The world of Artificial Intelligence (AI) is expanding. Market and academic research relate AI to the 4th Industrial Revolution (or Industry 4.0). Industry 4.0 is characterised by a change towards automated procedures, leaving manual work behind. In this process, Artificial Intelligence plays a crucial role. For this reason, analysing the AI sector in the UK is a great way to understand how the country is engaging with the new industrial revolution.
But, first of all, what is Artificial Intelligence? In short, AI can be seen as technology with similar cognitive abilities to humans. For example, it is able to learn from various forms of data and find solutions to problems. Currently, it is a key component of sectors like robotics, medicine or marketing; allowing them to perform better than ever before.
However, AI companies are difficult to identify because SIC codes poorly reflect Industry 4.0 sectors. This is why the Data Explorer is a fantastic tool to identify and gather all companies dedicated to AI in the UK, within a single data set, and provide insight into the sector.
The growth of AI as a sector.
In the last decade, the AI sector has increased by 145% as shown in the graph below. In 2010, there were 1070 companies in the UK before increasing to 2619 in 2018. This shows that AI, as a sector, has more than doubled in the last ten years, gaining importance in the UK economy. Based on this growth, the government created the Office of Artificial Intelligence (part of the Department of Digital, Culture, Media & Sport and the Department for Business, Energy & Industrial Strategy) and identified AI as a sector that can put the UK at the forefront of the industries of the future (“Industrial Strategy: Building a Britain fit for the Future”, available here)
Breakdown of the sector
We have identified 6 discreet sub-sectors composed of 2619 companies. There is no report or research that provides an approximation to the size of AI as an economic sector in the UK, and this showcases the Data Explorer’s potential as a pioneering research tool.
The graph above represents the 6 sub-sectors of AI and the number of companies gathered for each one of them. There are companies that have been identified in more than one sub-sector, highlighting that some have parallel branches of economic activity.
The above graph illustrates this situation. Basically, it tells us that almost 1500 companies are only related to one sub-sector, almost 600 engage in 2 sub-sectors and 337 in 3. Interestingly, only 18 companies of 2619 work in the 6 sub-sectors, showing a very different supply chain compared to other Emergent Technology sectors like Cyber Security.
Net worth
Our data identifies the AI sector as having an approximate net worth value of £15.6bn.
38% of companies in the RTIC have a zero or negative net worth value and 16% have below £15000. Together, the 54% of companies in the list contribute very little to the sector’s total net worth. However, it is important to highlight that a large proportion of companies (12%) are worth more than £1million. We can conclude that fewer than 20% of the companies in the list make up most of the net worth value of the sector.
Employees
Employee numbers tell a similar story. This chart shows that 45% of companies in the sector employ 2 to 9 people. However, 20% of companies are only formed by one person. In contrast, 78 companies (3%) employ over 250 people.
As with many other economic sectors, it reflects that the top end companies accumulate most of the human capital.
Geography
Most companies aggregate in urban areas of the UK. However, it is important to acknowledge that London (1588) has the largest cluster of AI companies, followed by Reading (193), Cambridge (110) and Manchester (96). London has been named the AI European capital, home to almost double the AI companies compared to other major European cities such as Berlin or Paris. This shows that the UK is a world leader in AI.
Summary
AI is central for the 4th Industrial Revolution, and this is why it is very important to know how the AI sector is developing. In the UK, we have seen a huge expansion during the last decade, showcasing that the UK economy is aiming to use AI to position itself at the forefront of the revolution. The latest data shows that the AI sector is worth over £15.6bn and employs more than 35,000 people. This means that AI has rapidly become a medium-sized sector in the UK economy and has the potential to participate in other sectors’ growth.
Data access
If you’d like to see the data behind these insights you can register and access them here. To build your own dataset have a look at our Data Explorer.