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Data Annotation Tools Market Share, Analysis 2027 | Industry Report

Data Annotation Tools Market Analysis Report By Type, By Annotation Type, By Vertical, By Region And Segment Forecasts From 2020 To 2027

Report ID: MN17619945  |  Published: July 2020  |  No of Pages: 100
Format: Electronic (PDF)  |  Industry: Computing & Technology  |  Publisher: Grand View Research

Industry Insights

The global data annotation tools market size was accounted for revenue of USD 390.1 million in the year 2019 and expected to grow at a 26.9% CAGR during the forecast period, from 2020 to 2027. Growing adoption of data annotation tools across various industries such as healthcare, automotive, and retail has majorly driven the market growth. These tools help to augment the value of datasets by adding labels and attribute tags.

Data annotation tools are the combination of data attributes that enable the user to manage data at a particular location and reduces the necessity to write similar rules again at different places. Increasing big data and a large number of data insights is driving the need for adopting artificial intelligence technology, thereby expected to propel the demand for data annotation tools over the forecast period.

Europe data annotation tool marketData annotation plays an important role in improving the application of AI-enabled products used in the healthcare sector. AI-enabled systems used computer vision or machine vision in medical imaging to identify injuries and sense patterns, which helps physicians to generate reports after examining the patients. The database of X-Ray, MRI, and CT scans can be easily observed by AI to identify several injuries. Hence, data annotation plays an important role in discriminating data gained from injured and normal medical images to finalize the patient’s reports.

Technologies such as Machine Learning (ML), Artificial Intelligence (AI) advanced predictive analytics, robotics, and the Internet of Things(IoT) generates a huge amount of data. In these technologies, data efficiency plays a vital role in creating new innovations, economies, and infrastructure in businesses. These factors are expected to create significant growth opportunities in the data annotation market. Due to wide scope of data labeling, market players developing AI-based healthcare applications are involved in collaborating with data annotation tools companies in order to obtain the required database that will help to enhance the deep learning and machine learning capabilities.

On the other hand, inaccuracy of these tools is expected to hamper the market growth. Sometimes data labeled manually may have erroneous labeling and it takes time to identify such erroneous labels, thereby required some additional cost for the entire annotation process. However, the development of various sophisticated algorithms is improving the accuracy of datasets as well as reducing cost and the reliance on manual annotation. This factor is expected to drive the market growth over the next few years.

Type Insights

On the basis of types, the data annotation tool market is fragmented into text, audio, and image/video. The text annotation tool dominated the global market, in 2019 and expected to retain its position through the forecast period. This is due to the increasing application of text annotation tools in clinical research and e-commerce industries. The audio segment is projected to have significant growth in the next few years.

The image/video segment is expected to grow with the highest CAGR from 2020 to 2027. The image/video annotation tools are gaining traction in the medical industry, especially in medical imaging. For instance, in 2017, the overall investment in startups who are engaged in developing machine learning tools was over USD 200 million. Startups like Zebra Medical Vision, Arterys, and Infervision are some of the key players operating in the healthcare data annotation tools industry. 

Annotation Type Insights

On the basis of annotation type, the market is segmented into manual, semi-supervised, and automatic. In 2019, the manual segment held the largest market share in terms of revenue. A manual data annotation tool is used to annotate data by humans. This annotation type is gaining traction due to its several benefits such as high level of integrity, needless efforts for data annotation, offers high accuracy, and chances for innovating intriguing insights regarding data automatic annotation tools that can be later helped to integrate into an algorithm. However, manual annotation tools are time consuming and expensive which is expected to hamper the growth of this segment to some extent in the near future.

The automatic annotation type is projected to witness substantial growth from 2020 to 2027. AI technology plays an important role in data annotation tools, as AI enables to extract complex and high-level insights from the datasets. Hence, increasing the need for extracting and mining data with high accuracy is driving the growth of the AI industry which is expected to further propel the demand for data annotation tools. Besides, the semi-supervised tools are used to classify the unlabeled data or identify labeled data. Therefore, the limited application of this annotation tool type is expected to witness moderate growth over the forecast period.

Vertical Insights

Based on verticals, the data annotation tool market is fragmented into IT, automotive, government, healthcare, financial services, retail, and others. Among verticals, the healthcare segment is anticipated to have significant growth during the forecast period. In the healthcare sector, Artificial Intelligence (AI) technology is used for a wide range of applications such as drug development, gene sequencing, treatment prediction, and diagnostic automation. The quality of training directly impacts the accuracy and efficacy of the algorithm used in AI applications. In the healthcare sector, AI enabled-product access accurate data is an important step. Hence, data annotation tools help to obtain accurate data in AI-enabled product, thereby expected to boost the market growth in the healthcare sector.

