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Artificial Intelligence, Machine Learning - Chatbots for Business: US Market Size, Revenue Potential and Number of Companies.
We estimate that the market size for employee-facing IT-related chatbot solutions in the U.S. is between $3 million and $20 million, and the number of companies participating in this space is between 85 and 171. The potential revenue for a chatbot solution operating in this space is likely to grow at a rate of 30% per year, in alignment with the market standard; therefore, a company with a revenue of $2 million in 2017, would reach a revenue of around $4.39 million in 2020 if they followed this pattern of growth.
After searching exhaustively through industry reports, market reports, press releases, and trusted media sites, we were unable to locate hard data which illustrates the U.S. market size, revenue potential or the number of companies for chatbot technology for automated responses to user queries in business. This is due to three primary reasons:
1) The chatbot industry is relatively new, and therefore, the amount of publicly available data with regard to chatbot use in the workplace (i.e. non-consumer facing) is severely limited.
2) The vast majority of data regarding all kinds of chatbot use, especially the data you are interested in, can only be found within paywalled market reports.
3) Our research findings suggest that the chatbot market is highly fragmented, with many bots designed for unique purposes, and with many companies designing and launching their own chatbots. The market is also divided into several segments for chatbot products based on end-user application (e.g. deployment channels, third-party chatbots, and native bots), however the majority of publicly available market data on chatbots does not differentiate between these segments (which all have vastly different purposes). These various nuances make it very difficult to synthesize the existing data in a way that is specific to the precise niche you are interested in.
Despite this, we have used the existing, publicly available data to triangulate some loose estimates for you. While these estimates are not entirely specific to your exact parameters, we were able to provide estimates for which we feel are at least applicable to the use case you are interested in.
Below, you will find a deep dive of our findings.
market size
In order to triangulate an estimate for you, we first located some general market sizing insights regarding the chatbot industry as a whole. This was a good starting place since this information was readily available.
A market report published in 2016 shows that the global chatbot market size is worth $190.8 million. As of 2015, the U.S. market size was valued at $49.1 million. Data for more recent years was not found to be publicly available, however, a graph within this market report appears to show U.S. market growth at about 30% between 2015 and 2016/2017. This would place the U.S. market size around $63.83 million (or, [30% of 49.1 million] + 49.1 million).
This large growth percentage is in alignment with the overall CAGR for this industry as a whole. For example, the global market size for help desk automation is expected to reach $11 billion in 2023, with a CAGR of 33%, and Reuters reported that the global chatbot market will grow more than 37% CAGR through 2021. Therefore, it is clear that this is a rapidly growing industry.
A 2017 report shows that the technology industry is estimated to have around a 30% share of the chatbot market in terms of industry applications. For business functions, this report divides the use of chatbots into the following business functions: customer service, sales/marketing, order processing, social media, payments, recruitment, and other. Based on your parameters (non-consumer facing business use cases), we assume your use case would fit best in the other category. This category appears to have around a 15% share.
It is important to note that the above percentages, provided by the survey, are not truly representative of 'market shares', but rather percentages of survey respondents who see benefit for chatbots across these use cases. However, we are using these percentages as a proxy to represent an assumed market share due to a lack of more direct data. Overall, we feel its highly likely that most of these use cases overlap one another, therefore we feel this data is a suitable proxy for use case market share.
Using this data, we have attempted to triangulate an estimate of the U.S. chatbot market size that was more specific to employee-facing and IT related use-cases. To do so, we first took the 2016/2017 market size we calculated for the U.S. ($63.83 million), and calculated 30% of this market for technology/IT-related application use cases. This brought the market size down to $19.149 million, (or, 30% of $63.83 million). We further calculated 15% of this market size to represent a market for non-consumer facing applications within the technology-related vertical. This gave us a market size of $2.87 million.
This market size is incredibly small, even for a very niche market. However, this is not entirely surprising given the relatively small market size of the entire chatbot industry, the vast majority of which is focused around consumer-facing solutions.
