AI Governance Market Size, Share & COVID-19 Impact Analysis, By Deployment (Cloud and On-premise), By Enterprise Type (Large Enterprises and Small & Medium Enterprises (SMEs)), By End-user (Healthcare, Retail, IT and Telecom, BFSI, Automotive, Media and Entertainment, Manufacturing, and Others), and Regional Forecast, 2023 – 2030

The global AI governance market size was valued at USD 89,900 thousand in 2022 and the market is projected to grow from USD 125,886 thousand in 2023 to USD 1,434,786 thousand by 2030, exhibiting a CAGR of 41.6% during the forecast period.

AI governance solution encompasses a comprehensive framework of regulations, protocols, methodologies, and advanced technologies to ensure an organization’s utilization of AI technologies aligns with its strategies, objectives, values, and legal obligations. It also ensures adherence to ethical principles and the achievement of organizational goals. The adoption of these solutions is expected to be driven by several factors, including the growing government initiatives to harness AI technology, the increasing need to establish trust in AI systems, the rising demand for transparency in AI decision-making, and the expanding regulatory compliance requirements surrounding AI.

COVID-19 IMPACT

Rise in Awareness of AI Governance Technology to Mitigate the Risk of Unethical Use of AI to Drive the Market

The COVID-19 pandemic had a significant impact on the market. The increased reliance on AI technologies during the pandemic highlighted the need for robust governance mechanisms. Governments and organizations realized the importance of ethical considerations, transparency, and accountability in AI deployment. The pandemic also exposed the limitations and biases of AI systems. As AI technologies were deployed for tasks related to the pandemic, it became evident that these systems are not immune to biases and errors. This realization led to increased scrutiny and demands for responsible AI governance practices. Furthermore, stakeholders emphasized the need for fairness and robust testing of AI algorithms.

Overall, the pandemic accelerated the development and implementation of these frameworks, heightened scrutiny of international collaboration and escalated the economic value of responsible AI practices.

LATEST TRENDS

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Increasing Need for Transparency and Trust Building in AI Technologies to Aid Market Growth

The growing demand for transparency and trust in AI systems is a crucial driver for the market. Vendors in the market increasingly focus on advancements in AI, cloud solutions, and services, incorporating machine learning algorithms and deep learning frameworks. These factors are contributing to the rapid growth of the market. Organizations are actively adopting these solutions to ensure the effective achievement of their business goals. For instance,

• According to a survey conducted by the IBM Institute for Business Value, it is projected that the average expenditure on Artificial Intelligence (AI) will rise over the next three years. As the use of AI increases, so does the concern regarding data responsibility.

Therefore, transparency has emerged as a crucial factor in addressing trust, fairness, and discrimination issues. These concerns have garnered significant attention in recent times. For instance,

• Another survey by IBM revealed that 81% of consumers have become more concerned about how organizations utilize their data compared to the previous year, and 75% of consumers are now less likely to trust companies with their data.

Consequently, the growing demand for transparency in AI decision-making is expected to drive the global AI governance market growth during the forecast period.

DRIVING FACTORS

Easy and Quick Access to Historical Dataset to Drive the Market Growth

The accessibility of historical datasets plays a crucial role in driving the pace of artificial intelligence innovation. With the decreasing data storage and recovery cost, healthcare institutions and government agencies generate vast amounts of unstructured data that researchers can readily access. These datasets cover many areas, including historical weather patterns and medical imaging. Furthermore, advancements in next-generation computing architectures empower data scientists and researchers to expedite innovation by providing extensive access to large datasets. Moreover, the progress made in deep learning and Artificial Neural Networks (ANN) dramatically accelerated the integration of AI across various industries, including aerospace, healthcare, manufacturing, and automotive.

Additionally, AI researchers and engineers require improved data quality to ensure effective AI governance. The success relies on the learning algorithm, such as a deep neural network model, and evaluation. In various industries, this solution enhances capabilities such as online and offline data storage, real-time offer management, automated checkout systems, and advanced behavior analytics. The demand for governance in data storage applications experienced substantial growth in recent years, primarily driven by the ease of access to valuable datasets. For instance,

• In December 2021, Google made substantial contributions to data-centric AI governance, demonstrating its commitment to this field. As part of their efforts, Google Cloud expanded its Public Dataset Program by including a valuable dataset, which adds significant value to the program’s offerings. Moreover, Google researchers introduced DataPerf, a collaborative initiative involving multiple organizations. The primary objective of DataPerf is to establish regulations and guidelines about the quality of data and data-centric algorithms.

Thus, these noteworthy contributions from Google have played a pivotal role in expanding the AI governance market share.

RESTRAINING FACTORS

Inadequate AI Expertise and Skills to Hamper the Market Growth

The market faces significant challenges due to inadequate AI expertise and skills. As artificial intelligence advances rapidly, the need for effective governance and regulation becomes increasingly important. However, the shortage of expertise to understand and navigate the complex ethical, legal, and societal issues surrounding AI is expected to impede market growth. Furthermore, the professionals required to design robust policies and guidelines require a deep understanding of AI technologies, their potential risks, and the broader implications for society. Hence, the lack of skilled professionals to mitigate these risks is expected to hinder the adoption further.

SEGMENTATION

By Deployment Analysis

Benefits Provided by Cloud-based Solution to Fuel the Segment Growth

Our research shows that the deployment is implemented on the cloud and on-premise. Cloud segment dominated the market and is expected to grow at the highest CAGR throughout the projected period owing to its several advantages, including scalability, flexibility, accessibility, cost efficiency, and data management capabilities, enabling them to effectively manage and regulate AI technologies while focusing on the core objectives.

