Business AI spending set to hit $342bn this year

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The global Artificial Intelligence (AI) market is set to earn a total of $341.8 billion, a rise of 15.2% compared to 2020, according to a new report from IDC.

The analyst firm notes that both software and hardware, as well as AI services, will experience growth, not just this year, but in more years to come - and by 2024, worldwide revenue from the AI market could hit $500 billion. 

Between software, hardware and services, it’s the latter that holds most of the market (88%). Hardware is expected to grow the fastest in the next couple of years, with AI services expected to take over from 2023 onward.  

Looking at the AI Software category itself, AI applications bring in almost 50% of all revenue, while AI platforms have the strongest five-year compound annual growth rate (CAGR) - 33.2%. The AI services market, estimated to bring in $19.4 billion last year, is growing faster than hardware and software, IDC says, expecting a 19.3% growth rate this year, and a CAGR of 21% for the next half a decade. 

AI essential for the future enterprise

IDC analyzed the work of almost 190 companies for its report, and found that under IT services for AI, the top three companies in 2021 were IBM, Accenture and Tata Consultancy Services, making up 26% of the market share, and each having more than $1 billion in revenue.

In Business Services for AI, the top three were Ernst & Young, Accenture and Deloitte, taking up almost half (46%) of the market share. AI Hardware, with just 5% of the overall AI market, is the smallest category, but it is expected to grow the fastest this year, at 29.6% year-on-year.

"AI has emerged as an essential component of the future enterprise, fueling demand for services partners to help organizations 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 organization, platform, governance, business process, and talent strategies to ensure sustainable AI adoption at scale drives expansion across both IT services and business services segments."

Sead is a seasoned freelance journalist based in Sarajevo, Bosnia and Herzegovina. He writes about IT (cloud, IoT, 5G, VPN) and cybersecurity (ransomware, data breaches, laws and regulations). In his career, spanning more than a decade, he’s written for numerous media outlets, including Al Jazeera Balkans. He’s also held several modules on content writing for Represent Communications.