Natural Language Processing Market

Natural Language Processing Market Overview

The global Natural Language Processing (NLP) Market size was valued at USD 25.93 billion in 2023 and is predicted to reach USD 189.62 billion by 2030 with a CAGR of 32.5% from 2024-2030. The natural language processing (NLP) market refers to the industry primarily focused on the deployment, development and commercialization of NLP technologies for business applications. This includes tools and solutions that enables machine to analyse, interpret, and respond to human language for proper business operations. Businesses adopt NLP for various applications including customer service automation, sentiment analysis, content categorization, data extraction, and communication enhancement. NLP includes a wide range of software and services designed to process and analyse large volume of natural language data. 

Market Dynamics and Trends

The demand for natural language processing is increasing owing to the rising adoption of digital technology-based software among new start-ups and global players. Businesses leverage NLP to enhance customer interaction, automate processes, and gain insights from large volume of datasets. For instance, in May 2022, Start-up One AI Inc. launched new natural language processing technology to help businesses add natural language processing features to their business applications. One AI, a company specializing in natural language processing (NLP), secured USD 8 billion in funding to support NLP projects. The funding enabled the company to further develop and enhance its NLP technology, which is designed to ease the complexity of processing and understanding human language. This investment highlights the growing importance of NLP in various industries and the potential for advancements in language processing capabilities.

Also, the growing adoption of cloud-based services that makes NLP technologies more accessible and scalable for businesses is significantly fueling the growth of the natural language processing market demand. According to the Eurostat report, around 42.5% of EU enterprises bought cloud computing services in 2023, mostly for e-mail, storage of files and office software. Cloud platforms offer cost-effective and on demand computing power and storage that enables businesses to deploy and manage NLP applications without upfront investment in infrastructure, thus enhancing operational efficiency and driving market growth.

However, the rising data security concern with limited interoperability of the NLP-based algorithms is restraining the growth of the market.  On the other hand, the integration of NLP with emerging technologies such as machine vision, and speech recognition aims to attain a holistic understanding of human language. This integration will pave the way for immersive and interactive application that includes virtual assistants and advanced chatbots. These advancements enable systems to interact with human language in natural and human like manner is expected to create ample opportunities for the market growth in the forthcoming years.

Market Segmentation and Scope of Study

The global natural language processing market report is segmented on the basis of component, enterprise size, technology, deployment, industry vertical, and region. On the basis of component, the market is divided into software and services. Based on enterprise size, the market is classified into small & medium-sized enterprises and large enterprises. Based on the technology, the market is segmented into interactive voice response, optical character recognition, text analytics, speech analytics, classification & categorization, and pattern & image recognition. On the basis of deployment, the market is categorized into on-premises, cloud, and hybrid. Based on industry vertical, the market is divided into healthcare, retail, telecom, banking, financial services & insurance, automotive & transportation, advertising & media, and manufacturing. Regional breakdown and analysis of each of the aforesaid classifications include regions comprising of North America, Europe, Asia-Pacific, and RoW.

Geographical Analysis

North America dominates the global natural language processing market share and is potently expected to remain dominant in the market throughout the forecast period. This is attributed the growing adoption of artificial intelligence and machine learning technologies in various industries including automotive, finance, and healthcare across the region, providing technological foundation for advanced NLP applications. According to the latest report published by the World Economic Forum, the total investment by venture capital firms in AI totaled to USD 290 billion over the last 5 years. These technologies provide more accurate and efficient processing of large volume of data enabling businesses to leverage advanced technologies for enhanced data analysis, customer interaction and decision making.  This integration accelerates the adoption of NLP solutions, leading to significant growth in the market.

Also, the presence of key market players such as Google, Microsoft, and Meta that are adoption strategies including product launches is further driving the growth of the market in the region. For instance, in January 2024, Microsoft launched premium AI copilot service for individuals, enhancing user productivity through NLP capabilities. This development aimed to integrate seamlessly with existing Microsoft 365 applications, offering personalized AI-driven assistance. This introduction of this service marked a significant advancement in the NLP market, showcasing Microsoft’s commitment to leveraging AI to improve user experiences and efficiency. 

On the other hand, Asia-Pacific shows substantial growth in the global market owing to the growing digitalization in various countries such as China, India, and Japan. Businesses are leveraging NLP to enhance customer service through chatbots and virtual assistants to automate routine business tasks such as data entry and analysis, and to handle large volume of datasets. According to a report published by GSMA, the mobile data consumption in Asia-Pacific is expected to grow four-fold by 2024, fueled by increased smartphone adoption and availability of affordable high-speed networks. This transformation creates the need for efficiency, scalability, and enhanced interaction capabilities in an increasingly digital economy, pushing businesses to integrate advanced NLP solutions to stay competitive and meet evolving consumer expectation.

