Natural Language Processing Market Size, Share & COVID-19 Impact Analysis, By Deployment (On-Premises, Cloud, and Hybrid), By Enterprise Size (Small & Medium-sized Enterprises and Large Enterprises), By Technology (Interactive Voice Response, Optical Character Recognition, Text Analytics, Speech Analytics, Classification and Categorization, Pattern and Image Recognition), By Industry Vertical (Healthcare, Retail, High Tech and Telecom, Banking, Financial Services, and Insurance, Automotive & Transportation, Advertising & Media, Manufacturing), and Regional Forecasts, 2022-2029

The global natural language processing market size was valued at USD 20.80 billion in 2021 and is projected to grow from USD 26.42 billion in 2022 to USD 161.81 billion by 2029, exhibiting a CAGR of 18.1% during the forecast period. Based on our analysis, the global market exhibited a decline of 1.0% in 2020 as compared to 2019. The global COVID-19 pandemic has been unprecedented and staggering, with natural language processing experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels.

The report comprises various Natural Language Processing (NLP) products from key players such as Hewlett Packard Enterprise Development LP, Amazon.com, Inc., Google, LLC (Alphabet), SAP SE, IBM Corporation, and others. Natural language processing consists of the combination of the computational rule-based modeling of the human language that represents data in machine learning, statistical, and deep learning models. These players offer NLP applications such as speech recognition, sentiment analysis, virtual agents & chatbots, and text analytics to provide meaningful sentences and phrases from internal representations in the form of natural language. NLP is required when an intelligent system such as a robot performs as per user instructions. Interactive voice response is an automated phone system that interacts with callers, routes calls to appropriate recipients, and collects information. The IVR system takes action based on the caller’s response via voice output or telephone keypad. Optical character recognition technology extracts and uses data from camera images and scanned documents. Rising digital transformation and adopting these tools allow businesses to transform business modules, driving the natural language processing market growth.

The leading players are developing advanced technology-based natural language processing for the healthcare and automotive industries. For instance,

• September 2021– Melax Tech AI-based NLP processing technology software provider launched Mercury. The new software provides clinical textual medical data that facilitates quantitative analytics in the healthcare and pharmaceutical industry. Mercury allows rapid access to text data from a variety of sources.

COVID-19 IMPACT

Rising Adoption of Advanced AI-based Platform during the Pandemic Aided the Market Growth

The COVID-19 pandemic has negatively impacted the global economy as governments worldwide have imposed lockdowns and restrictions. However, the COVID-19 pandemic has pushed businesses worldwide to shift to digital platforms and implement digital technologies-based solutions to streamline their business operations. Enterprises implemented digital strategies for automating their business processes. Globally, market revenue slightly increased by 0.2%, showing USD 16.43 billion in 2020 amid pandemic.

Rising adoption of digital strategies by the key players with implementation of favorable government policies for digital technology adoption has strengthened the market growth. For instance, as per the IDC report in 2020, the global digital technology transformation funding reached USD 1.5 trillion owing to a rising investments by SMEs for digitalization.

Post-pandemic, market players, such as Amazon Web Service, IBM Corporation, Microsoft Corporation, and others, have reported upward sales of natural language services. For instance, in 2021, the productivity and business processes segment of Microsoft Corporation, which includes Artificial intelligence-related services, increased by 16%. Also, in April 2021, Microsoft Corporation acquired Nuance Communication Inc. for USD 19.7 billion.

Such an increase in the sale of these services of the leading players in the market is expected to strengthen the market growth during the forecast period.

LATEST TRENDS

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Rising Digitalization and Adoption of Advanced Technologies to Aid Market Growth

The rising adoption of digital technology-based software among enterprises and global businesses is driving the market growth. Several leading players are investing in developing advanced technology-based NLP software to optimize business operations. For instance,

• In April 2021, Apple Inc. planned to launch next generation 5G infrastructure. The company announced an investment of around USD 430 billion to develop 5G for the U.S. economy for the next five years. 


