Optical Character Recognition Market Size, Share & Trends Analysis Report By Type (Software, Services), By End Use (B2B, B2C), By Vertical (Retail, BFSI, Government, Education, Transport and Logistics, Healthcare, IT & Telecom, Manufacturing, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global optical character recognition market size was valued at USD 10.45 billion in 2023. It is expected to reach USD 43.69 billion in 2032, growing at a CAGR of 17.23% over the forecast period (2024-32). The global shift towards automation and digitization across industries propels the OCR market. Businesses seek to streamline operations, reduce manual data entry, and enhance accuracy. OCR technology is crucial in converting physical documents into digital formats, supporting automated workflows and data management, leading to significant time and cost savings.

Optical character recognition (OCR) is the mechanical or electronic conversion of images of printed, typed, or handwritten text into coded text via machine, either through a picture of a document, a scene photo, or subtitle text superimposed on an image, or scanned document. It's a standard technique of digitizing printed texts to be electronically used in a machine like a machine translation, cognitive computing, and (extracted) text-to-spreadsheet conversion, searched, stored more compactly, displayed online, edited, searched, and stored more compactly.

OCR enhances efficiency by automating data entry and text extraction tasks. This is particularly valuable in industries such as finance, healthcare, legal, and administrative services, where large volumes of documents need to be processed quickly and accurately.

Market Dynamics

Optical character recognition market drivers

Increasing adoption of ocr across diversified verticals

In the BFSI, healthcare, retail, tourism, logistics, transportation, government, manufacturing, and other sectors, OCR technology is widely used. The growth of the OCR market can primarily be due to increased productivity and the adoption of automated recognition technologies. In commercial organizations, digitization has made all procedures faster and more accessible. Data is becoming a vital ingredient for success as firms experience technological improvements. 

When data is transformed into digital format, it may be processed by computers and other computing devices, making it simple to distribute, access, and store. Companies founded before digitization became the standard in the enterprise sector have begun to use tools like OCR to turn their physical data into digital format. The technology is also being used to create digital copies of checks, invoices, and other documents in the BFSI and healthcare industries.

For example, some ATMs require customers to submit their photo ID, which the program scans for the person's name and face. Banks in China use OCR software in conjunction with facial recognition software to protect ATMs. They also utilize OCR software to examine paper applications and other documents that customers may provide to demonstrate accountability or creditworthiness. Thus, the rising adoption of OCR across diversified verticals is likely to market growth over the forecast period.

Growing adoption of ocr due to the integration of advanced capabilities

With the support of text-to-speech technologies, OCR technology is also commonly utilized to convert information available in written form into speech, making it accessible to blind and visually impaired people. Sorting letters at post offices and documents in law companies and courts are some of the other technology applications, as are conserving historical and cultural materials, personal identity, and processing invoices, orders, and other documents.

Optical character recognition technology has many advantages, including saving time spent manually entering data into computers, improving work management, lowering the cost of translating documents to digital form, and eliminating manual errors. It also has other advantages, such as improved customer service and document security, driving demand in industries like BFSI and retail. The market is anticipated to be boosted by cognitive solution developers' increased focus on integrating new technologies to improve accuracy in the near future.

For example, Envision, a smartphone app that assists blind and low vision users, has created AI-powered smart glasses that provide hands-free access and make everyday life more accessible to visually impaired and blind users. Optical character recognition will be possible with these smart glass.

Optical character recognition market restraints

Several issues regarding optical character recognition (ocr) technology

The following issues are likely to restrain the adoption of OCR technology over the forecast period.

1. Accuracy - OCR software is never completely accurate. The quantity of errors varies on the document's quality and kind and the typeface chosen. These are examples of OCR errors, misreading letters, skipping over illegible letters, and mixing text from adjacent columns or image captions.
2. Workarounds - Characters like the number zero and a capital "O" are challenging for OCR to distinguish. A custom OCR typeface, such as writing out zero, can be utilized to get around this. This, however, only applies to papers designed with OCR in mind, such as questionnaires.
3. Additional Work - Even if the scanned image of the original document is of excellent quality, the OCR text must be cleaned up. Correcting the inaccuracies caused by OCR takes a lot of time. The original paper and the digitized text must be manually compared.

Which trends may impede optical character recognition market growth?

Online free services as an emerging business model

Online reviews of OCR software apps help companies in the optical character recognition sector gain reputation. However, established corporations such as Microsoft and Google pressure developing market players. Emerging software companies can either sell their products on the Microsoft Store or enhance their marketing capabilities through Google Play and digital advertising to attain market dominance.

To suit the convenience needs of individuals, several websites have provided direct online OCR services. Users mostly choose free online services. Adobe Acrobat Pro DC is another strong contender in the competition. As a result, new entrants to the optical character recognition sector can test business models using direct online free services.

Regional Analysis

The global optical character recognition market share has been segregated into North America, Europe, Asia-Pacific, South America, the Middle East, and Africa.

Supremacy of north america over others

With a market value of USD 12,448 million by 2031, registering a CAGR of 15%, North America is expected to be the largest optical character recognition market. This is due to the existence of prominent market players in the United States and the early adoption of new technology in enterprises, all of which contribute to regional market growth. 

