After a year of feverish hype, a new study from Sopra Steria suggests the generative AI market could grow to a value of more than $100 billion in the coming four years. This growth could be driven by new language models presenting opportunities in customer services, software development, knowledge management and marketing in particular.
The rise of the latest crop of AI technologies came just in time to give businesses something else to channel their resources into, after the spectacular bursting of the bubble that had developed around the metaverse and NFTs. Immediately filling the gap in the market for some much-needed hype, talk around the early forms of ‘generative AI’ – platforms which could use machine learning to approximate human-produced content in a fraction of the time – was filled with grand promises of the technology’s potential.
One study from KPMG suggested that GenAI could ‘save money’ on creative tasks, such as the creation of images and text for online content, while enabling that labour to be repurposed toward other activities, including manual labour and customer services work. This is something the report asserted could boost the UK’s productivity by £31 billion. On a global basis, meanwhile, McKinsey & Company touted an even grander $44 trillion productivity boost each year.
Despite an initial scramble to invest in GenAI, however, the market remains relatively small. According to Sopra Steria, the GenAI market is currently valued between $7 billion and $9 billion. For context, the wider digital transformation market in 2023 was valued at $937 billion by researchers at Precedence Research, suggesting that for all the hype, many businesses still see their priorities laying elsewhere.
This might also reflect the plateauing interest around GenAI’s most famous product. After a rapid rise to prominence at the start of last year – shooting from 206 million web-engagements in December 2022, to 1.8 billion in April 2023, the number of clicks ChatGPT seemed to hit a ceiling over the second half of the year, levelling out at 1.7 billion monthly engagements by its end. This may be because most users quickly found the limits of what the technology could actually stretch to delivering in its current, direct form – from mildly amusing images of the Pope wearing a puffer-jacket, to churning out SEO-competent, if dull, listicles. But this does not necessarily mean GenAI is a bubble about to burst, according to Sopra Steria.
Fabrice Asvazadourian, chief executive officer of Sopra Steria Next, explained, “At the start of the gold rush, the first to strike it rich were actually the ones selling shovels and pickaxes; similarly, despite its lightning-fast market penetration, generative AI generated only limited revenue in 2023, essentially for cloud providers and their graphics processor manufacturers. Our study shows that 2024 will mark the beginning of an exponential rise in the monetisation of generative AI, with more and more services being sold, both by major tech players as an extension of their current product ranges and by a multitude of startups that are beginning to emerge, targeting specific use cases.”
To that end, the researchers predict that the GenAI market is set to grow to a size of more than $100 billion over the next 4 years. Equating to annual growth of 65%, the commercial take-off in the technology is anticipated to be driven by greater competition between major generalist AI models and the rise of specialised large language models (LLMs), enabling the proliferation of applications targeting multiple use cases. In particular, the emergence of LLMs will present major opportunities for the use of GenAI in the lucrative financial sector. The use of GenAI there could account for as much as 30% of the market’s value by 2028.
Beyond that, the study also found four key areas of opportunity for GenAI scaling. In customer service, GenAI could improve self-service rates, and handle basic customer enquiries, while also enabling human agents to carry out more complex tasks. The technology could also be used in digital marketing, ingesting data to produce accurate customer profiles for human marketers to build campaigns around. It could be used in software engineering, helping to generate and review new code and improving existing code by detecting errors, suggesting improvements. And, it could enhance knowledge management, for example, enabling law firms to access previous information more efficiently, and draw up drafts for new consultations
“What these cases show us is that generative AI represents a whole new paradigm for business competitiveness, so it’s vital that leaders move from the discovery and familiarisation phase to a true programmatic approach in 2024,” continued Asvazadourian. “The challenge lies in implementing this technology gradually, striking the right balance between proactivity and control, and coordinating the technological, regulatory and human dimensions involved. At a time when everyone is talking about ‘humans augmented by AI’, our experience with our customers in 2023 has convinced us that the key to success is to ensure that GenAI also remains ‘augmented by humans’.”