<p>The study is an investigation of the role of artificial intelligence (AI) and the impact of its application in the service sector. The services require a desired level of human interaction which today with the use of AI has been replaced to a certain extent. This domain of research being at a nascent stage requires a detailed review of the existing literature. Using a systematic quantitative literature review with bibliometric analysis, 79 articles in the field are found and reviewed. The findings interpreted two prime sectors where the majority of AI innovation-based research is focused in the service sector – healthcare and public administration. The majority of researchers are focusing on either the benefits or challenges or sometimes both when using AI in services. The outcome is measured in terms of users’ adoption and diffusion levels. The results of the study put forward the research gaps in the literature in the form of research questions to be undertaken in the future. The use of AI across businesses especially with respect to modern approaches such as neural networks and large language modelling is novel. While researchers are focusing on identifying different attributes around it, the study provides a comprehensive summary of the conducted studies and points out directions for the future.</p>