Artificial Intelligence sector study 2023

gary.blunden

Introduction

The Artificial Intelligence sector study 2023 published by the UK government provides a comprehensive analysis of the AI sector in the UK.

Key Points

I have provided below the key points from the study if you’re in a rush.

The study highlights that there are over 3,000 AI companies in the UK, generating more than £10 billion in revenues and employing over 60,000 people in AI-related roles. The sector contributes £5.8 billion in Gross Value Added (GVA) to the economy.
Compared to the 2022 study, the number of AI companies, revenues, employment and GVA have all increased in 2023. The total number of AI companies grew by 17%.
The Department for Science, Innovation and Technology (DSIT) has set new objectives to enhance the UK’s scientific and technological capabilities, focusing on fostering innovation, improving digital infrastructure and promoting sustainable development. AI plays a crucial role in achieving these objectives by enabling efficient data analysis, automating routine tasks and providing insights for policy decisions.
The Secretary of State tasked Matt Clifford with developing an action plan to identify how AI can drive economic growth and deliver better outcomes for people across the country. The plan will outline how the UK can build a scalable and competitive AI sector on the global stage, boost technology uptake across the economy, and consider the necessary infrastructure, talent, and data access required for adoption.
The government is committed to regulating the most powerful AI frontier models to drive trust and adoption of safe AI.

Taking an executive view, we see increases across the board including employment, revenue etc…which is expected given we are seeing AI stock surging and daily headlines fuelling and reinforcing the public view on AI impact now and expected in the near future.

Defining AI Sectors

UK AI Taxonomy

The definition of what constitutes “AI” is always an interesting debate. The UK government have shared their taxonomy for this report.

Given that Standard Industrial Classification (SIC) codes do not yet include a specific ‘Artificial Intelligence’ classification, the analyses contained in this report are based on a business-focussed taxonomy that can better reflect AI activity in the UK

Let’s take a closer look at these:

Machine Learning
Natural Language Processing
Computer Vision & Image Processing
Model Development (Foundation, Multi-Modal)
AI Strategy & Consulting
AI Skills and Training
Autonomous Systems
Speech & Audio Processing
AI Assurance (Risk Assessment, Evaluation)
AI Governance
AI Safety

Nothing unexpected. I presume once we have Standard Industrial Classification (SIC) codes then these will widen out, as we discover more businesses using AI capabilities for new use cases.

Key AI Sector Contributors

The most prominent dedicated and diversified AI companies

Again, nothing of surprise here. We see the top tech companies driving AI innovation. DeepMind continued to dominate. The table below contains the top 3 but you can see the full list here.

This view has changed significantly of late and I expect we will see a real shuffle here in the coming months.

Dedicated	Position	Business Model	Diversified
Deepmind	No change in position	strategic infrastructure	Amazon
Builder	rise in position	products	Microsoft
Databricks	rise in position	products	Deloitte

Diversified AI companies incorporate AI as part of their broader business operations. These companies may have a variety of products or services, and AI is just one component of their overall strategy.

Number of UK companies (United Kingdom)

The UK government estimate that there were 3,713 active UK companies providing AI products and services in 2023.

Half of those in this study (2150) being micro businesses which is another expected statistic, given this technology will promote smaller business operations through autonomous automation, we are seeing a rejuvenated AI industry which has allowed start-ups to come in and capture part of this growing market.

Of the 3,713 active companies identified through the study 59% are dedicated AI businesses and 41% are diversified.

A rather interesting statistic is that we now see the rise of AI-services vs AI products.

In 2023 most dedicated AI companies remain focussed on developing AI products (69%, n=1,516), however the share of dedicated companies now offering AI related services has increased by more than 10 percentage points, from 18% in 2022 to 31% in 2023

AI Infrastructure

It’s staggering to see how much of the hardware required to run AI is provided by the US.

The US dominate the landscape. I would like to see more happening in Europe and beyond so this picture is not so one-sided.

I will speculate here but I expect that OpenAI will lose some points this year as we see more businesses looking for solutions that are more aligned and specific to their needs and goals.

AI Partnerships

27 of the largest dedicated AI companies have collaborated with ~130 partners spanning a range of organisations including academic institutions (e.g., Universities of Cambridge, Oxford, Bristol, Warwick, Essex and UCL), corporates (e.g., HSBC, Merk, Sanofi, Bristol Myers Squibb, Asda, Ocado, AIG, Bupa), government departments and other publicly funded organisations (e.g., the NHS, Transport for London and the BBC).

Conclusion

I’ve only glossed over the report but the numbers truly represent the rise and opportunity that AI brings to the UK economy.

I find it reassuring that as a country we continue to see great signs of a growing sector that supports technology innovation and the stats on the report show a vibrant and health ecosystem.

The next few years will likely pave the way for the next decade of advancements in artificial intelligence and it will be nothing short of exciting to see which businesses take the market and where the technology will take us next.

I implore you to read the report and any references to get a fuller view of things. What is for certain, UK is in a good position to capitalise and the shifts to services vs products may see a rise in consultation and advisory services providing many new jobs and positions for those ready to embrace this fast moving space.

A.I, Featured Post

Gary Blunden

Microsoft Solutions Expert / MVP

Welcome to my blog! I'm Gary, a Microsoft solutions expert specialising in Microsoft business applications, data and artificial intelligence - working with Microsoft tech for over 15 years. Here, I share tutorials, case studies, best practices and industry trends to help the community harness the power of these technologies. Join me in exploring the transformative potential of Microsoft products and services.