Optical Character Recognition Market

Market Overview

The global optical character recognition (OCR) market is expected to reach a valuation of USD 39,655 million by 2030 at a CAGR of 16% during the forecast period (2022–2030).

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.

Research can be conducted in advanced technologies like artificial intelligence, computer vision, and pattern recognition with the help of optical character recognition.

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 glasses.

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.

Segmental Analysis

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

The optical character recognition market has been segmented into software and services based on type. The software type segment is expected to dominate the global market, and it is projected to reach USD 28,013 million by 2030, registering a CAGR of 16% during the forecast period. The growing need to digitize and lessen reliance on physical documents to save money, energy, and time has assisted the software segment's growth. Also, the market has developed as augmented reality has become more widely used in platforms such as healthcare, banking, and retail.

For example, Smart Engine, a Russian software development firm, teamed with Promobot Thermocontrol, a robotics firm that produced the Promobot Scanner, in March 2021. Smart Engine would be able to provide high-end document recognition due to this relationship, enhancing form filling productivity by automatically obtaining data from documents. It also contains next-generation biometric passports with Green Engine Technology and smart engine identification scanning.

The optical character recognition market has been segmented into Retail, BFSI, Government, Education, Transport and Logistics, Healthcare, IT & Telecom, Manufacturing, and Others based on vertical. The BFSI segment is likely to dominate the global market, and it is projected to reach USD 7,865 billion by 2030, registering a CAGR of 18% during the forecast period. 

The usage of OCR, optimizing performance, and automating time-consuming activities are factors in the company's growth. It aids in document scanning, credit card scanning, and data entry for financial services, converting all information into a standard format that a computer can recognize and interpret. For example, Citigroup. Inc., a banking and financial services company based in the United States, employs Appzillon's banking solution to boost the efficiency of its corporate banking products. Its rich user experience and innovative innovations in the digital platform simplify and improve the customer experience.

The optical character recognition market has been segmented into B2B and B2C based on end-use. The B2B end-user segment is expected to dominate the global market, and it is projected to reach USD 29,062 million by 2030, registering a CAGR of 17% during the forecast period. 

The development is linked to various businesses' adoption of software solutions involving OCR with smart qualities to enable consumers to extract archived forms. It will enable companies to arrange their data and digitally make it usable and accessible. It also eliminates the requirement for manual data entry. For example, Tata CLiQ, a Tata Group e-commerce platform, adopted Adobe in October 2021 to scale its business and provide a tailored shopping digital experience on its mobile app and website.

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.

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 12,248 million by 2030, 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 example, 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 9,584 million by 2030, 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 example, 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

Recent Developments

• January 2022- AIMMO, a Korean AI firm, has raised USD 12 million in a Series A funding round to enhance its technology and expand its business globally in the data labelling space. The company is primarily focused on self-driving cars and smart cities.
• January 2022- Axera Tech, a Chinese AI startup, has raised USD 125.9 million in a Series A++ fundraising round to grow 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.
• October 2021- AlphaSense Inc., a market intelligence firm based in the United States, has raised USD 180 million in a Series C fundraising round, increasing its total capital to USD 263 million.
• July 2021- Cortex Fabric 6, a low-code development platform for the transformation, automation, and augmentation of digital experiences, was released by CognitiveScale, an AI-powered digital system. This technology would allow organizations to create more cost-effective and speedier AI applications.