IMARC Group's report titled "Explainable AI Market Report by Component (Solution, Services), Deployment (Cloud, On-premises), Application (Fraud and Anomaly Detection, Drug Discovery and Diagnostics, Predictive Maintenance, Supply Chain Management, Identity and Access Management, and Others), End Use (Healthcare, BFSI, Aerospace and Defense, Retail and E-commerce, Public Sector and Utilities, IT and Telecommunication, Automotive, and Others), and Region 2024-2032". The global explainable AI market size reached US$ 6.3 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 24.9 Billion by 2032, exhibiting a growth rate (CAGR) of 16.51% during 2024-2032.
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Factors Affecting the Growth of the Explainable AI Industry:
- Rising Regulatory Compliance and Ethical Concerns:
The explainable AI industry is driven by the increasing focus on regulatory compliance and ethical considerations in AI development. Governments and organizations worldwide are recognizing the importance of ensuring that AI systems are transparent and accountable. Explainable AI (XAI) techniques address this by providing interpretable AI models that offer insights into how decisions are made. This aligns with regulations such as GDPR and ethics standards like fairness and bias mitigation. As a result, explainable AI is becoming a necessity in industries where ethical and regulatory compliance is crucial, fostering market growth.
- Trust and Adoption:
Trust is a major factor in AI adoption, and XAI plays a vital role in building that trust. Many individuals and organizations are wary of AI systems owing to their perceived "black box" nature, where decisions are difficult to interpret. XAI provides transparency by explaining how AI models arrive at conclusions, making AI systems more trustworthy. This is crucial for applications where human lives or sensitive decisions are involved, such as in healthcare and autonomous vehicles. The rapid growth of the XAI industry is fueled by its ability to boost trust, thereby spurring the adoption of AI technologies.
- Industry-Specific Applications:
The explainable AI industry's growth is positively influenced by its versatility in addressing industry-specific needs. Different sectors have unique requirements for AI explainability. In healthcare, for instance, it is imperative to understand the reasoning behind AI-driven medical diagnoses to ensure patient safety and clinician trust. Along with this, in financial services, transparent AI models are essential for risk assessment and regulatory compliance. XAI solutions can be tailored to meet these distinct demands, making them indispensable for the development and deployment of AI systems across diverse industries. This adaptability has accelerated the adoption of the explainable AI, thereby supporting market growth.
Leading Companies Operating in the Global Explainable AI Industry:
- DarwinAI
- DataRobot Inc.
- Google LLC (Alphabet Inc.)
- International Business Machines Corporation
- Kyndi Inc.
- SAS Institute Inc.
- Seldon Technologies Limited
Explainable AI Market Report Segmentation:
By Component:
- Solution
- Services
Solution represented the leading segment due to the rising demand for XAI systems that provide transparency and interpretability in AI decision-making.
By Deployment:
- Cloud
- On-premises
On-premises accounted for the largest market share owing to the escalating need for data security and control.
By Application:
- Fraud and Anomaly Detection
- Drug Discovery and Diagnostics
- Predictive Maintenance
- Supply Chain Management
- Identity and Access Management
- Others
Fraud and anomaly detection represented the largest segment as explainable AI plays a crucial role in identifying unusual patterns and explaining why such events occur, benefiting sectors like finance and cybersecurity.
By End Use:
- Healthcare
- BFSI
- Aerospace and Defense
- Retail and E-commerce
- Public Sector and Utilities
- IT and Telecommunication
- Automotive
- Others
IT and telecommunications held the majority of the market share on account of the industry's increased reliance on AI for network optimization, customer support, and data analysis.
Regional Insights:
- North America: (United States, Canada)
- Asia Pacific: (China, Japan, India, South Korea, Australia, Indonesia, Others)
- Europe: (Germany, France, United Kingdom, Italy, Spain, Russia, Others)
- Latin America: (Brazil, Mexico, Others)
- Middle East and Africa
North America's dominance in the explainable AI market is attributed to its early adoption of AI technologies, heightened regulatory focus on transparency, and a robust ecosystem of AI research and development in the region.
Global Explainable AI Market Trends:
Regulatory compliance and ethical considerations have augmented the demand for explainable AI as governments and organizations worldwide increasingly require AI systems to be transparent and accountable. This, in turn, is catalyzing market growth. Apart from this, the growing realization of explainable AI's importance in various industries, such as finance and healthcare, where critical decisions are made, has accelerated the product adoption rate. Furthermore, ongoing technological advancements and innovations in XAI techniques that make AI models more interpretable are contributing to market growth.
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