What is AI Agent?

AI agent vs chatbot

• Chatbot: maps user input to pre-defined or LLM-generated responses, mostly single-turn.
• AI agent: reasons about goals, plans steps, uses tools, observes results, and iterates until the goal is met or escalation is required.

The practical test: if it can independently call your order-lookup API, check shipment status, and reply with the real answer (not a generic FAQ), it's behaving like an agent.

What AI agents do in practice

In a typical support deployment, AI agents handle:

• FAQ deflection (with grounding in your knowledge base)
• Order status, refund, and return queries
• Multi-step workflows like password resets and account recovery
• Translation between customer language and agent language
• Conversation summarization at handoff

Why agents need guardrails

Agents that can act on customer accounts (refund, cancel, change address) need:

• Authorization scoping per tool (refund up to ₹X auto-allowed, above requires human)
• PII redaction before model context
• Audit logging of every action
• Escalation paths when confidence is low

See our deep dive: AI Chatbot vs AI Agent.