Data Annotation Tool Market

Data Annotation Tool Market Outlook (2024 to 2034)

The global data annotation tool market is calculated to reach US$ 1.7 billion in 2024. Over the forecast period (from 2024 to 2034), worldwide revenue from the sales of data annotation tools is forecast to exhibit 14.5% CAGR (compound annual growth rate), leading to a market size of US$ 6.6 billion by 2034-end.

More organizations are now inclined to the 'do-it-yourself' method, which is projected to contribute to the rising deployment of data annotation tools. Further, the growing penetration of machine learning and artificial intelligence solutions in various sectors, such as healthcare, IT, etc., is set to increase demand for data annotation tools in the coming 10 years. More enterprises are leveraging big data analytics for assimilation and streamlining data collection, which generates demand for data annotation tools.

AI and ML models need high-quality and diverse training data to perform efficiently across numerous use areas and domains. These annotation tools enable the development of labeled datasets customized to specific requirements, thus facilitating the training of robust and accurate AI models.

• Worldwide demand for text-based data annotation tools is projected to accelerate at a 13.9% CAGR and reach a market valuation of US$ 3.4 billion by 2034.
• East Asia is set to account for 26% of the data annotation tool market share by the end of 2034.
• Sales of data annotation tools in South Korea are estimated to rise at a CAGR of 16.1% from 2024 to 2034.

Industries such as robotics, autonomous vehicles, etc., rely heavily on annotated data for training algorithms for autonomous operation and critical decision-making in real time. Data annotation tools stimulate real-world scenarios and environments by creating labeled datasets. Multiple organizations prefer outsourcing data annotation tasks to crowdfunding platforms and specialized service providers. It leads to an increased adoption of data annotation tools, that are efficient, scalable, and capable of managing distributed annotation workflows.

Report Attributes	Details
Data Annotation Tool Market Size (2024E)	US$ 1.7 Billion
Forecasted Market Value (2034F)	US$ 6.6 Billion
Global Market Growth Rate (2024 to 2034)	14.5% CAGR
Japan Market Growth Rate (2024 to 2034)	15.9% CAGR
North America Market Share (2034F)	31.5%
Market Share of Manual Tools (2034F)	64%
Key Companies Profiled	Cogito Tech LLC; Google LLC; CloudFactory Limited; Amazon Mechanical Turk Inc.; Clickworker GmbH; Appen Limited; Labelbox Inc.; Annotate.com; Playment Inc.; Alegion; CloudApp

What is Shaping Global Data Annotation Tool Market Growth?

“Deployment of Data Annotation Tools at Larger Scale in Organizations”

Global market growth is owing to the effectiveness of automated data annotation tools along with the growing use of computing resources that are cloud-based for the annotation of large datasets. Further, the increasing instances of data annotation tool deployment by numerous organizations for the labeling and accuracy of volumes of training data generated through AI are some other pivotal causes contributing to market growth in the coming decade.

Increasing requirements for annotated data for the effective operation of machine learning (ML) models and growing investments for advancements taking place in autonomous technologies are anticipated to be the key growth drivers.

What are the Restraints Adversely Impacting Data Annotation Tool Market Size?

“Certain Incidences of Inaccuracy of Data Annotation Tools”

Inaccuracies found in some data annotation tools are anticipated to act as one of the prominent restraints to the data annotation tool market growth. If a given image includes numerous objects and has low resolution, therefore making it a bit difficult to label. Thus, the issue associated with data inaccuracy in the labeling process can lead to erroneous outcomes, which is estimated to add to the entire cost of the annotation process.

How are New Companies Contributing to Market Expansion?

“Constant Advancements in Computer Vision and AI”

Computer vision technologies and AI continue to advance with the complexities associated with annotation tasks. Therefore, startups are expected to invest more in data annotation tools to incorporate advanced features, including active learning, semi-automated labeling, and quality control mechanisms for improving annotation efficiency and accuracy.

Country-wise Insights

Fact.MR, a market research and competitive intelligence provider, states in its recently published study that North America is forecasted to contribute 31.5% share of the global market by 2034. This prominence in the North American region is due to the growing deployment of data annotation tools for assuring quality input data with precision.

Which Aspects Define Market Growth in the United States?

