The global market for AI-driven recommendation engines will grow from about $800 million in 2017 to $4.4 billion by 2022, a compound annual growth rate of 40.7 percent, according to a report from the research firm MarketsandMarkets.
Driving the growth is an increasing focus on enhancing consumer experiences and the continuing rise in digitalization. In addition, the firm expects surging demand for the analysis of large data sets and an increase in the use of deep learning to provide growth opportunities for recommendation-engine developers.
Recommendation engines are becoming an integral component of more HCM technology systems as more employers seek to enhance their self-service capabilities and provide more guidance to front-line supervisors and middle managers.
The large volume of user data generated by smartphones, the Web and other touch points has resulted in a need for intelligent filtering to create personalized recommendations, the researcher said. Since many recommendation engines filter data based on the similarity of user interests, a number of companies have deployed recommendation engines that combine AI with such “collaborative filtering” to categorize users and deliver personalized recommendations.
MarketsandMarkets said the demand for AI-driven recommendations will grow across a broad spectrum of users. Although the report focuses on customer behaviors, we think its fair to say “customer” can be replaced with “employee” here. As more organizations struggle with engagement, the need to understand workers’ behavior has become a key to developing retention strategies.
North America is the most “competitive and rapidly changing” market for recommendation engines, the report said. The region has seen the most adoption because of businesses’ increasing focus on enhancing customer experience, rapid advancements in technology and strong government support.
Globally, the leading recommendation engine vendors are IBM, SAP, Salesforce, Hewlett-Packard Enterprise, Oracle, Google, Microsoft, Intel, Amazon Web Services and Sentient Technologies. With the exception of Germany’s SAP, all of these companies are based in the U.S.
To create the report, MarketsandMarkets captured data on the key vendor revenues through secondary research, annual reports and information from them IEEE, Factiva and Bloomberg, as well as press releases. This initial research was then verified through senior executives at a variety of companies.
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