AI GOVERNANCE MARKET ANALYSIS

The global AI governance market size was valued at USD 131.9 million in 2022 and is anticipated to witness a compound annual growth rate (CAGR) of 46.60% from 2022 to 2030. The rise in regulatory compliances around AI, increase in demand for better security of data and systems, and advancements in ML algorithm and deep learning frameworks are some of the major factors driving the growth of this market.

Global AI Governance Market: Regional Insights

North America is expected to gain major share in the global AI governance market during the forecast period. This can be attributed to growing adoption of AI by private and government agencies. In past few years, the lawmakers and government agencies in the U.S. are developing AI and automated systems strategies as well as policies to aim the balancing of tension between preventing harmful impacts of AI technologies and encouraging positive competitiveness and innovations. Moreover, early adoption of technologies such as machine-learning by companies in Canada is also expected to drive growth of the market in North America region.

Moreover, Asia Pacific is also expected to show substantial growth in the global AI governance market during the forecast period. China is likely to witness accelerated growth in AI research, as most of the Chinese AI organizations are embracing open-sourcing, clearing the path for further innovations. The government of countries in this region are accelerating construction of novel infrastructure projects such as 5G networks and data centers. Moreover, growing implementation of AI governance by countries such as India is also expected to drive growth of the market across the region.

Figure 1: Global AI Governance Market Share (%), By Region, 2022

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Global AI Governance Market Drivers:

Rise in demand for transparency in AI decision making to drive the market growth

As per the IBM Institute for Business Value survey of global executives, the average expenditure on Artificial Intelligence is expected to increase in the coming three years. The use of AI has increased, and with it has increased the risk related to data responsibility, thus, transparency is becoming a major enabler for mitigating issues of trust, fairness, and discrimination. All these factors are gaining increasing attention in recent times. For instance, as per another survey by IBM, 81% consumers are concerned over the previous year with the way organizations are using their data, and 75% of consumers are less likely to put their trust in companies with their personal data. Thus, the growing demand for transparency in AI decision making is expected to drive growth of the global AI governance market during the forecast period.

Growing expansion of government initiatives for leveraging the AI technology to fuel the market pace

AI and ML are known to be two of the most transformative technologies in the space of computing that are changing the entire world. Governments of several countries across the globe are grappling to manage expanded budgets and pressing public financing requirements in the downturn, due to this, AI is redefining all the possible things with optimizations of restricted resources and efficiently addressing complex issues. Thus, growing initiatives by governments around the world to leverage Artificial intelligence technology is expected to boost growth of the global AI governance market during the forecast period.

Global AI Governance Market Opportunities:

Growing implementation of automation and AI-based systems by companies is expected to offer several growth opportunities in the global AI governance market during the forecast period. The use of AI and data that it provides will become an important aspect to the future of different industries such as Defense, Healthcare, Automotive, Government, and several others will enable developments in the market. Thus, companies are increasingly focusing on implementation of automation and AI-based systems into their businesses in order to enhance time and efficiencies. This will further create multiple growth opportunities in the global AI governance market during the forecast period.

Growing investment in artificial intelligence for governance is expected to create lucrative environment for growth opportunities in the global AI governance market during the forecast period. Organizations are prioritizing AI for governance as a major target for investments for innovations in the market. Several companies are focusing on streamlining their operations and increasing their efficiency, along with finding new insights and connections in their data. These factors are likely to drive the demand for AI governance in the future, which is expected to create growth opportunities in the market.

Global AI Governance Market Trends:

Increasing use of AI in retail is a growing trend in the market

The retail industry around the world is witnessing major transformation. Customers are becoming digital natives, due to which their preferences for channel and purchasing habits continue to change. The transformation to digital is creating worries around the data driving the digital transformation. This in turn is creating demand for appropriate AI governance for improving overall retail performance, to overcome challenges, as well as to lead the highly powerful retail competition. Thus, this trend is expected to continue in the market in the coming future.

Services segment is gaining traction in the market

The integration services segment is likely to gain dominating share in the global AI governance market during the forecast period. The implementation of AI involves various technicalities, and the demand for integrating AI governance solutions into the IT infrastructure of companies is also growing all over the world. These factors in turn are driving the growth of service segment among other components. This in turn is expected to augment growth of the global AI governance market during the forecast period.

Global AI Governance Market Restraints:

Lack of expertise and skills for operating AI to hinder market growth

Many organizations invest fully in AI; however, more than half of them lack needed in-house skilled talent for executing their strategy. According to the Coherent Market Insights, 93% of the companies in the U.S. and U.K. consider AI to be a business priority and already have projects planned and in production. However, 51% of these companies lack right mix of skilled set for operating AI solutions in order to executing their strategies. Thus, shortage of skilled workforce is a major barrier in progression of AI initiatives. This factor in turn expected to hinder growth of the global AI governance market during the forecast period.

