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Named Entity Recognition (NER): Unveiling the value in unstructured text

Named Entity Recognition (NER)
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In our digitally interconnected world, the immense generation of textual data has become a staple of daily life. From social media updates and news articles to emails and other sources, we contribute to a vast repository of information every day. Yet, the true value within this data often remains locked away due to its unstructured format, demanding sophisticated techniques for processing. Within Natural Language Processing (NLP), Named Entity Recognition (NER) stands out as a critical tool for gleaning meaningful insights from this unstructured textual data by skillfully identifying and categorizing named entities. NLP allows machines to comprehend, interpret, and interact with human language, thus narrowing the divide between humans and computers. According to Markets and Markets, the NLP market size reached $18.9 billion in 2023 and is expected to experience significant growth, aiming to hit $68.1 billion by 2028 with a CAGR of 29.3%.

At its essence, named entity recognition acts as a vital process for detecting and classifying named entities within texts, revealing their significance and facilitating a more profound level of analysis. These entities span various categories, including people, organizations, locations, dates, and other contextual indicators. Through the identification and extraction of these entities, NER converts a sea of unstructured text into structured information. By clarifying the identities and classifications of named entities, NER lays the groundwork for detailed analysis, empowering individuals and organizations to make well-informed decisions and unearth the hidden treasures within the textual landscape.

Join us as we explore the nuances of named entity recognition, demystifying its fundamental principles and operations to gain a full appreciation of its capabilities and the intricacies of its application.

What is Named Entity Recognition (NER)?

NER is a process used in Natural Language Processing (NLP) where a computer program analyzes text to identify and extract important pieces of information, such as names of people, places, organizations, dates, and more. Employing NER allows a computer program to automatically recognize and categorize these specific pieces of information within the text. This is especially useful when dealing with large volumes of text, where manually identifying and organizing such entities would be both time-consuming and prone to errors.

NER involves two key tasks, both crucial for effectively processing text and extracting valuable information. The first task is identifying significant words and phrases, particularly proper nouns, within the text. This step requires precisely locating and annotating these words to mark them as named entities.

Once the named entities are identified, the second task of NER, classification, begins. In this stage, the recognized entities are sorted into predetermined categories based on their nature. These categories can include personal names, organizations (such as companies, government bodies, and committees), locations (ranging from cities to countries and rivers), and temporal expressions indicating specific dates or times.

Consider the sentence: “Apple Inc. is planning to open a new store in New York City next month.”

In this sentence, “Apple Inc.” is a named entity referring to an organization, while “New York City” is a named entity representing a location.

The first task of NER is to identify these proper names or phrases within the text. Here, “Apple Inc.” and “New York City” are the identified named entities.

The second task involves classifying these named entities into predefined categories. In our example, “Apple Inc.” would be categorized under organizations, and “New York City” would fall under the category of locations.

NER efficiently extracts and classifies these specific entities from the sentence, enabling further analysis or information retrieval based on the identified named entities.

Key components of named entity recognition

In Natural Language Processing, a model designed for NER comprises several essential components, which include:

  • Tokenization: The text is divided into individual tokens, which are typically words or punctuation marks. Tokenization helps in creating a structured representation of the text.
  • Part-of-speech tagging: Each token is labeled with its corresponding part of speech, such as noun, verb, adjective, etc. This step provides grammatical context and aids in understanding the syntactic structure of the text.
  • Chunking: Tokens are grouped into “chunks” based on their part-of-speech tags. Chunking allows for identifying and extracting meaningful phrases or entities from the text.
  • Named entity recognition: This component is responsible for identifying named entities, such as names of people, organizations, locations, dates, and other specific entities. It involves classifying these entities into predefined categories or types.
  • Entity disambiguation: In situations where multiple entities share the same name in the text, entity disambiguation is performed to determine the correct meaning of the named entity. This process considers the surrounding context and additional information to resolve any ambiguities.

These components are foundational for NER and contribute to the model’s ability to process and understand text at a level that is useful for practical applications.

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Harness the power of your data using LeewayHertz’s NER solutions. We build robust solutions tailored to your specific business needs.

