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The global natural language processing (NLP) market size was valued at USD 20.80 billion in 2021. The market 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. 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. Based on our analysis, the global market exhibited a decline of 1.0% in 2020 as compared to 2019.
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,
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.
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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,
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.
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,
Data Security Concerns is Likely to Hinder the 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.
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.
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,
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.
Text Analytics Segment to Hold Dominant Market Share Owing to Rising Development of Consumer Analytics
The 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.
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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,
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.
North America Natural Language Processing Market Size, 2021 (USD Billion)
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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.
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 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,
An Infographic Representation of Natural Language Processing (NLP) Market
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The 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.
Value (USD billion)
By Deployment, Enterprise Size, Technology, Industry Vertical, and Region
By Enterprise Size
By Industry Vertical
The global market is predicted to reach USD 161.81 billion by 2029.
In 2021, the market value stood at USD 20.80 billion.
The market is projected to grow at a CAGR of 18.1% during the forecast period (2022-2029).
The cloud segment is expected to show the highest CAGR during the forecast period.
North America dominated the market owing to rising investment in digitalization and the presence of several leading players in the market.
By technology, text analytics segment leads the market owing to the huge amount of data from social media, websites, and others.
Data security concerns and limited interoperability with existing software and its infrastructure restrain the market growth.
Rising adoption of cloud-based NLP and AI-based software among small & medium businesses is the critical factor driving the market.
Some of the top players in the market are Hewlett Packard Enterprise Development LP, Amazon.com, Inc., Google, LLC (Alphabet), SAP SE, IBM Corporation, and Inbenta Holdings Inc.
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