“High Precision and Accuracy of Data Annotation Tools”

Attribute	United States
Market Value (2024E)	US$ 300 Million
Growth Rate (2024 to 2034)	14.2% CAGR
Projected Value (2034F)	US$ 900 Million

The United States is estimated to account for 45.6% of the North American market share by the end of 2034. The rising adoption of manual data annotation tools for ensuring high-quality input data is anticipated to be one of the salient causes of strengthening market growth. Increased accuracy and high precision are some other pivotal factors contributing to increased demand for data annotation tools.

Why are Suppliers of Data Annotation Tools Investing in China?

“Expansion of Healthcare Sector Leading to Rising Adoption of Data Annotation Solutions”

Attribute	China
Market Value (2024E)	US$ 200 Million
Growth Rate (2024 to 2034)	15.3% CAGR
Projected Value (2034F)	US$ 800 Million

China is set to hold a 47.5% share of the East Asian market by 2034, as asserted in the research report by Fact.MR. The growing adoption of data annotation tools, especially in the financial and healthcare service verticals is widening opportunities for players. The expansion of the healthcare sector is owing to the increasing adoption of innovative healthcare access programs, which is further projected to stimulate data annotation tools market share.

Category-wise Insights

Certain datasets contain nuanced or complex information that needs human context and judgment to be labeled accurately. Therefore, manual tools ensure high-quality annotations for such types of data, particularly in domains, including legal, finance, and healthcare where precision is critical.

Which Type of Data Annotation Tool is Most Widely Used?

“Rising Use of Annotation Tools for Text-based Data”

Attribute	Text-based Annotation Tools
Segment Value (2024E)	US$ 900 Million
Growth Rate (2024 to 2034)	13.9% CAGR
Projected Value (2034F)	US$ 3.4 Billion

Text-based data annotation tools are anticipated to account for 52% share of the global market by 2034-end. The rising deployment of these tools in clinical research applications and e-commerce is attributed to the requirement to fine-tune AI's capacity to recognize patterns of text and semantic connections of respective data. These efficiencies are projected to positively influence data annotation tool market trends.

Which Annotation Type is Preferred More by End Users?

“Growing Deployment of Manual Annotation Tools to Discovering Intriguing Insights”

Attribute	Manual Annotation Tools
Segment Value (2024E)	US$ 1.2 Billion
Growth Rate (2024 to 2034)	13.2% CAGR
Projected Value (2034F)	US$ 4.2 Million

Among numerous other types, manual data annotation tools are projected to hold a 64% share of the global market revenue by the end of the forecast period in 2034. The enhanced insights and accuracy of manual data annotation tools are anticipated to be one of the prominent factors driving development. Further, the increasing popularity of manual data annotation tools is attributed to their high level of integrity, higher chances of discovering some intriguing insights related to the data in comparison to automatic annotation, and minimal data annotation efforts.

Competitive Landscape

Some of the prominent suppliers of data annotation tools are coming up with more effective services to generate leads. They are increasing their expenditure on new product development, providing quality products, and managing systems utilized in the supply chain. Moreover, acquisitions, collaborations, partnerships, etc., are some other strategies adopted by players.

For instance :

• Appen Limited is a company based in Australia and offers quality training data for numerous organizations building AI systems. In August 2021, the company announced the acquisition of Quadrant, who is dealing in corresponding compliance services, mobile location data, and Point-of-interest data.
• CloudApp is a cross-platform used prominently for the modern workplace. In May 2021, the company announced a collaboration with Slack as well as Atlassian products Confluence and Jira.

Key players in the data annotation tool industry include Cogito Tech LLC, Google LLC, CloudFactory Limited, Amazon Mechanical Turk Inc., Clickworker GmbH, Appen Limited, Labelbox Inc., Annotate.com, Playment Inc., Alegion, and CloudApp.

Segmentation of Data Annotation Tool Market Research

• By Data Type :

  • Text
  • Images/Videos
  • Audio

• By Annotation Type :

  • Manual Data
  • Semi-supervised
  • Automatic

• By Vertical :

  • IT
  • Automotive
  • Government
  • Healthcare
  • Financial Services
  • Retail

• By Region :

  • North America
  • Europe
  • East Asia
  • Latin America
  • Middle East & Africa
  • South Asia & Oceania