• In May 2022, Startup One AI launched its new natural language processing technology business. Technology investors Ariel Maislos, Tech Aviv, and SentinelOne Inc., several other unnamed venture capital firms, and angel investors raised USD 8 million to establish this company. This company provides various services in natural language processing. This company was founded in 2020 to offer multiple artificial intelligence-related services.

Due to such increasing demand for these tools amid COVID-19 pandemic, market players are likely to increase spending on advanced technologies and protocols. This factor is likely to encourage the market player’s revenue to expand the product portfolio, increase brand awareness, and partner with established companies to stay competitive in the market post-COVID-19 outbreak.

DRIVING FACTORS

Rising Adoption of Cloud-based NLP and AI-based Software among Small & Medium Businesses to Aid Market Growth

Organizations are adopting cloud-based NLP solutions to reduce the time required for the collection of insightful data and processing. Chabots and voice search natural language processing technology collect data using various AI-powered and cloud-based tools such as interactive voice recognition systems. This data helps process various predictive and market analyses for a particular product.

On the other hand, technological advancement in AI has drastically transformed Big Data analytics and has driven efficient services by automating time-consuming data collection tasks. Several leading players are launching AI-based software tools for automating businesses around the globe. For instance,

• In July 2022, SecureKloud Technologies introduced DataEdge, a cloud-based and AI-powered data analytics platform that enables organizations to power insights for decision-making. Rising cloud transformation solutions with the DataEdge platform provide scalable, highly modular, and API-driven solutions for unlocking data-powered insights. 


• In September 2021, DataRobot launched an AI-powered and cloud-based DataRobot unified tool for automating the next generation of intelligent businesses. DataRobot AI-based cloud tool serves as a single platform that accelerates the delivery of AI & NLP solutions for production for organizations. DataRobot AI Cloud platform enhances the productivity of business operations in production and quickly builds applications to deliver critical business insights.

RESTRAINING FACTORS

Data Security Concerns is Likely to Hinder the Natural Language Processing Market Growth

Rising data security concern with limited interoperability of the NLP-based software among enterprises hinders the market growth. This software is used for performing authorship attribution and sentiment analysis as a core function of Apple’s Siri and IBM’s Watson. However, these are subjected to security concerns that hinder the market growth. The average cost of cybersecurity and malware attacks of any firm is around USD 2.6 million, which is likely to decline the market growth.

SEGMENTATION

By Deployment Analysis

 Cloud Segment to Dominate Owing to Rising Adoption of Cloud Software and Services

The market scope includes on-premises, cloud, and hybrid based on deployment. Cloud is expected to have the largest share in 2021 and is growing with the highest CAGR during the forecast period due to the rising adoption of cloud-based services among enterprises around the globe. According to the Flexera State of the Cloud Report in 2022, around 81% of enterprises adopted a multi-cloud strategy for their businesses. Also, in 2021, more than 67.0% of all enterprises will use cloud-based infrastructure.

Further, hybrid segment is expected to grow with a moderate CAGR during the forecast period owing to a surge in AI-based tools and software adoption. Also, increased annual spending on artificial intelligence & emerging technology by developing countries is driving the market globally.

By Enterprise Size Analysis

Large Enterprises to Dominate Owing to Rising Development of NLP Tools

Based on enterprise size, the market scope includes Small & Medium-sized Enterprises (SMEs) and large enterprises. Large enterprises segment had the largest market share in 2021. This factor is primarily owing to the rising development of advanced NLP platforms among large enterprises. For instance,

• In November 2021, IBM Corporation launched its new NLP upgrade patch for its IBM Watson Discovery. This new updated feature was designed to support users from various industry verticals such as BFSI, government, public service, and defense to enhance customer service and optimize business processes by synthesizing information and covering insight from multiple documents.