For instance, AlphaSense Inc., a market intelligence firm based in the United States, raised a Series C investment round of USD 180 million in October 2021, bringing its total funding to USD 263 million. Furthermore, CognitiveScale, an AI-powered digital system, announced Cortex Fabric 6, a low-code development platform for the transformation, automation, and augmentation of digital experiences, in July 2021. This technology would allow organizations to create more cost-effective and speedier AI applications.

Asia-Pacific is expected to be the second-largest optical character recognition market with a market value of USD 9,674 million by 2031, registering a CAGR of 16%. The considerable increase in AI and related technologies investments can be ascribed to the rise. The rising technology industry in Asia Pacific's emerging economies encourages the adoption of products with OCR capabilities. 

For instance, Axera Tech, a Chinese AI startup, closed a USD 125.9 million Series A++ investment round in January 2022 to expand its operations and create AI vision processor chips. Smart retail, smart cities, smart homes, and smart communities all benefit from the company's primary offering. Furthermore, in January 2022, AIMMO, a Korean AI firm, raised USD 12 million in a Series A funding round to improve its technology features and grow its business globally in data labeling. The company is primarily focused on self-driving cars and smart cities.

Segmental Analysis

The global optical character recognition market share has been classified based on type, vertical, end-use.

Based on the type of product, the optical character recognition market has been divided into software and services. The global market is anticipated to be dominated by the software type segment, which is expected to reach USD 33,655 million by 2032, with a compound annual growth rate (CAGR) of 16% during the forecast period. The software segment's expansion has been facilitated by the increasing necessity to digitize and reduce dependence on physical documents in order to conserve energy, time, and money. The market has also expanded as augmented reality has become more prevalent in platforms such as healthcare, banking, and retail.

For instance, in March 2021, Smart Engine, a Russian software development company, collaborated with Promobot Thermocontrol, a robotics company that developed the Promobot Scanner. This relationship would enable Smart Engine to offer advanced document recognition capabilities, thereby improving the efficiency of form filling by automatically extracting data from documents. It also includes biometric passports of the future, which are equipped with Green Engine Technology and smart engine identification scanning.

By End-Use

B2B

In 2022, the B2B segment dominated the market, contributing more than 78% of the global revenue. It is anticipated that the B2B segment will experience significant growth during the projected period. The expansion is ascribed to the adoption of software solutions by a variety of businesses, which integrate optical recognition technology with intelligent features to enable customers to extract data from archived forms. It will allow companies to digitally organize their data, thereby ensuring that it is both accessible and usable. Furthermore, it eliminates the necessity for manual data entry. For instance, in October 2021, Tata CLiQ., an e-commerce platform owned by Tata Groups, implemented Adobe to expand its operations and provide a customized digital shopping experience on its website and mobile application.

The consumer market's increasingly significant emphasis on personalization and customer experience is the driving force behind the B2C (business-to-consumer) segment. The market has become increasingly competitive and customer-centric as a result of the proliferation of digital technologies, which have provided consumers with a greater amount of information and options.

By Vertical

BFSI

The global market is expected to be dominated by the BFSI segment, which is expected to reach USD 7,985 billion by 2031, with a compound annual growth rate (CAGR) of 18% during the forecast period.

The company's expansion is influenced by the optimization of performance, automation of time-consuming tasks, and the utilization of OCR. It assists in the scanning of documents, credit cards, and data entry for financial services, converting all information into a standard format that a computer can recognize and interpret. For instance, Citigroup, Inc., a banking and financial services company headquartered in the United States, makes use of Appzillon's banking solution to enhance the efficiency of its corporate banking products. The customer experience is simplified and enhanced by the digital platform's innovative innovations and the rich user experience.

Impact of covid-19

The COVID-19 pandemic had positively influenced the optical character recognition market. The pandemic significantly impacted the global economy and all businesses worldwide. To stop the pandemic from spreading, governments around the world instituted lockdowns. The complete global lockdown severely disrupted people's livelihoods and quality of life in several countries' early pandemic stages. As a result, supply chain disruptions occurred all around the world. The world's economies have suffered from a significant drop in product demand.

The pandemic severely hampered production across industries, resulting in a lack of basic materials. The fall in production was primarily due to supply chain interruptions and a fall in exports. During this time, the primary goal of enterprises was to stay afloat, and intelligent manufacturing played an essential role in helping businesses to operate efficiently with limited resources and manpower.

Market Recovery Timeline and its Challenges

The post-pandemic phase will be significant for the global optical character recognition market. The recovery can be hindered by supply chain disruptions, which will affect the market dynamics and the prices of the product. Also, distribution and transportation capabilities restrictions, unfavorable financial conditions, and ascended expenses will challenge the global market. Also, limited production, support operations, labor shortages, and constraints for other end-user sectors, suppliers, and vendors may fail to meet the consumer demand. Overall, the recovery will be challenging for the global optical character recognition market.

Recent Developments

• February 2024 - Android users can now easily input text using their cameras with Gboard's 'Scan Text' function. This feature lets users quickly enter text using the phone's camera. The application uses optical character recognition (OCR) technology to identify text by taking a picture of it and then entering it into any text field.
• January 2024 - WPS Software (WPS) released new optical character recognition (OCR) features for WPS PDF Tools, a product in the WPS Office suite. WPS Software is a top provider of free office productivity solutions for consumers and organizations. The WPS Office OCR PDF feature uses cutting-edge OCR technology to preserve the source document's appearance and features while performing basic recognition.