Moreover, the rapid growth of the e-commerce sector in the region, generating large volume of unstructured data is further accelerating the natural language processing market growth. As per a report published by the McKinsey & Company, the Southeast Asian market is projected to triple at a compound growth rate of 22% and will reach around USD 230 billion in gross merchandise volume between 2024 to 2026. NLP enables sentiment analysis of customer feedback on social media, provides valuable marketing insights by analyzing trends and preferences, and enhances customer engagement through personalized interactions. Thus, harnessing NLP, companies can better understand and respond to customer needs, improve marketing strategies, and drive growth in the competitive digital landscape of e-commerce and social media platforms.

Competitive Landscape

The natural language processing industry includes several key players such as IBM Corporation, Microsoft Corporation, Google LLC, Amazon Web Services, Meta, 3M, Baidu, Apple Inc, SAS Institute, Oracle Corporation and among others. These market players are adopting strategies such as product launches to maintain their dominance in the market.

For instance, in August 2023, Meta launched redefining natural language processing model, LLaMA 2, a powerful language model that promises to redefine the field of NLP. LLaMA 2 is the successor to the original LLaMA model, which was introduced by Meta in 2022 and quickly gained attention for its impressive performance on a wide range of NLP tasks.

in December 2022, Inbenta Technologies, launched new solution to increase revenue rates with conversational AI. This solution helps business in improving service, anticipate customer intent and reduce customer service and queries and supports costs by quick answers.

Also, in November 2021, IBM Corporation launched new natural language processing updates for IBM Watson Discovery to help business users enhance customer care and accelerate business processes by uncovering insights.

Key Benefits

• The report provides quantitative analysis and estimations of the natural language processing market from 2024 to 2030, which assists in identifying the prevailing market opportunities.

• The study comprises a deep-dive analysis of the current and future natural language processing market trends to depict prevalent investment pockets in the market.

• Information related to key drivers, restraints, and opportunities and their impact on the market is provided in the report. 

• Competitive analysis of the players, along with their market share is provided in the report.

• Value chain analysis in the market study provides a clear picture of roles of stakeholders. 

Natural Language Processing Market Key Segments

By Component 

• Software 

• Services

By Enterprise Size

• Small & Medium-sized Enterprises 

• Large Enterprises

By Technology

• Interactive Voice Response

• Optical Character Recognition

• Text Analytics

• Speech Analytics

• Classification & Categorization

• Pattern & Image Recognition

By Deployment

• On-Premises

• Cloud

• Hybrid

By Industry Vertical

• Healthcare

• Retail

• Telecom

• Banking

• Financial Services & Insurance

• Automotive & Transportation

• Advertising & Media

• Manufacturing

By Region

• North America

  • The U.S.

  • Canada

  • Mexico

• Europe

  • The UK

  • Germany

  • France        

  • Italy        

  • Spain        

  • Denmark        

  • Netherlands        

  • Finland        

  • Sweden        

  • Norway        

  • Russia        

  • Rest of Europe    

• Asia-Pacific

  • China

  • Japan

  • India

  • South Korea

  • Australia

  • Indonesia

  • Singapore

  • Taiwan

  • Thailand

  • Rest of Asia-Pacific

• RoW

  • Latin America

  • Middle East

  • Africa

REPORT SCOPE AND SEGMENTATION:

Parameters	Details
Market Size in 2023	25.93 Billion
Revenue Forecast in 2030	189.62 Billion
Growth Rate	32.5% from 2023 to 2030
Analysis Period	2023–2030
Base Year Considered	2023
Forecast Period	2024–2030
Market Size Estimation	Billion (USD)
Growth Factors	The rising adoption of digital technology-based software fuels the market growth. The growing adoption of cloud-based services is driving the growth of the market.
Countries Covered	28
Companies Profiled	10
Market Share	Available for 10 companies
Customization Scope	Free customization (equivalent to up to 80 working hours of analysts) after purchase. Addition or alteration to country, regional, and segment scope.
Pricing and Purchase Options	Avail customized purchase options to meet your exact research needs.

KEY PLAYERS

• IBM Corporation

• Microsoft Corporation

• Google LLC

• Amazon Web Services

• Meta

• 3M

• Baidu

• Apple Inc

• SAS Institute

• Oracle Corporation