Global Explainable AI Market Industry: Key Statistics and Insights in 2024–2032

Summary:

• The global explainable AI market size reached USD 6.3 Billion in 2023.
• The market is expected to reach USD 24.9 Billion by 2032, exhibiting a growth rate (CAGR) of 16.51% during 2024–2032.
• North America leads the market, accounting for the largest explainable AI market share.
• Solution accounts for the majority of the market share in the solution segment due to the increasing demand for tailored, transparent AI tools that help businesses meet regulatory compliance and improve decision-making.
• On-premises holds the largest share in the explainable AI industry.
• Fraud and anomaly detection remain a dominant segment in the market.
• IT and telecommunication represent the leading end use segment.
• The rising demand for transparency in artificial intelligence (AI) decision-making is a primary driver of the explainable AI market.
• The growing focus on ethical AI development and the increasing complexity of AI models are reshaping the explainable AI market.

Industry Trends and Drivers:

● Rising demand for transparency in artificial intelligence (AI) decision-making:

The rapid integration of artificial intelligence (AI) systems across multiple industries is driving the need for transparency in decision-making processes. Explainable AI is gaining traction as it enables users to comprehend how AI models arrive at their decisions, fostering trust and accountability. In sectors like finance, healthcare, and legal services, where decisions can have notable ethical or financial implications, explainable AI ensures that stakeholders understand the logic behind automated decisions. This transparency is not only important for users but also for meeting regulatory requirements that emphasize fairness and the prevention of bias. Regulators worldwide are encouraging the adoption of explainable AI models to ensure they are fair, ethical, and non-discriminatory.

● Growing focus on ethical AI development:

The ethical implications of AI usage are under intense scrutiny as AI becomes more embedded in everyday life. Explainable AI supports the development of ethical AI systems by making it easier for organizations to align AI behavior with their ethical guidelines and social responsibility goals. Companies are adopting AI governance frameworks to ensure that their AI systems act in a manner consistent with societal values, particularly in areas like data privacy, fairness, and accountability. Explainable AI is key to implementing these frameworks, as it provides transparency into how decisions are made and ensures that any deviations from ethical guidelines are identified and addressed.

● Increasing complexity of AI models:

AI models are becoming more complex, with deep learning and neural networks gaining prominence, which is making it difficult to understand their decision-making processes. These advanced models often involve intricate layers of processing, making it challenging for even experienced data scientists to explain how the model arrives at specific outcomes. Explainable AI provides the tools needed to break down these complex models into understandable components, allowing developers, stakeholders, and users to grasp how decisions are made. This is especially important in sectors where model explainability is crucial for adoption, such as healthcare and autonomous vehicles. In these fields, users need to understand the reasoning of AI to trust its outputs and ensure safety.

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Explainable AI Market Report Segmentation:

Breakup By Component:

• Solution
• Services

Solution exhibits a clear dominance in the market attributed to increasing demand for tailored, transparent AI tools that help businesses meet regulatory compliance and improve decision-making.

Breakup By Deployment:

• Cloud
• On-premises

On-premises represents the largest segment accredited to concerns over data security and compliance in handling sensitive information.

Breakup By Application:

• Fraud and Anomaly Detection
• Drug Discovery and Diagnostics
• Predictive Maintenance
• Supply Chain Management
• Identity and Access Management
• Others

Fraud and anomaly detection hold the biggest market owing to the growing reliance on AI to identify irregular patterns and mitigate risks.

Breakup By End Use:

• Healthcare
• BFSI
• Aerospace and Defense
• Retail and E-commerce
• Public Sector and Utilities
• IT and Telecommunication
• Automotive
• Others

IT and telecommunication account for the majority of the market share, as these sectors heavily invest in AI to optimize operations and enhance services.

Breakup By Region:

• 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 dominates the market due to strong technological infrastructure and high adoption of AI-driven solutions across industries.

Top Explainable AI Market Leaders:

The explainable AI market research report outlines a detailed analysis of the competitive landscape, offering in-depth profiles of major companies. Some of the key players in the market are:

• DarwinAI
• DataRobot Inc.
• Google LLC (Alphabet Inc.)
• International Business Machines Corporation
• Kyndi Inc.
• SAS Institute Inc.
• Seldon Technologies Limited

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