Natural Language Understanding (NLU) Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024 - 2030)

Natural Language Understanding Market Size

Natural Language Understanding (NLU) Market Trends and Growth Drivers

Digitalization and Adoption of Advanced Technologies Are Key Market Trends

• The rapid digitalization and adoption of advanced technologies are the key trends in the market.
• There is a huge demand for the integration of AI technologies in both the public and private sectors due to their accuracy, ability to expedite response times, capability to provide a meaningful customer experience, and free up staff members to concentrate on customer-centered duties.
• Innovations in AI, big data analytics, and cloud computing are trending in the natural language processing (NLP) market by supplying the infrastructure and processing power required for complex language processing jobs.
• In addition, the increase in the availability of open-source NLP libraries and frameworks has reduced the entry barriers for developers and businesses.
• For instance, chatbots are helpful to a variety of industries, including e-commerce, which depend on them to provide prompt answers to consumer questions.
• Furthermore, smart assistants like Google Alexa and Apple Siri use voice recognition and NLP technologies to respond to humans. These capabilities can be utilized for e-shopping.

Growing Demand for Automation of Customer Services Is a Key driver for Market

• There is a growing demand for the automation of customer services worldwide, which is driving the growth of the NLU market.
• By automating customer service, manufacturers and businesses can create a more efficient and cost-effective system compared to human labor.
• Automated customer services are more efficient in-service processes and can recognize consumer needs accurately, by collecting information, responding to queries, and providing direction.
• Additionally, it is flexible to combine customer support software and AI automation approaches with human operators.
• Moreover, automation in customer services helps in providing larger returns on investment and creating a better customer service experience.
• For instance, chatbots use automated responses to provide customers with a timely and customized experience.

Data Security Concerns Will Hinder Market Growth

• The main challenges associated with NLU are data limitations, ambiguity in language, dealing with negative sentiment, and cross-cultural considerations.
• In addition, data security concerns and the limited interoperability of NLU-based software among various enterprises hinder market growth.
• When dealing with sensitive and personal information, data privacy and security become the major concerns.
• According to the U.S. Department of Health and Human Services (HHS), the HIPAA Privacy Rule establishes national regulations for the protection of specific health information, also known as the Rules for Privacy of Individually Identifiable Health Information.
• The Security Rule also sets nationwide security guidelines to safeguard particular health information stored or transmitted electronically.
• Additionally, NLP aids in avoiding HIPAA non-compliance by mining through unstructured data with a high degree of precision.

Natural Language Understanding Market Analysis

Offering Analysis

• The solutions category will hold the larger market share, of 65%, in 2024 due to the potential of NLU to enhance financial processes, boost operational efficiency, and reduce overall operational costs for businesses.
• In addition, researchers are using deep learning techniques for data and information analysis.
• Moreover, the demand for NLP software tools and platforms is being driven by the need for real-time insights from speech or voice data across various verticals worldwide.
• The services category is expected to grow at a higher CAGR, of 27.5%, during the forecast period.
• It includes consulting, training, system integration and implementation, and support and maintenance, all of which help organizations deploy NLU solutions in their systems.
• Furthermore, to preserve the accuracy and dependability of NLU models, there is an increasing need for services that can help with data preprocessing, annotation, and quality assurance as most of the data available Is unstructured.

Based on offering, the market is categorized into:

• Solutions (Larger Category)
• Services (Faster-Growing Category)
  • Professional
  • Managed

Type Analysis

• The hybrid category will hold the largest market share, of 55%, in 2024 due to this type’s combination of the advantages of both rule-based and ML NLP methods.
• Moreover, there are several options accessible when using the hybrid NLP technique to choose the best course for managing data and making business decisions more quickly.
• The rule-based category is expected to grow at the highest CAGR, during the forecast period because of the extensive use of this type in the healthcare industry to maintain the electronic health record process.

The types analyzed in this report are:

• Rule-Based (Fastest-growing Category)
• Statistical
• Hybrid (Largest Category)

Application Analysis

• The text analysis category will hold the market's largest share, of 40%, in 2024 due to the rise in the pace of advancements in text analysis technologies.
• Text analysis plays a very crucial role for many businesses, as it is used to extract valuable insights from various unstructured data sources.
• Furthermore, with the help of text analysis, more reliable information can be obtained, as it is a fully automated and consistent approach.
• Machine translation is expected to grow at the highest CAGR, of 27.6%, during the forecast period due to the rise in demand for uninterrupted, seamless communication across languages and cultures.
• Businesses are expanding globally, and there is a need for effective translation solutions.
• Additionally, international collaborative initiatives and the emergence of multilingual digital platforms have contributed to the popularity of machine translation applications by spurring innovation and technological advancements in natural language understanding.

