increasingly in demand.

Additionally, data security is a critical concern, and AIaaS providers must offer specialized expertise and usability to attract subscribers. The global cloud market's expansion fuels AIaaS growth, with advanced data center infrastructure and AI-specific hardware development playing essential roles. AI services are transforming sectors like healthcare, 3D printing, and the Internet of Things, requiring skilled people and quality data. Mistakes and pipeline failures can be costly, making automation capabilities and accessibility crucial. Virtual assistants and smart monitoring systems are just a few examples of AIaaS applications. In the context of Digital India, AIaaS can bring significant benefits, from improving computational power to enhancing the overall efficiency of various industries. However, upfront costs and expertise remain challenges that must be addressed to ensure widespread adoption.

Market Dynamics and Customer Landscape

In the rapidly evolving technological landscape, Artificial Intelligence-as-a-Service (AIaaS) has emerged as a game-changer. This model, which is a part of the cloud-based intelligence services, enables businesses to access AI capabilities without the need for extensive in-house technical expertise. Key components of AIaaS include Machine Learning APIs and Software Development Kits (SDKs), Pre-trained models, and Customizable models. These tools facilitate the development of AI models using various algorithms and AI-based solutions. High-Performance Computing is integral to AIaaS, ensuring the efficient processing of large datasets. AIaaS also encompasses Cybersecurity, Data encryption, and Compliance frameworks to ensure the security and privacy of customer data. Blockchain technology can be integrated into AIaaS for enhanced security and transparency. Multi-cloud functioning is a crucial aspect of AIaaS, allowing businesses to leverage multiple cloud providers for improved automation capabilities, usability, and accessibility. Multi-cloud management strategies and multi-cloud architectures are essential for effective AIaaS implementation. Virtual assistants, AI-based infrastructure development, and Digital India are some of the areas where AIaaS is making a significant impact. By providing on-demand access to AI capabilities, AIaaS is revolutionizing various industries and transforming the way businesses operate. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

Key Market Driver

The adoption of cloud-based solutions is the key driving factor for the growth of the market. The worldwide acceptance of cloud computing services has led to the acceptance of cloud-based applications that can be used in multiple end-user industries. The global market is experiencing significant growth as enterprises seek to enhance their IT infrastructure and empower their workforce with advanced AI solutions. Software developers are increasingly turning to third-party AIaaS offerings for code suggestions and automation.

Moreover, governments are also investing in AI R&D and education to foster a skilled workforce. Venture capital is a crucial source of funding for AI technology development, with notable investments in firms like Zymergen and Automation Anywhere. Morgan Stanley has backed Dataminr, an AI startup that delivers real-time news using ML and AI. In summary, AIaaS is a public, private, and hybrid cloud-based service that provides businesses and organizations with advanced AI capabilities, enabling them to gain a competitive edge. Firms prefer to outsource these tasks to AIaaS providers to avoid these direct costs in implementing and utilizing AI that will drive market growth during the forecast period.

Significant Market Trend

A rising number of mergers and acquisitions is an emerging trend in the AIaaS market.  The integration of Artificial Intelligence (AI) with blockchain technology leads to significant advantages in various industries, driving the growth of the market. AIaaS offers code suggestions for software developers through third-party offerings, ensuring improved efficiency and reduced human error. Blockchain technology integrated with AI enhances transparency and security, allowing real-time tracking and reducing fraud. This public, private, or hybrid solution offers scalability, enabling quick and easy access to databases from anywhere in the world, reducing paperwork, and increasing overall transparency during the movement of products.

• In January 2023, management consulting firm McKinsey and Company acquired Iguazio, a leader in AI and machine-learning technology.
• In January 2023, international accredited registrar DNV acquired Proxima solutions, an AI-enabled wind software-as-a-service provider. This acquisition will strengthen DNV GreenPowerMonitor business.

These strategic partnerships will help companies expand their geographic presence, increase their customer base, and provide improved AI services, which will support the growth of the market during the forecast period. 

Major Market Challenge

The rising concern for data privacy is a major challenge impeding the market growth. In the realm of Artificial Intelligence-as-a-Service (AIaaS), enterprises rely on third-party offerings to gain insights from vast amounts of data for business planning and optimization. However, as AI solutions become more advanced, data privacy concerns intensify. With the capability to make autonomous decisions, AI can potentially breach sensitive information. To mitigate risks, software developers implement data anonymization techniques, such as generalizing data points.