Also, SMEs are expected to grow at the highest CAGR during the forecast period. This factor is primarily owing to the rising adoption of digital transformation by digital tech start-ups and SMEs around the globe.

By Technology Analysis

Text Analytics Segment to Hold Dominant Market Share Owing to Rising Development of Consumer Analytics

The natural language processing market is segmented into interactive voice response, optical character recognition, text analytics, speech analytics, classification and categorization, pattern and image recognition, and others (auto coding, professional services, and others) based on technology. Text analytics segment is expected to have the largest share in 2021 due to the rising development of these analytics tools by the key players in the market. For instance, in February 2022, Qina launched the QinaVer text analytical tool to help companies to innovate personalized nutrition. Text analytics tools use machine learning and natural language processing to use unstructured data and analyze data sentiments, topics, and key phrases. Such rising use and development of the next-generation text analytics tools are expected to strengthen the market growth.

Interactive voice response segment is expected to grow with the highest CAGR during the forecast period owing to rising adoption during the COVID-19 pandemic. During the pandemic, interactive voice response is used by healthcare providers to assist the patients in providing necessary treatment to cure COVID-19-infected patients. Also, several countries’ governments are developing advanced technology-based interactive voice recognition systems for assistance during the pandemic. For instance,

In April 2020, an Interactive Voice Response System (IVRS) was developed by the State Health Department in Tamil Nadu, India, in collaboration with the Department of Telecom. This platform was designed to assist patients with COVID-19 infections.

By Industry Vertical Analysis

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High Tech and Telecom Segment to Dominate Backed by Rising Advanced AI-based Tools Adoption by Companies

The market scope includes healthcare, retail, high tech and telecom, Banking, Financial Services & Insurance (BFSI), automotive & transportation, advertising & media, manufacturing, and others (government, energy & power, and others) based on industry vertical. Among these, high tech and telecom segment is expected to have the largest share owing to rising investments and development of the IT companies with AI-based tools for the digital transformation of businesses. For instance,

• In November 2020, high technology start-up Expert.ai launched advanced tools that build for application development and Advanced Edge AI. Expert.ai found two products named text analytics and KMWorld for simplifying the natural language processing applications developments. The company enables seamless deployment of artificial intelligence technology on-premise, hybrid, or private cloud.

The healthcare sector is expected to grow at the highest CAGR during the forecast period owing to the rising adoption of mature technologies and IT software such as predictive analytics, automation tools, NLP tools, and cloud-based software in the healthcare sector. Using NLP, medical researchers can monitor popular online comment boards and better understand public concerns during the COVID-19 pandemic, which helped develop the COVID-19 vaccine.

REGIONAL INSIGHTS

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Geographically, the market is fragmented into five chief regions, Asia Pacific, North America, the Middle East & Africa, Europe, and Latin America. They are further classified into countries.

North America is expected to dominate the global natural language processing market share during the forecast period, owing to the presence of leading players such as IBM Corporation, Alphabet LLC, Oracle Corporation, Microsoft Corporation, and others. These players are developing advanced technology-based NLP platforms for optimizing business operations by adopting several strategies such as mergers, acquisitions, and partnerships.

• In May 2020, Apple Inc. completed the acquisition of machine-learning start-up Inductiv Inc. The aim is to improve its speech recognition and smart assistant Siri. The investment assists Apple in identifying, monitoring, and correcting errors in Siri data and accordingly sets the tasks.


• In 2020, Intel Corporation completed a partnership with Alibaba Group Holding Limited (China) and developed advanced tracking technology based on an AI platform to be deployed at the Olympic Games 2020.

Europe is expected to grow at a moderate CAGR during the forecast period due to the rising cloud computing adoption among enterprises in Europe. According to the European Commission Organization, around 42% of European enterprises have adopted cloud-based services in 2021 and are proliferating. Such an increase in the adoption of cloud services is expected to strengthen the market growth. 

