Worldwide AI Spending Grew 20.7% in 2021: IDC

Worldwide artificial intelligence (AI) revenues (including software, hardware, and services for both AI-centric and AI non-centric applications) reached $383.3 billion in 2021, a 20.7% growth from 2020 revenue, according to the IDC Worldwide Semiannual AI Tracker.

IDC predicts the worldwide AI market value will reach approximately $450 billion by 2022 and retain a year-over-year gain in the high teens throughout the five-year prediction.

“Across all industries and functions, end-user organizations are discovering the benefits of AI technologies, as increasingly powerful AI solutions are enabling better decision-making and higher productivity,” said Rasmus Andsbjerg, associate VP of Data & Analytics at IDC.

AI is not limited to any particular industry, it is being adopted across the sectors like technology, Pharma, BFSIs, Retail & eCommerce, Manufacturing, Travel, Entertainment, Logistics & Transportation.

AI does not just have the promise to enhance business efficiency and competitiveness better but also to improve the human experience as a whole. Across the countries, the adoption of AI and its impact on companies and society stands at a turning moment.

AI applications again accounted for the biggest share of the overall AI market in 2021. Combined, the four AI Software categories – AI Applications Delivery & Deployment, AI Applications, AI System Infrastructure Software, and Artificial Intelligence Platforms – yielded more than $340 billion in market value in 2021, with AI Applications representing nearly half the total. In addition, AI Platforms delivered the most robust year-over-year growth at 36.6%, albeit from a smaller baseline. Within the AI Applications category, AI Customer Relationship Management (CRM) Applications and AI Enterprise Resource Management (ERM) Applications each delivered about 16% of the category total. The myriad provided the remainder of other AI Applications available in the market. With nearly 300 companies vying for opportunities to gain share, the AI Applications market stays highly competitive.

IDC’s AI Tracker also shows that AI-centric applications, in which AI technologies are central and critical to the function of the application, continued to grow its share of the AI Software market slowly. In 2021, AI-centric applications captured 12.9% of the market, up 29.3% yearly. The remainder of the market was held by AI non-centric applications, where AI technologies are integral to specific application workflows. However, if those technologies were removed, the application would still be able to function.

Similarly, the deployment of AI Software to the cloud continues to show steady growth. In 2021, 47.3% of AI Software purchases were deployed to the public cloud, an increase of four percentage points over 2020 and 8.4 percentage points over 2019. IDC expects cloud deployment of newly purchased AI Software to surpass on-premises deployments in 2022.

The AI Services market saw its total value increase 22.4% year over year to $24 billion in 2021. Client demand for expertise in developing production-grade AI solutions helped the AI IT Services category grow 21.9% year over year to $18.8 billion. The AI, Business Services category grew 24.2% year over year as organizations sought assistance on AI governance, business process, and talent strategies.

AI Hardware was the smallest ($18.8 billion) and fastest growing (38.9% year over year growth) segment of the AI market. The hardware growth was driven by efforts to build dedicated AI systems that meet AI models and increase compute and storage demands for data sets. While both AI Servers and AI Storage delivered strong growth in 2021 – 39.1% and 32.9%, respectively – server purchases were notably larger at $15.6 billion.