Data Annotation Tools Market size was valued at USD 1.26 Billion in 2023 and is poised to exceed USD 25.7 Billion by the end of 2036, expanding at over 26.1% CAGR during the forecast period i.e., between 2024-2036. In the year 2024, the industry size of data annotation tools is evaluated at USD 1.56 Billion.The growth of the market can be attributed to the rising production of data, such as videos and photos. In order to train ML models, more information/metadata is added to various data kinds, such as text, audio, image, and video, using a data annotation tool. More than 3 billion photographs and around 720,000 hours of video are shared every day on social media, worldwide.
In addition to these, factors that are believed to fuel the data annotation tools market growth include the rise in advanced technologies, such as AI, ML, robotics, and others. Advanced technologies such as industrial robots are mostly propelled by high-quality data annotation. It is common to practice using labeled data for tasks such as developing and testing computer vision (CV) models for robotic navigation systems. In companies all around the world, there are now a record-breaking 2.7 million industrial robots at work, up 12% from the previous year, according to the new World Robotics 2020 Industrial Robots research published by the International Federation of Robotics. Moreover, there was a worldwide shipment of 373,000 units in 2019. Furthermore, the rising use of data annotation in machine learning is also anticipated to augment the market growth. In machine learning projects all across the world , more than 80% of the engineering labor is devoted to data preparation and labeling. Additionally, by 2024, the market for third-party data annotation is expected to nearly triple.
Growth Drivers
Challenges
Base Year |
2023 |
Forecast Year |
2024-2036 |
CAGR |
26.1% |
Base Year Market Size (2023) |
USD 1.26 Billion |
Forecast Year Market Size (2036) |
~ USD 25.7 Billion |
Regional Scope |
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End-user (Retail & E-Commerce, IT & Telecommunication, BFSI, Government, Automotive, Healthcare)
The global data annotation tools market is segmented and analyzed for demand and supply by end user into retail & e-commerce, IT & telecommunication, BFSI, government, automotive, healthcare, and others. Out of the six end users of data annotation tools, the retail & e-commerce segment is estimated to gain the largest market share in the year 2036. The growth of the segment can be attributed to the increasing prevalence of e-commerce and the rising integration of artificial intelligence in retail & e-commerce. According to a survey conducted in October 2020, around 70% of e-commerce decision-makers in North America and Europe said AI would aid personalization in their companies' operations in 2021. For both retailers and customers, AI & Data annotation services are greatly enhancing online shopping experiences. Companies witnessed a transformation in the e-commerce industry's adoption of AI and data annotation during the last few years. Therefore, for a better user experience and more effective solutions, several companies already utilize AI with data annotation services.
Type (Text, Pictures & Videos, Audio)
The global data annotation tools market is also segmented and analyzed for demand and supply by type into text, pictures & videos, and audio. Amongst these three segments, the text segment is expected to garner a significant share in the year 2036. Text is the most often used data type. In around 70% of businesses, the text is used. A wide variety of annotations, including sentiment, intent, and inquiry, are included in text annotations. The growth of the segment is primarily attributed to the rising use of annotation in data labeling. The labeling is used (Natural Language Processing) NLP technologies, automatic question-and-answer (Q&A) platforms, intelligent chatbots, sentiment analysis, and others. Therefore, the rising use of chatbots and text analytics based cloud NLP technologies is also expected to boost segment growth. Chatbot adoption as a brand communication channel has increased by around 92% globally since 2019. Almost 25% of customers interacted with businesses through chatbots in 2020, up from just under 13% in 2019.
Our in-depth analysis of the global market includes the following segments:
By Type |
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By Component |
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By Annotation Type |
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By End User |
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North American Market Forecast
The data annotation tools market in North America is projected to be the largest with a share of about ~30% by the end of 2036. The growth of the market can be attributed majorly to the increasing number of devices connected to the Internet of Things (IoT). In 2022, there were nearly 3 billion connected IoT devices in North America, and this number is expected to rise to more than 6 billion devices by 2030. On the other hand, the rising adoption of AI in healthcare is also expected to boost market growth. In a poll of US healthcare executives, around 41% said that as of 2021, their use of AI had reached a fully functional level. Another nearly 26% claimed that their AI system is partially working.
APAC Market Statistics
The Asia Pacific data annotation tools market is estimated to be the second largest, registering a share of about ~28% by the end of 2036. The growth of the market can be attributed majorly to the rising penetration of the internet, which in turn is expected to expand data generation. India adds up to 25 million new smartphone users every three months and has the highest mobile data usage rate in the world at around 12 gigabytes (GB) per user per month. In addition to this, China produced around 8 trillion gigabytes of data in 2018. That sum is anticipated to increase to around 49 trillion gigabytes by 2025. Furthermore, rising demand for autonomous cars in the region is also expected to augment the data annotation tools market growth. To promote modern mobility services, the Japanese government intends to utilize autonomous driving vehicles in more than 40 areas nationwide by 2025.
Europe Market Forecast
Further, the data annotation tools market in Europe is projected to hold a majority of the share by the end of 2036. The growth of the market can be attributed majorly to the rising adoption of facial recognition technologies. Furthermore, face recognition has quickly transformed from a cutting-edge curiosity to an essential component of daily life. Technologies for facial recognition are developing quickly, and algorithms are getting better every day. In 11 European nations, law enforcement agencies already use biometric identification systems in their investigations. Moreover, facial recognition technology is used by police for former identification during criminal investigations in France, Germany, Greece, Hungary, Italy, Austria, Finland, France, and other regions.
Innodata, Inc. announced the expansion of services to support the development of predictive models for the medical record by combining their Synodex medical data extraction platform with data annotation platform. This expansion demonstrates the efficacy of the method of Innodata for extracting high-quality AI training data from medical records.
Telus Corporation announced the acquisition of Lionbridge AI, a market-leading global supplier of solutions for annotation platforms and crowd-based training data by their Telus International segment. Lionbridge AI will assist TELUS International expand its penetration of the quickly expanding new economy services market
Author Credits: Abhishek Verma
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