Asia Pacific is expected to grow with the highest CAGR due to rising NLP in Asia Pacific, which is anticipated to show significant growth in coming years, owing to the growing focus on adopting AI, deep learning, and machine learning technology by countries. The Japanese government is taking various initiatives to encourage NLP across the country, along with the surge in adoption of machine learning services, which play a vital role in driving the market in Japan. Players in the region focus on offering open-source platforms for building custom these solutions according to customer requirements and offering advanced software tools or API solutions with advanced features per user requirements.

Latin American countries, such as Mexico, Brazil, and others, are expected to grow with moderate CAGR owing to the rising adoption of the advanced NLP platform among large and small-scale enterprises. According to the IDC Report in 2020, around 25% of large enterprises in Brazil are already using AI and machine learning in their projects to manage their work efficiently and generate more revenue.

The Middle East & Africa is growing with moderate CAGR owing to the rising digitalization of and adoption of advanced technologies in the Gulf countries. GCC governments’ ambitious plans to position themselves at the forefront of the digital revolution will positively impact this market. According to a survey by Microsoft Corporation, 30% of companies in the region have started using NLP to improve customer experience.

KEY INDUSTRY PLAYERS

Key Players in the Market are Investing in Adopting Advanced NLP through Several Strategies

The global market is consolidated with leading players such as Hewlett Packard Enterprise Development LP, Amazon.com, Inc., and Google, LLC. (Alphabet), SAP SE, IBM Corporation, and others. These crucial players are investing and inventing advanced lighting by adopting corporate strategies such as partnerships, mergers, acquisitions, and collaborations. For instance,

• In July 2022, SAP SE acquired Askdata, a search-driven Analytics Company. With this acquisition, the company will assist businesses in making well-informed choices with the support of AI-driven natural language searches.


• In July 2021, SAP SE and Google Cloud declared a strategic collaboration to assist customers in transferring critical business systems to the cloud, accomplish business transformations, and increase existing business systems with Google Cloud’s competency in machine learning and artificial intelligence.


• In June 2021, Inbenta started a partner ecosystem to work jointly with enterprise partners interested in automating business processes and reshaping customer service using AI.


• In October 2020, Inbenta declared a partnership with IntelePeer to provide more intelligent workflows for clients.

List of Key Companies Profiled:

• Hewlett Packard Enterprise Development LP (U.S.)


• Amazon.com, Inc. (U.S.)


• Google, LLC. (Alphabet) (U.S.)


• SAP SE (Germany)


• IBM Corporation (U.S.)


• Inbenta Holdings Inc. (U.S.)


• Linguamatics (U.K.)


• SoundHound AI, Inc. (U.S.)


• NetBase Quid, Inc. (U.S.)


• JUST AI LIMITED (U.K.)

KEY INDUSTRY DEVELOPMENTS:

• July 2022 - SoundHound collaborated with LG to develop Voice AI Technology for next-gen in-vehicle infotainment systems, which will encourage OEMs to create new revenue streams.


• July 2022 - HPE GreenLake partnered with AntemetA, a French cloud service provider, for disaster recovery services to create a secure, flexible infrastructure that secures the data.


• September 2021 - NetBase Quid joined an exclusive group of companies as part of the Twitter Official Partner Program to avail advanced technologies for customers.


• November 2020 - Just AI launched the first Voice Assistant Platform using Kotlin Programming Language, which augments this language with natural language understanding.


• February 2020 - Just AI launched JAICF, which brought Kotlin Language to RASA, a python language, allowing the developer to connect with voice-first applications and the world of conversational.

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The natural language processing market report offers qualitative and quantitative insights into the market and a detailed analysis of the size & growth rate for all possible segments. It also elaborates on market research, dynamics, emerging trends, and the competitive landscape. Key insights offered in the report are the adoption of automation by individual segments, market intelligence, recent industry developments such as partnerships, mergers & acquisitions, consolidated SWOT analysis of key players, business strategies of leading market players, macro and micro-economic indicators, and key industry trends.

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