AI Governance Market Size, Share & Industry 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, 2024 – 2032

The global AI governance market was valued at USD 125,886 thousand in 2023. The market is projected to be worth USD 176,788 thousand in 2024 and reach USD 2,291,494 thousand by 2032, exhibiting a CAGR of 37.7% during the forecast period.

AI governance solutions encompass a comprehensive framework of regulations, protocols, methodologies, and advanced technologies to ensure that 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, increasing need to establish trust in AI systems, rising demand for transparency in AI-related decision-making, and expanding regulatory compliance requirements surrounding AI.

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 demand for responsible AI governance practices. Furthermore, stakeholders emphasized the need for fairness and robust testing of AI algorithms.

AI Governance Market Trends

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 are increasingly focusing 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, the average expenditure on Artificial Intelligence (AI) is projected to 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.

Increasing Adoption of AI in Retail to Accelerate Market Growth

The retail industry is experiencing major changes. As customers become digital natives, their channel preferences and purchasing habits also change. The shift to digital has raised concerns about the data that drives the digital transformation. AI governance is essential to improve the overall retail performance, address common challenges, and stay ahead of powerful retail competitors and agile direct-to-consumer brands. Governance removes friction for those who need quick access to data and puts more data at the fingertips of decision-makers. AI and ML are powerful technologies that retail companies are increasingly deploying. However,  companies should develop comprehensive ethics plans and include them in the process. The development of a code of conduct is expected to establish structure and accountability, enable good data management practices, and help establish a framework to guide the entire organization. These factors are considered to be trending factors for the market’s growth.

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AI Governance Market Growth Factors

Easy and Quick Access to Historical Dataset to Drive 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 costs, 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 accelerate 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 & offline data storage, real-time offer management, automated checkout systems, and advanced behavior analytics. The demand for governance in data storage applications has 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 its 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 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 the market growth. Furthermore, the professionals required to design robust policies and guidelines need a deep understanding of AI technologies, their potential risks, and their broader implications for society. Hence, the lack of skilled professionals to mitigate these risks is expected to further hinder the adoption.

AI Governance Market Segmentation Analysis

By Deployment Analysis

Benefits Provided by Cloud-based Solution to Fuel Segment Growth

Our research shows that the deployment is implemented on the cloud and on-premises. The cloud segment dominated the market and is expected to record the highest CAGR throughout the forecast period owing to its several advantages. These benefits include scalability, flexibility, accessibility, cost efficiency, and data management capabilities, enabling users to effectively manage and regulate AI technologies, while focusing on the core objectives.

By Enterprise Type Analysis

Large Enterprises to Dominate Market Due to Rising Product Demand

By enterprise type, the market is bifurcated into large enterprises and small & medium enterprises. The 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 number of SMEs in developing regions, such as Asia Pacific, the Middle East & Africa, and South America, where AI technologies are being increasingly adopted.

By End-user Analysis

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Growing Use of Artificial Intelligence (AI) in Retail to Propel Market Growth

As per our study, the market has specific end-users, including healthcare, retail, IT & telecom, BFSI, automotive, media & entertainment, manufacturing, and others. The retail segment holds the highest share of the global market as customers are increasingly embracing digital technologies, leading to changes in 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’s growth.

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

REGIONAL INSIGHTS

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.

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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 the ethical and responsible use of AI technologies. 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 are also developing frameworks to address the legal and ethical challenges. For instance,

• India proposed the National Strategy for Artificial Intelligence, which focuses 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.

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.

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List of Key Companies in AI Governance Market

Key Players Launch New Products to Strengthen Market Positioning

Prominent market players are actively creating advanced solutions to cater to customer demands. They are also focusing on enhancing their existing product portfolios to deliver flexible solutions with unique attributes. Furthermore, these organizations are proactively pursuing collaborations, 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:

• December 2023: Meta and IBM launched the AI Alliance in collaboration with more than 50 founding members and employees around the world. Open innovation in AI benefits everyone and is developed responsibly. The AI Alliance comprises a wide range of organizations working in AI education, research, development & deployment, and governance.


• December 2023: D2L announced the launch of a new free course, Introduction to AI Ethics and Governance, developed in collaboration with AI experts INQ Consulting. The free course aims to bring companies one step closer to responsible AI governance for a deeper understanding of AI technology.


• 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 grants worth USD 100,000 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 the OneTrust 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.

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, it offers insights into the market trends and highlights key industry developments. In addition to the factors mentioned above, the report encompasses several factors that have contributed to the growth of the market in recent years.

Report Scope & Segmentation