AI spending will reach US$342bn in 2021, says IDC
Companies could spend nearly $342 billion on AI software, hardware, and services in 2021, as worldwide revenues for the AI market, including software, hardware, and services, are estimated to grow 15.2% year over year in 2021. This is according to the latest edition of IDC’s Worldwide Semiannual Artificial Intelligence Tracker, which forecasts that the AI market will accelerate in 2022, with 18.8% growth, and remain on track to break the $500 billion mark by 2024.
Among three technology categories, AI Software occupied 88% of the overall AI market, although, in terms of growth, AI Hardware is estimated to grow the fastest in the next several years. From 2023 onwards, AI Services is forecast to become the fastest-growing category.
"Disruption is unsettling, but it can also serve as a catalyst for innovation and transformation. 2020 was the year that accelerated digital transformation and strengthened the value of enterprise AI," said Ritu Jyoti, group vice president for AI and Automation Research at IDC. "We have now entered the domain of AI-augmented work and decision across all the functional areas of a business. Responsible creation and use of AI solutions that can sense, predict, respond, and adapt at speed is an important business imperative."
AI services market
The AI services market was estimated at $19.4 billion in 2020, representing the fastest growth relative to hardware and software. For 2021, it is forecast to grow at 19.3%. Over the next five years, it is expected to enjoy the best CAGR at 21%. This technology category breaks down into two segments: IT Services and Business Services. IT Services is the larger of the two, accounting for nearly 80% of all AI Services revenues. From a growth perspective, the two markets are similar with five-year CAGRs of 21%. Overall, AI Services is expected to be a $50 billion market by 2025.
"AI has emerged as an essential component of the future enterprise, fueling demand for services partners to help organisations clear the many hurdles standing between pilot projects and enterprise AI," said Jennifer Hamel, research manager, Analytics and Intelligent Automation Services. "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."
Almost 190 companies were included in the AI Services market in this release of the AI Tracker. Under IT Services for AI, the Top 3 companies in 2020 were IBM, Accenture, and Tata Consultancy Services. Each of the three companies achieved over $1 billion in revenues and combined for a total of 26% market share. Beyond them, another eight companies generated more than $500 million each. The Top 3 companies in Business Services for AI in 2020 were Ernst & Young, Accenture, and Deloitte, accounting for a combined share of 46%.