Gartner Says Conversational AI Capabilities Will Help Drive Worldwide Contact Center Market to 16% Growth in 2023

Contact Center as a Service and Conversational AI and Virtual Assistant Segments Driving Growth

Worldwide contact center (CC) and CC conversational AI and virtual assistant end-user spending is projected to total $18.6 billion in 2023, an increase of 16.2% from 2022, according to Gartner, Inc.

“Near-term investment growth rates for CC and CC conversational AI and virtual assistants are expected to dip as business volatility creates a lengthening of decision cycles,” said Megan Marek Fernandez, Director Analyst at Gartner. “Longer-term, generative AI and growing maturity of conversational AI will accelerate contact center platform replacement as customer experience (CX) leaders look to simultaneously improve the efficiency of customer service operations and the overall customer experience.”

The global conversational AI and virtual assistant market represents the fastest-growing segment in the contact center forecast, helping to spur 24% growth in 2024 (see Table 1). Conversational AI capabilities are receiving greater investment as contact center decision makers look to incorporate conversational AI as part of a long-term strategy to reduce reliance on live agents. While the number of customer service interactions that are touched by AI continues to increase, most of these interactions are augmented with CC AI instead of fully offloaded to a virtual agent. Overall, Gartner estimates around 3% of interactions will be handled via CC AI in 2023, growing to 14% of interactions in 2027.

Table 1. Worldwide Contact Center and CC Conversational AI and Virtual Assistant End-User Spending Forecast (Millions of U.S. Dollars)

Source: Gartner (July 2023)

Gartner expects general economic and geopolitical uncertainty to create some budget restrictions in 2023, resulting in a slowdown of premises-based contact center replacements and upgrade projects. However, customer-facing projects may be viewed as an important part of revenue retention and generation strategies.

“This means that while many IT investment areas will be weakened as budgets tighten, customer service and support initiatives that have the potential to differentiate the customer experience or streamline customer service operations could receive easier investment ‘buy-in,” said Marek Fernandez. “These factors will help contact center as a service (CCaaS) projects receive funding associated with broader corporate digital transformation budgets.”

Gartner expects CCaaS investment growth to accelerate as decision makers implement cloud-based contact center capabilities to modernize their customer service operations. This includes adoption among contact centers with many thousands of agents, which have been slow to adopt CCaaS. As part of modernization projects, CCaaS solutions will be implemented to support a broader mix of communications channels and will feature more significant uptake of advanced dashboards, analytics, routing, workforce optimization (WFO), knowledge and insight, and conversational AI capabilities.