Latest News- Explainable AI Market: Solutions is expected to lead the Component segment during 2025-2029

The Explainable AI Market is being driven by Escalating regulatory and compliance mandates for ai transparency

The Explainable AI Market is expected to grow at a CAGR of 18.5% during 2024 and 2029. During this period, the market is also expected to show a growth of USD 9617.6 million. The global explainable AI market is experiencing significant growth due to increasing regulatory pressures and compliance mandates. Governments and international bodies are enacting regulations in response to the growing societal and economic dependence on artificial intelligence systems, particularly those used in high-stakes industries such as finance, healthcare, and public services. The opacity of advanced AI models, also known as the "black box problem," poses risks related to bias, fairness, and accountability. To mitigate these risks, regulators are mandating transparency, requiring organizations to explain the decision-making processes of their AI systems. This trend is expected to continue, driving the demand for explainable AI solutions. 

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Which Factors Are Causing a Surge in Market Growth?

The market is segmented based on

• Component
  • Solutions
  • Services
• Deployment
  • On premises
  • Cloud
• Application
  • Fraud detection and risk management
  • Healthcare diagnostics
  • Predictive analytics
  • Customer service automation
  • Others
• Geography
  • North America
    • Canada
    • US
  • Europe
    • Germany
    • UK
    • France
    • Italy
  • APAC
    • China
    • India
    • Japan
    • South Korea
  • Middle East and Africa
  • South America

According to Technavio, There are several factors that are causing the market to flourish during the forecast period, which are as follows: 

• Escalating regulatory and compliance mandates for ai transparency
• Imperative for building stakeholder trust to accelerate enterprise adoption
• Critical need for risk mitigation and enhanced ai model governance

However, the market also witnesses some limitations, which are as follows:

• Inherent tradeoff between model performance and interpretability
• Lack of standardization and benchmarking for explanation quality
• High implementation complexity and a scarcity of specialized talent

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Market Scope in Explainable AI Market Research Report

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Research Analysis Overview

The Explainable AI (XAI) market encompasses various techniques for making AI systems more transparent and understandable to humans. These include decision boundary visualization, sensitivity analysis, influence functions analysis, concept activation vectors, text and image explanation methods, tabular data explanation, time-series explanation, multimodal explanation, model versioning, audit trails, model lineage tracking, explanation consistency checks, accuracy metrics, comprehensibility, user-centered design, interactive interfaces, XAI dashboards, model documentation, risk assessment, regulatory compliance, privacy preservation, security, data quality impact, model performance improvement, explainability trade-offs, and model simplicity measures.

Market Research Overview

The Explainable AI (XAI) market is a segment of the larger IT software industry, focusing on model explainability, interpretable machine learning, feature importance ranking, and counterfactual explanations. XAI companies provide software solutions that enable users to understand the reasoning behind AI models' decisions, ensuring transparency and trust. This sub-segment falls under the application software market, contributing to the specialized business software sector, as defined by the combined revenue generated by these companies. The global application software market encompasses enterprise and technical software, excluding those engaged in interactive home entertainment or producing systems or database management software.. Industries are leveraging the products belonging to the market for customer engagement, transactional notifications, and promotional offers.

Technavio Research
Jesse Maida
Media & Marketing Executive
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UK: +44 203 893 3200
Email: media@technavio.com
Website: www.technavio.com/