Global data annotation tools market The automotive segment is projected to have steady growth during the forecast period. The major factor driving this growth is the increasing adoption of data annotation tools in self-driving vehicles. In addition, rising investment in R&D for enhancement of image annotation in self-driving vehicles is surging the market growth. For example, in 2018, the BMW Group invested the largest share of its revenue for R&D activities. The company is majorly concentrating on the development of electric and autonomous vehicles.

Impact of COVID-19

The growing spread of coronavirus pandemic is projected to urge pharmaceutical and healthcare industries to increase investment in R&D activities. This initiative will support these industries to adopt new technologies such as machine learning, artificial intelligence, and AR/VR technology. These technologies are playing a crucial role to help societies effectively for dealing with the outbreak. Data annotation tools integrated with machine learning and artificial intelligence technologies help to find potential drug molecules to identify, sharing data, fighting misinformation, tracking & forecast COVID-19 outbreak. Thus, afore-mentioned advantages of data annotation tools will fuel the market growth during COVID-19 outbreak.

Moreover, temporary closure of schools and the adoption of remote learning strategy will drive new opportunities for market growth by using virtual reality and augmented reality space throughout the pandemic period.

Regional Insights

In 2019, North America accounted for the largest market share in terms of revenue. This high revenue market share is attributed to rapid geographical expansion and product development strategies implemented by market vendors to sustain in the competitive market. Europe is projected to witness considerable growth over the forecast period. This is owing to enhancement in automotive and retail sectors in this region.

Asia Pacific is estimated to grow at the highest CAGR from 2020 to 2027. In this region, developing economies are expected t0 hold substantial potential for the adoption of data annotation tools, especially financial and healthcare verticals. Growth of the healthcare industry in Asia Pacific is gaining traction due to the rising technological advancement and innovation in healthcare-related programs. Above mentioned factors are projected to fuel the demand for image annotation tools, thereby expected to augment the regional market growth.

Data Annotation Tools Market Share Insights

The prominent players operating in this market are Figure Eight Inc.; Cogito Tech LLC; CloudFactory Limited; Appen Limited; Tagtog Sp. z o.o; Trilldata Technologies Pvt. Ltd. (Data Turks); Annotate.com; LightTagPlayment Inc.; Amazon Mechanical Turk, Inc.; Scale Inc.;Mighty AI, Inc.; Lotus Quality Assurance; Clickworker GmbH; Explosion AI; Alegion; Google, LLC.; and Labelbox, Inc.

Market players are concentrating on investing funds for geographical expansion and product launches. For example, in 2018, a U.S. based company Scale Inc. that offers data annotation tools and solutions raised worth USD 18 million funds to label data gathered by manufacturers developing self-driving cars like Lyft, Inc., and General Motors.

Report Scope



Base year for estimation


Actual estimates/Historical data

2016 - 2018

Forecast period

2020 - 2027

Market representation

Revenue in USD Million and CAGR from 2020 to 2027

Regional scope

North America, Europe, Asia Pacific, South America, and MEA

Country scope

U.S., Canada, Mexico, U.K., Germany, France, China, Japan, India, and Brazil

Report coverage

Revenue forecast, company share, competitive landscape, and growth factors and trends

15% free customization scope (equivalent to 5 analyst working days)

If you need specific information, which is not currently within the scope of the report, we will provide it to you as a part of customization

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Million Insight has segmented the global data annotation tools market report based on type, annotation type, vertical, and region:

• Type Outlook (Revenue, USD Million, 2016 - 2027)
    • Text
    • Image/Video
    • Audio

• Annotation Type Outlook (Revenue, USD Million, 2016 - 2027)
    • Manual
    • Semi-supervised
    • Automatic

• Vertical Outlook (Revenue, USD Million, 2016 - 2027)
    • IT
    • Automotive
    • Government
    • Healthcare
    • Financial Services
    • Retail
    • Others

• Regional Outlook (Revenue, USD Million, 2016 - 2027)
    • North America
        • U.S.
        • Canada
        • Mexico
    • Europe
        • U.K.
        • Germany
        • France
    • Asia Pacific
        • China
        • Japan
        • India
    • South America
        • Brazil
    • Middle East & Africa

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