How big is the Data Annotation Tool Market | Applications & Future Demand 2025

Q: What was the market size of the data annotation tool market in 2025 and its projected value by 2031?

Data annotation tool market size was valued at USD 1.85 billion in 2025 and is projected to reach USD 6.94 billion by 2031.

Q: What is the CAGR of the data annotation tool market during 2025–2031?

Data annotation tool market is expected to grow at a CAGR of 20.7% from 2025 to 2031.

Q: What are the major trends shaping the data annotation tool market?

Data annotation tool market is driven by automation in annotation processes, real-time collaboration tools, and hybrid AI-human annotation models.

Q: What are the key growth drivers of the data annotation tool market?

Data annotation tool market is driven by the growing use of AI applications, increased demand for annotated data, and rising industry-specific AI deployments.

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Code: MTA5704

Publication Date: Jul 2025

What is the Data annotation tool Market Size?

According to 6Wresearch internal database and industry insights, the Global Data Annotation Tools Market was valued at USD 1.9 Billion in 2024 and is expected to reach USD 4.7 Billion by 2031, growing at a compound annual growth rate of 5.60% during the forecast period (2025-2031).

This market is anticipated to experience robust growth driven by rising adoption of AI and machine learning technologies across industries. The requirement for high-quality labelled datasets to train algorithms has made annotation tools essential. This market is driven by increasing automation in data labelling, demand for AI-powered solutions, and the growth of industries such as autonomous vehicles, healthcare AI, and intelligent retail systems.

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Major Growth Factors of the Data annotation tool Market

Rising deployment of AI-based applications
Increasing need for training data in machine learning
Expansion of autonomous vehicle development
Growth in the healthcare AI ecosystem
Surge in video and image annotation demand
Integration of cloud-based annotation solutions
Adoption of data-centric AI strategies
Expansion of e-commerce and retail analytics

Data annotation tool Market Trends

Data annotation tool market is anticipated to experience major shift toward automated annotation techniques to decrease manual workload and improve scalability. Industries are integrating hybrid models combining human-in-the-loop with AI-assisted tools. There is also growing preference for tools supporting multi-format annotations, real-time collaboration, and enterprise-grade security features.

Emerging Developments in the Data annotation tool Market

Data annotation tool market is witnessing the integration of generative AI to assist in faster and context-aware labelling. Platforms are evolving with features like synthetic data generation, automated quality assurance, and real-time feedback loops. Additionally, open-source tool enhancements and vendor partnerships with AI development firms are gaining momentum.