Yet, maintaining privacy and anonymity in AIaaS, particularly with public, private, or hybrid cloud environments, poses a significant challenge. Compliance with stringent government regulations and adapting to evolving policies necessitate the secure handling of customer data. However, sensitive data like this is the key to AIaaS. Ensuring the privacy and anonymity of data points and large amounts of data, therefore, becomes a major challenge for enterprises.

Key Market Customer Landscape

The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global Market Customer Landscape

Who are the Major Artificial Intelligence-as-a-Service (AIaaS) Market Players?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Tencent Holdings Ltd.-The company offers solutions for artificial intelligence-as-a-service which helps the developers focus exclusively on solving problems that matte and helps the business run faster, smarter, and at planet scale. Also, the company offers online games and social networks.

Oracle Corp.- The company offers solutions for artificial intelligence-as-a-service which accelerate development with built-in business logic that enables one to launch solutions in days. Also, the company offers Oracle Cloud Services offerings, cloud license and on premise license offerings, and license support offerings.

The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:

• Accenture Plc
• Alphabet Inc.
• Amazon.com Inc.
• Baidu Inc.
• Capgemini Service SAS
• Cognizant Technology Solutions Corp.
• Dell Technologies Inc.
• Fujitsu Ltd.
• Hitachi Ltd.
• Huawei Technologies Co. Ltd.
• Infosys Ltd.
• Intel Corp.
• International Business Machines Corp.
• Microsoft Corp.
• NVIDIA Corp.

Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.

Segment Overview

The report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. 

• End-user Outlook 
  • Retail and healthcare
  • BFSI
  • Telecommunication
  • Government and defense
  • Others
• Type Outlook 
  • Software
  • Services
• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa
  • South America
    • Brazil
    • Argentina
    • Chile

Market Analyst Overview

Artificial Intelligence-as-a-Service (AIaaS) refers to the delivery of AI capabilities on a subscription basis, allowing businesses to access advanced technologies and functionalities without the need for extensive in-house expertise or infrastructure. The market is experiencing significant growth due to its ability to provide cost-effective and flexible solutions for various industries, including finance, healthcare, and retail. Key players in the AIaaS market include Microsoft, Google, Amazon Web Services, IBM, and Oracle. These companies offer a range of services, from natural language processing and machine learning to computer vision and predictive analytics. The use enables businesses to streamline operations, improve customer experiences, and gain valuable insights from data. Moreover, the integration of AI with other technologies, such as the Internet of Things (IoT) and blockchain, is driving innovation and creating new opportunities in the market. The global market is expected to reach a value of USD 190.61 billion by 2025, growing at a CAGR of 36.6% during the forecast period. The increasing adoption of cloud computing and the growing demand for automation and digital transformation are key factors contributing to this growth.

Artificial Intelligence-as-a-Service (AIaaS) Market Scope
Report Coverage	Details
Page number	181
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 40.17%
Market growth 2023-2027	USD 28.77 billion
Market structure	Fragmented
YoY growth 2022-2023(%)	36.54
Regional analysis	North America, APAC, Europe, Middle East and Africa, and South America
Performing market contribution	North America at 39%
Key countries	US, Canada, China, Germany, and UK
Competitive landscape	Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks
Key companies profiled	Accenture Plc, Alphabet Inc., Amazon.com Inc., Baidu Inc., Capgemini Service SAS, Cognizant Technology Solutions Corp., Dell Technologies Inc., Fujitsu Ltd., Hitachi Ltd., Huawei Technologies Co. Ltd., Infosys Ltd., Intel Corp., International Business Machines Corp., Microsoft Corp., NVIDIA Corp., Oracle Corp., SAP SE, Tata Consultancy Services Ltd., Tencent Holdings Ltd., and Wipro Ltd.
Market dynamics	Parent market analysis, market growth and trends, Market forecasting, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period
Customization purview	If our market research report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Market Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting of the market between 2023 and 2027
• Precise estimation of the size of the market size and its contribution to the parent market
• Accurate predictions about upcoming market trends and analysis and changes in consumer behavior
• Growth of the market industry across Europe, North America, APAC, South America, and Middle East and Africa
• Thorough market growth analysis of the market’s competitive landscape and detailed information about vendors
• Comprehensive market analysis and report on the factors that will challenge the market research and growth of market companies

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