By Enterprise Type Analysis

Large Enterprise to Dominate Supported by Rising Product Demand

By enterprise type, the market is bifurcated into large enterprises and small & medium enterprises. Large enterprises segment is expected to dominate the market due to their early adoption of technologies, primarily Artificial Intelligence (AI), and the need for its governance.

The SMEs segment is projected to experience an average growth rate in AI governance adoption. This growth can be attributed to increasing SMEs in developing regions such as Asia Pacific, the Middle East & Africa, and South America, where AI technologies are being adopted increasingly.

By End-user Analysis

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Growing Use of Artificial Intelligence (AI) in Retail to Propel the Segment

As per our study, the market has specific end-users, including healthcare, retail, IT and telecom, BFSI, automotive, media and entertainment, manufacturing, and others. The retail segment holds the highest share of the global market as customers increasingly embrace digital technologies, leading to changes and purchasing behaviors. As a result, there is a growing need for effective AI governance to enhance retail performance, address challenges, and stay ahead of the competitive retail landscape, which is expected to expand the overall market growth.

The healthcare segment is expected to grow at the highest CAGR as AI governance in healthcare settings is crucial for ensuring patient safety, upholding ethical standards, protecting patient privacy, and promoting AI technologies' responsible and effective use.

REGIONAL INSIGHTS

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As per our report, the market is studied across five regions, including North America, South America, Europe, the Middle East & Africa, and Asia Pacific. These regions are further categorized into leading countries.

North America holds the highest share and has recently gained significant attention and momentum. Governments, regulatory bodies, and industry stakeholders in the region have recognized the need for policies and frameworks to address AI technologies' ethical and responsible use. For instance,

• The U.S. Department of Defense released its AI strategy, which includes adopting ethical standards for AI systems used by the military and related industries. Additionally, the Canadian government launched the Pan-Canadian Artificial Intelligence Strategy, which focuses on advancing AI research and promoting responsible and inclusive AI development.

Asia Pacific is witnessing rapid growth and development owing to several countries in the region, including China, Japan, and Singapore, actively working on establishing regulatory frameworks and guidelines to govern AI's ethical and responsible use. For instance,

• The Chinese government released guidelines and policies to regulate AI technologies, promote data security, and encourage collaboration.

India and South Korea also develop frameworks to address legal and ethical challenges. For instance,

• India proposed the National Strategy for Artificial Intelligence, focusing on R&D, adoption, and ethical considerations.

Europe is gaining prominence as the region recognizes the need for ethical and responsible use of AI technologies. European countries have been actively developing regulations and frameworks to address the potential risks associated with AI while promoting innovation.

• The European Commission has proposed creating a comprehensive AI regulatory framework, including guidelines on AI ethics, transparency, and accountability.

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South America and the Middle East & Africa are expected to grow slowly as AI governance in these regions is still developing, with countries beginning to recognize the importance of developing regulatory frameworks and guidelines to address AI's ethical and responsible use.

KEY INDUSTRY PLAYERS

Key Players Launch New Products to Strengthen Market Positioning

Prominent market players actively create advanced solutions to cater to customer demands. They also focus on enhancing their existing product portfolio to deliver flexible solutions with unique attributes. Furthermore, these organizations proactively pursue collaboration, acquisitions, and partnerships to bolster their product offerings.

List of Key Companies Profiled:

• Microsoft Corporation (U.S.)


• IBM Corporation (U.S.)


• SAP SE (Germany)


• FICO (U.S.)


• H2O.ai, Inc. (U.S.)


• Informatica LLC (U.S.)


• OneTrust, LLC (U.S.)


• Accenture (Ireland)


• Salesforce.com, Inc. (U.S.)


• Credo AI (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• May 2023: IBM Unveiled IBM WatsonX, an AI and data platform designed to empower businesses in harnessing advanced AI technologies and reliable data on a large scale. This technology stack enables enterprises to train, optimize, and implement AI models throughout their organization, including foundational models and machine learning capabilities. It offers a unified solution that ensures data integrity, rapid deployment, and governance across various cloud environments.


• May 2023: OpenAI, which introduced ChatGPT, announced a distribution of USD 1 thousand for experiments focusing on democratic processes. These experiments explore how AI software governance can effectively address bias and other relevant factors.


• May 2023: OneTrust launched OneTrist Artificial Intelligence Governance, a comprehensive solution that aids organizations in managing risks related to AI and machine learning (ML) technologies. With the increasing use of AI and ML for providing data and driving innovation, AI governance by OneTrust offers visibility and control over data usage and associated risks arising from AI models. It enables organizations to inventory, evaluate, and monitor these risks effectively.


• November 2022: Credo AI, a governance company for responsible AI, released new assessment and reporting features in its governance platform. These enhancements help businesses meet regulatory requirements and customer expectations for governance artifacts, reports, and AI development and usage disclosures.


• October 2022: Informatica, an enterprise cloud data management provider, announced that Valmont Industries will adopt its Cloud Data Governance and Catalog (CDGC) solution. This unified, cloud-native Software as a service (SaaS) offering will improve data and analytics governance for Valmont Industries.

REPORT COVERAGE

An Infographic Representation of AI governance market

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The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product/service types, and leading applications of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

Report Scope & Segmentation