[DigitalToday reporter Jin-ho Lee (이진호)] The public-sector artificial intelligence (AI) market has grown more than 11-fold over the past 10 years, emerging as a large market approaching 3 trillion won a year.

A "2025 study on the status of AI adoption in the public sector" by the Software Policy and Research Institute on May 10 showed the value of public-sector AI-related service contracts rose 11.5-fold to 2.82 trillion won in 2015 to 2024 from 244.3 billion won. The number of contracts also increased 5.5-fold to 1,215 from 221 over the same period.

By value, AI projects also expanded their share of all public-sector ICT-related service contracts to around 10 percent from 3.33 percent in 2016. It stood at 11.8 percent in 2024.

The total number of AI adoption contracts over the past decade was 6,975. Among 412 public institutions surveyed, 268 institutions, or 65.0 percent, were tallied as having adopted AI.

The technological level is also becoming more advanced. Early adoption mainly applied simple functions focused on optical character recognition (OCR) and text-to-speech (TTS), but as of 2024 the scope expanded into service development and operation, including 325 chatbot deployments, 208 machine learning cases and 176 deep learning cases.

The study also identified a structural limitation in which demand is concentrated in a small number of central government ministries and large projects. The scale of public AI contracts exceeded 2 trillion won from 2023, but it analysed that a few large projects, including the Ministry of National Defense’s intelligent platform build and the Korea Legal Aid Corporation’s legal service platform project, increased the overall market size.

Average contract value per case was tallied at 2.05 billion won for state agencies and 2.33 billion won for quasi-government institutions. Local governments, in contrast, were at 1.08 billion won. In particular, for local governments, maintenance of existing systems accounted for 48.6 percent of AI-related projects, limiting investment in new builds or upgrades relatively.

A concentration among large companies was also confirmed on the supplier side. While 1,509 small and medium-sized enterprises won 87.6 percent of all contracts, their average contract value per case was 1.215 billion won. The average for 25 large companies was 11.092 billion won, nine times that of SMEs.