AI Agents to Boost Productivity and Size of Software Market

The next milestone in the development of generative artificial intelligence (AI) will be the unlocking of business productivity through AI agents that can perform sequences of actions with minimal intervention by the user, according to Goldman Sachs Research. This shift will expand the software market over the next several years. 

The market for customer service software—incorporating traditional software-as-a-service (SaaS) products and new AI agents—could expand by an additional 20% to 45% by 2030, writes Gabriela Borges, who covers emerging software in Goldman Sachs Research, in the team’s report. That’s compared to a scenario without a generative AI boost. Their analysis is based on value- and cost-based pricing methodologies, and their estimates are based on conversations with industry experts and pricing specialists.

The total addressable market for the broader software industry is expected to expand at least 20%, the researchers find, using the growth in customer service software as a “low-end proxy” for the sector. In fact, there may be greater potential for the market to expand in areas that are more directly tied to revenue generation, such as sales and marketing, as compared with customer service, which is primarily viewed as a cost center. Growth in the market for developer tools may benefit from the faster pace of innovation, and there may be idiosyncratic opportunities in areas such as security operations.

“We believe agents will drive productivity, and software companies will capture a portion of this value,” Borges writes. Goldman Sachs Research estimates the application software market could grow to $780 billion by 2030, a 13% compound annual growth rate from this year.

How AI can boost productivity

The researchers examined how AI agents are beginning to boost productivity. “While the majority of examples that we discovered in our industry diligence over the last six months could be described as chatbots with basic integrations to LLMs, we did find select examples of more advanced AI that support much more interesting use cases,” Borges writes. In many instances, these are either proof-of-concept activities or agents trained for internal use at software companies, but there is clear potential for commercialization longer-term. Large language models, or LLMs, are a type of AI that are trained on large amounts of data and can process and generate human-language content.

“Our technical deep dive illustrates the potential for agents to become the new user interface for knowledge workers,” Borges writes. By 2030, the agent portion of the software market may account for more than 60% of the total. In other words, the profit pool is going to shift to agents, but the entire market for software will be larger.