The working mechanism of named entity recognition

NER systems typically follow a two-step process:

  • Boundary detection
  • Entity classification

Boundary detection

The first step in Named Entity Recognition (NER) is to figure out where each named entity starts and ends in the text. This means identifying the beginning and ending points of entities, like names of people or places. While capital letters can give us clues, especially in English, where proper nouns are usually capitalized, NER systems usually use more advanced machine learning algorithms. These algorithms look at a wider range of language features, not just capitalization and punctuation, to identify entities.

For example, in the sentence “John lives in New York, and he works for IBM.”, an NER system would identify “John,” “New York,” and “IBM” as named entities. The system recognizes “John” as a person, “New York” as a location, and “IBM” as an organization without necessarily dividing the text into separate sentences for this step.

Entity classification

Entity classification is a pivotal step in NER, where the system categorizes words or phrases into predefined types such as location, people, organization, event, time, and so on, using machine learning techniques.

Here is how it happens:

  • Feature extraction: NER systems analyze the text to extract various features that aid in classifying entities. These features may include the word itself, its part-of-speech tag, the surrounding words, and broader context. Such linguistic features are crucial for capturing the nuances that inform the entity’s category.
  • Training and classification: To prepare for classification, NER models are trained on datasets where human annotators have manually labeled entities. During training, the model discerns patterns that it uses to predict entity types in new texts. Common algorithms for NER include Conditional Random Fields (CRF) and Hidden Markov Models (HMM).
  • Throughout training, models learn to recognize patterns and cues. For instance, a capitalized word followed by “Inc.” or “Co.” is likely an organization, while phrases like “born,” “lives in,” or “from” often signal a person’s name or location.
  • Prediction: With training complete, the NER model is equipped to classify entities in unseen texts. It assesses the text, assigns a category to each detected named entity and outputs a list of labeled entities.

In the sentence “John lives in New York, and he works for IBM.”, an NER system would classify “John” as a person, “New York” as a location, and “IBM” as an organization.

NER systems can achieve high accuracy but may encounter challenges in ambiguous entities, misspellings, or rare names not present in the training data. Regular updates and retraining with new data can help improve the performance of the NER model over time.

working mechanism of named entity recognition

An overview of named entity recognition methodologies

There are several approaches to NER, each with its own methodology and level of complexity. Here are the most common ones:

Rule-based systems

Rule-based systems are usually based on hand-crafted rules written by persons with domain expertise. These rules can be based on patterns in the text, lexical information, or syntactic structure. While rules can be very effective in some domains, they can be challenging to develop and maintain, and they often do not generalize well to new domains or languages.

Statistical models

Statistical models for named entity recognition operate on the premise that named entities can be differentiated from other words in the text based on their surrounding context. Hidden Markov models (HMMs), maximum entropy (Maxent) models, and support vector machines (SVMs) are common statistical approaches used in NER. These models learn from labeled training data, capturing the statistical patterns and dependencies between named entities and their associated words. However, a major challenge is the need for a large amount of annotated training data, which can be time-consuming and costly to obtain. Techniques like data augmentation, transfer learning, and semi-supervised learning are employed to mitigate this. Although deep learning models have shown remarkable advancements in NER, they require significant computational resources and extensive labeled data for training.

Hybrid systems

In a hybrid NER system, different techniques can be used in conjunction with each other to enhance the overall performance. For example, a hybrid approach may involve combining rule-based methods with statistical models. Statistical or machine learning models are utilized to recognize more complex and diverse named entities. These models can learn patterns and features from annotated training data, enabling them to generalize well to unseen text.

ML-based approach

The ML approach in NER involves training models to automatically recognize and classify named entities in text using machine learning techniques. This approach relies on the ability of machine learning algorithms to learn patterns and make predictions based on labeled training data.

In the ML approach, the first step is to prepare a labeled dataset where named entities are manually annotated. This dataset consists of text examples along with the corresponding entity labels. Features are then extracted from the text, which captures important characteristics of the words and their context. These features can include the surrounding words, part-of-speech tags, syntactic dependencies, or other linguistic attributes.

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NLP models used for named entity recognition

Various approaches can be used for named entity recognition, but two of the most common ones are:

  1. Maximum Entropy Markov Model (MEMM), and
  2. Conditional Random Fields (CRF)


MEMM is a discriminative model used in NER. It calculates the conditional probability, which is the likelihood of a sequence of tags given a sequence of words. This enables MEMM to differentiate among potential tag sequences by selecting the one with the highest probability.