The applications analyzed in the report are:

• Chatbots & Virtual Assistants
• Customer Experience Management
• Text Analysis (Largest Category)
• Sentiment Analysis
• IVR & Message Routing
• Data Capture
• Machine Translation (Fastest-Growing Category)
• Others

End User Analysis

• The BFSI category will hold the largest market share, in 2024 due to the rising necessity for personalized consumer experiences, improved fraud detection, and enhanced risk assessment capabilities, which increase the demand for effective communication channels.
• NLU solutions provide BFSI companies with an advanced automated consumer experience with the help of chatbots and virtual assistance, which offer seamless transactions and real-time assistance to the consumer.
• The healthcare & life sciences category is expected to grow at the highest CAGR, during the forecast period because several healthcare organizations are using NLU for the management of patient data.
• Furthermore, the extensive use of the internet and connected devices for patient data capturing is driving the growth of this market.

The end users analyzed in the report are:

• BFSI (Largest Category)
• Healthcare & Life Sciences (Fastest-Growing Category)
• Retail & E-commerce
• IT & ITeS
• Transportation & Logistics
• Government & Public sector
• Media & Entertainment
• Manufacturing
• Telecommunication
• Others

Geographical Analysis

• Geographically, North America will hold the largest market share, of 45%, in 2024.
• The high adoption of digital technologies has led companies and organizations to integrate AI, ML, and deep learning technologies into their business processes to stay ahead in this competitive market.
• Additionally, IBM Corporation, Alphabet LLC, Oracle Corporation, Microsoft Corporation, and other leading market players are present here, which drives the growth of the market in a particular region.
• Geographically, APAC is expected to grow at the highest CAGR, of 27.8%, during the forecast period.
• Governments in the APAC region is taking initiatives to encourage the usage of NLU across the country due to the rapid adoption of advanced technologies such as ML.
• Furthermore, players in the APAC region are offering open-source platforms to build custom solutions based on customer preference.

The regions and countries analyzed for this report include:

• North America (Largest Regional Market)
  • U.S. (Larger and Faster-Growing Country Market)
  • Canada
• Europe
  • Germany (Largest Country Market)
  • U.K. (Fastest-Growing Country Market)
  • France
  • Italy
  • Spain
  • Rest of Europe
• Asia-Pacific (APAC) (Fastest-Growing Regional Market)
  • China (Largest Country Market)
  • Japan
  • India (Fastest-Growing Country Market)
  • South Korea
  • Australia
  • Rest of APAC
• Latin America (LATAM)
  • Brazil (Largest and Fastest-Growing Country Market)
  • Mexico
  • Rest of LATAM
• Middle East and Africa (MEA)
  • Saudi Arabia (Largest Country Market)
  • South Africa
  • U.A.E. (Fastest-Growing Country Market)
  • Rest of MEA

Natural Language Understanding Market Share

• This market is consolidated as most of the market share is occupied by international players.
• There is tough competition between market players due to which all market players are effectively investing in the R&D of the NLU to get a better position in the market globally.
• Companies are collaborating and acquiring other companies to increase their product portfolio.
• In March 2024, Cognizant Technology Solutions Corporation collaborated with LexisNexis Legal & Professionals in the U.S. and Canada to provide cloud and digital engineering services to enhance customer experience.

Natural Language Understanding Market News

• In June 2023, Apple Inc. handed its developers a range of new tools to embed NLP into their apps.
• In February 2023, Amazon Web Services collaborated with Hugging Face, a natural language processing provider, to increase training and deployment of large languages.
• In March 2023, Baidu unveiled ERNIE Bot, a knowledge-enhanced large language model (LLM), and its most-recent generative AI product, which can understand human intentions and respond with precision, reason, and fluency.
• In August 2023, Meta introduced seamless M4T, a multimodal AI model for speech and text translations that can perform speech-to-text, speech-to-speech, and text-to-text translations in up to 100 languages, depending on the task.