Stringent guidelines and ethical principles for AI to hamper the market growth

Several government agencies and research labs along with AI solution providers are involved in in-depth research for building comprehensive ethical principles for AI technology. From 2017, governments of several countries along with processional bodies, AI companies, and regulatory systems have imposed various principles and guidelines that offer a basic stage for showing the path to build robust AI regulations. However, even with the proliferation of these principles, the comprehensive guidelines are still not there. Thus, establishment of comprehensive ethical principles for AI is expected to restrain growth of the global AI governance market during the forecast period.                                  

Figure 2: Global AI Governance Market Share (%), By Component, 2022

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Global AI Governance Market Segmentation:

The global AI governance market report is segmented into Component, Deployment, and End-User Vertical.

Based on Component, the market is segmented into Solution and Services. Out of which, Solution is expected to dominate the global market over the forecast period and this is attributed to the presence of well-diversified market players. Such vendors are focusing on providing new, innovative solutions consistently in line with technological development to cater the growing customer demand in several end-user industry verticals. For instance, in October 2021, Datatron announced advancement in its MLOps and AI governance solution, which makes the cataloging, operationalizing, monitoring, and governing AI/ML models easy for enterprises.

Service segment is also expected to witness significant growth in the near future and this is owing to the rise in adoption of AI governance solutions, leading to rise in demand for software integration services, installation services, and deployment, maintenance, and upgradation services. Implementation of AI governance platforms and software involves technicalities, which along with the demand for integrating them into IT infrastructure of clients is likely to drive growth of the integration services.

Based on Deployment, the market is segmented into On – Premise and Cloud. Out of which, Cloud is expected to dominate the global market over the forecast period and this is attributed to the various advantages of using cloud deployment of AI governance. One of the major benefit of cloud-based services is the ability of allocating assets precisely. With this users can remotely audit and monitor the observance of pre-existing rules along with IT guidelines adhering to existing services contracts with Cloud service providers. Thus, the segment is likely to show strong growth.

On Premise segment is also expected to witness significant growth in the near future and this is owing to the demand for conventional on-premise environment that offers single monolithic network with appropriate security measures. Even though deployment of cloud solutions has increased with time, it still lacks proper security measures for protecting the data and applications for cloud users.

Based on End-User Vertical, the market is segmented into Healthcare, Government and Defense, Automotive, Retail, BFSI, and Other End-User Verticals. Out of which, Healthcare is expected to dominate the global market over the forecast period and this is attributed to the growing adoption of AI solutions in healthcare sector. AI technologies in healthcare are designed by organizations or through public-private partnerships. IoT has many uses in healthcare and offers potential to keep patients healthy and safe along with improving the way of delivering care by physicians. Thus, this is creating demand for AI governance in healthcare, which is expected to drive growth of the segment in the coming future.

Government and Defense segment is also expected to witness significant growth in the near future and this is owing to the growing applications of AI in government and defense. Ai can be used for applying public policy objectives and assist the public interaction with the government. Thus, growing number of applications of AI in defense and government is driving the need for AI governance in the segment, which is likely to fuel the market growth during the forecast period.

Global AI Governance Market: Key Developments

In February 2022, Virtana announced the development of a hybrid cloud management solutions platform leveraging ML, AI, and data analytics that allows the customers to plan and execute as well as mange their hybrid cloud implementations. This platform provides customers with observability to manage app workloads in private, public, multi-cloud, and hybrid environments.

In February 2022, Meta AI announced opening of sourced data2vec, a unified framework for self-supervised deep learning on speech audio, images, and text data.

In December 2021, Datalink, and everyday AI platform announced novel AI governance and oversight as part of the unified AI platform of the company, which allows companies in scaling analytics and AI initiatives under single centralized control tower.

In March 2021, the Indo-U.S. Science and Technology Forum launched the U.S.-India Artificial Intelligence Initiative. This initiative is likely to bring major stakeholders from the U.S. and India together for fostering AI innovation through the exchange of experience and ideas.

Global AI Governance Market: Key Companies Insights

The global AI governance market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis.

Some of the key players in the global AI governance market are Facebook, Inc. (Meta Platforms Inc), IBM Corporation, Integrate.ai Inc., Google LLC (Alphabet Inc.), H2O.ai, Inc., SAP SE, SAS Institute Inc., Microsoft Corporation, Pymetrics Inc., FICO Inc., and Salesforce.com, Inc.

*Definition:

AI Governance is the system of rules, practices, processes and technological tools that ensure an organization’s use of AI technologies aligns with its strategies, objectives, values and legal requirements; meets ethical AI principles; and fulfills organizational goals.