The MEMM model constructs a probability distribution that incorporates various features, which can be either manually crafted or learned during training. The goal is to find the distribution with maximum entropy that still meets the constraints set by these features, allowing the inclusion of diverse characteristics like capitalization, punctuation, and suffixes.

MEMM is adept at handling a wide range of non-independent features, meaning it can model complex dependencies within the data. However, it is subject to the ‘label bias problem,’ where the transition probabilities are normalized at each state, leading to potential biases. For instance, if a state has a single outgoing transition, the model will inevitably select it, regardless of the subsequent observation.

Consider a character-level MEMM analyzing the sequence “rib”. If ‘r’ is encountered, paths for “rib” and “rob” might initially have the same probability. Upon observing ‘i’, the model transitions only to the state linked with “rib”, channeling all probability there. When ‘b’ appears, if it leads to only one possible state, it again receives full probability, perpetuating the bias.

MEMM’s advantages include its versatility across different languages and domains, its efficiency with large datasets, and its quick processing capability. It systematically identifies sequences of capitalized words in the text and classifies them as named entities, although it requires careful feature selection to perform optimally.


CRF focuses on modeling the conditional probability distribution of the hidden variables (labels) given the observed variables (input features). This means that CRFs are discriminative models as they directly model the relationship between the observed and hidden variables without explicitly modeling their joint distribution.

To capture the dependencies and patterns in the data, CRFs use manually defined feature functions. These feature functions describe certain properties or characteristics of the observed variables and their relationships to the hidden variables. In the context of sequence labeling tasks like part-of-speech (POS) tagging, these feature functions often depend on the position of words in the sequence and the surrounding words.

For example, a feature function could be defined to check whether a word is a question mark and whether it is the first word of the sequence, indicating the beginning of a question. Another feature function could examine whether the current word is a noun and the previous word is also a noun, capturing the pattern of consecutive nouns. Similarly, a feature function might identify if the current word is a pronoun and the next word is a verb, indicating a potential subject-verb relationship.

The feature functions can be designed based on domain knowledge and task-specific requirements. By defining these feature functions, we establish the connections between the observed and hidden variables. The weights of the feature functions are learned during the training of the CRF, allowing the model to assign importance to different features for making predictions.

CRFs rely on manually defined feature functions to capture relevant information from the observed variables to model the conditional distribution of the hidden variables given the observations. This enables them to effectively address sequence labeling tasks by considering the dependencies and patterns within the data. CRFs are trained on labeled data and learn to predict named entity labels based on the contextual information of words. They are effective because they capture dependencies between words and labels, making them a valuable tool for named entity recognition tasks.

Named entity recognition methods

The named entity recognition methods include:

Ontology-based NER

Ontology-based NER is a knowledge-based process that collects data sets containing words, terms, and their relationships to recognize entities in text. The granularity of an ontology directly influences the breadth and precision of the outcomes in named entity recognition. For example, a free encyclopedia would require a high-level ontology to capture and structure a wide range of information. In contrast, a company in the medical science field would need a more detailed ontology to handle the complexities of medical terminologies.

Ontologies play a vital role in natural language processing by facilitating semantic understanding and knowledge representation. The process begins with ontology construction, where concepts, relationships, and properties relevant to the domain are identified and defined. Knowledge acquisition techniques are then used to populate the ontology with information extracted from text corpora or structured data sources. Ontology alignment allows for the integration of multiple ontologies, ensuring interoperability. Semantic annotation involves mapping text or data to ontology concepts, enabling advanced search and retrieval. Ontologies also support semantic reasoning, allowing for the inference of new knowledge based on existing ontology relationships.

In question-answering and dialogue systems, ontologies enhance understanding and enable more accurate responses. Furthermore, ontologies serve as a foundational knowledge representation for various NLP applications, empowering information extraction, text summarization, machine translation, sentiment analysis, and more. Therefore, ontologies in NLP provide a structured and standardized framework for organizing and processing domain-specific knowledge.

Ontology-based NER is similar to machine learning approaches because it can identify known terms and concepts in unstructured or semi-structured text. However, it also relies on updates to stay current. As new terms and concepts emerge or existing ones change, the ontology must be updated to ensure accurate recognition.