Interestingly, this market size falls right around the estimated revenue of Spoke, according to Owler which is $2 million. Compounding this, our analysis of the chatbot landscape within this niche revealed no other companies which are providing the same precise solution as Spoke. Even Spoke's main competitors, as suggested by Owler, are not wholly focused on this niche. Further supporting this, our research revealed a database of different chatbots organized by category. Spoke appears under the 'task management' category. After surveying the other chatbots in this category, we were able to further confirm the uniqueness of the Spoke chatbot.
During our collective research, we did locate a number of chatbots designed to handle IT ticket requests and the like, however these products were consumer-centric, rather than designed specifically for employee-facing functions. During our research we did locate a number of chatbot services for employee-facing HR functions, although we haven't considered these within our market size estimate, as you stated that you were focused around the IT element.
All things considered, we would assume that the $2.8 million market size is likely a very low end estimate. Therefore, overall, we estimate that the U.S. market size for chatbots in this category falls between $3 million and $20 million, which represents the range of estimated market sizing between employee-facing IT-related chatbots, and the broader market of technology/IT-related chatbot applications.
number of chatbots in the u.s.
Currently, there are around 40,000 chatbots that exist. North America has a 38% share of the global chatbot market. This equates to around 15,200 chatbots in the North American market, (or 38% of 40,000).
If we apply the market share percentage estimates for the IT and non-consumer chatbot markets (30% and 15% respectively, as noted above), we arrive a total of 684 chatbots that exist within this space.
Calculations:
30% of 15,200 = 4,560
15% of 4,560 = 684
This figure represents an estimate of the total number of employee-facing IT-related chatbots that exist within the North American market. We did not locate any publicly available information which illustrates the precise market share for the U.S., however we assume the U.S. likely holds at least half, and probably more of the North American market. Given this, we estimate that there are between 342 and 684 chatbots operating within this niche in the U.S. market.
It is important to note that the number of chatbots in existence does not necessarily represent the number of companies providing chatbots in this niche, because chatbots are also commonly built by individual companies for their own personal use. We did find data which showed that 75% of businesses responding to the survey said they intended to build a chatbot for their business during 2017. Using this data as a proxy, we estimate that there are likely between 85 and 171 companies in the U.S. providing some sort of employee-facing IT chatbot solution, even if these solutions do not entirely encompass your specified features.
Calculation:
100% - 75% = 25% of non-company created chatbots.
25% of 342 = about 85.
25% of 684 = about 171.
revenue potential
When looking at revenue potential, we first started with understanding the revenue of Spoke, as this company seems to be the primary example of a company operating in this space. Spoke has a revenue of $2 million, according to Owler.
Next, we looked at the projected growth of this market. A 2017 survey revealed that 75% of business do not think chatbots have proven themselves as of yet. This could indicate why there doesn't seem to be a huge market for employee-facing chatbot solutions. However, 96% also agree that chatbots are not going anywhere and are here for the long-term. This could indicate that adoption of employee-facing chatbot solutions will likely rise considerably in the coming years. Lastly, the project CAGR for the U.S. chatbot market is around 30%, as noted above.
Based on the above insights, we assess that this market is very promising, and that any company operating within this market is likely to show a significant growth in revenue, even if the revenue is currently quite small, as is the case with Spoke.
Using Spoke as a case study, we estimated the potential revenue growth for this product, assuming this company's revenue grows in alignment with the industry standard of around 30% per year. Additionally, Spoke is a great example of potential revenue growth, considering this is a very new company, founded in 2016.
Spoke Revenue:
2017: $2 million
2018: $2.6 million, (or [30% of $2 million] + $2 million).
2019: $3.38 million, (or [30% of $2.6 million] + $2.6 million)
2020: $4.39 million, (or [30% of $3.38 million] + $3.38 million).
Given this information, we estimate that a company operating within this space as the potential to increase their revenue by around 30% per year for the next several years, in alignment with the industry standards, reaching a revenue of around $4.39 million in 2020, for a company that had a revenue of $2 million in 2017.
conclusion
In closing, we estimate that the market size for employee-facing IT-related chatbot solutions in the U.S. is between $3 million and $20 million. We estimate that the number of companies participating in this space is between 85 and 171. The potential revenue for a chatbot solution operating in this space is likely to grow at a rate of 30% per year, in alignment with the market standard; therefore a company with a revenue of $2 million in 2017, would reach a revenue of around $4.39 million in 2020 if they followed this pattern of growth.