Deep learning NER

Deep learning elevates NER accuracy beyond ontology-based methods by discerning word relationships through word embeddings. These embeddings are specialized representations that encapsulate both semantic and syntactic word relationships.

The deep learning approach to NER involves several steps:

  • Data preparation: A dataset with labeled examples is prepared.
  • Word embedding: Words are transformed into embeddings that capture nuanced meanings.
  • Model training: A deep learning model, attentive to word order and context, is trained on this data.
  • Evaluation and tuning: The model’s predictions are evaluated, and its accuracy is refined.
  • Prediction: The trained model can then identify named entities in new texts.

Deep learning’s strength in NER lies in its capacity to learn and recognize intricate patterns autonomously. It offers the advantage of identifying entities that may not exist in an ontology, having been trained on diverse language data. Deep learning NER is versatile, automating repetitive tasks, thus saving researchers valuable time.

While deep learning models for NER demonstrate enhanced linguistic understanding, they are data-hungry, requiring extensive labeled datasets and significant computational power. Despite these demands, their automated learning prowess renders them highly efficient in extracting named entities from vast, unstructured texts.

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Harness the power of your data using LeewayHertz’s NER solutions. We build robust solutions tailored to your specific business needs.

How to perform named entity recognition using Python?

In this section, we delve into NER, a crucial aspect of NLP. We will showcase the significance of NER using examples, first with SpaCy, a renowned NLP library. Demonstrations include extracting entities from general and scientific texts. Additionally, we highlight the application of NER in web scraping, illustrating how it can be employed to extract valuable information from a news article. This section underscores the versatile utility of NER in uncovering meaningful entities across various contexts and data sources. Let’s understand in detail:

NER using Spacy

SpaCy is a powerful open-source library for NLP that offers a range of functionalities, including built-in methods for NER. It provides a fast statistical entity recognition system, making it an efficient choice for NER tasks.

Using SpaCy for NER is straightforward, and while there may be cases where training custom data is necessary for specific business needs, the pre-trained SpaCy models generally perform well on various types of text data.

You’ll need to import the Spacy library and initialize a Spacy model to get started. Here’s an example code snippet to illustrate the process:

import spacy
from spacy import displacy

NER = spacy.load("en_core_web_sm")

Now, we enter our sample text which we shall be testing.

raw_text="LeewayHertz, During our 15 years in the industry, we have designed and developed platforms for startups and enterprises. Our award-winning work generates billions in revenue and is trusted by millions of users."
text1= NER(raw_text)

Now, we print the data and the corresponding label/category of each named entity detected in the processed text using spaCy.

for word in text1.ents:

The output:

LeewayHertz ORG
our 15 years DATE
billions CARDINAL
millions CARDINAL

Now, we have extracted all the named entities from the given text. We can utilize the following method if we encounter any difficulties in determining the specific type of a particular named entity.


Output: Companies, agencies, institutions, etc.


Now, we will try an interesting visual showing the NEs directly in the text.

LeewayHertz ORG, During our 15 years DATE in the industry, we have designed and developed platforms for startups and enterprises. Our award-winning work generates billions CARDINAL in revenue and is trusted by millions CARDINAL of users.

Let us try the same tasks with some tests containing more Named Entities.

raw_text2="The ISO mission resulted from a proposal made to ESA in 1979. After a number of studies ISO was selected in 1983 as the next new start in the ESA Scientific Programme. Following a Call for Experiment and Mission Scientist Proposals, the scientific instruments were selected in mid 1985. The two spectrometers (SWS, LWS), a camera (ISOCAM) and an imaging photo-polarimeter (ISOPHOT) jointly covered wavelengths from 2.5 to around 240 microns with spatial resolutions ranging from 1.5 arcseconds (at the shortest wavelengths) to 90 arcseconds (at the longer wavelengths). The satellite design and main development phases started in 1986 and 1988, respectively. ISO was launched perfectly in November 1995 by an Ariane 44P vehicle."
text2= NER(raw_text2)
for word in text2.ents:

The output



1983 DATE

the ESA Scientific Programme ORG

mid 1985 DATE







986 DATE 1

988 DATE

ISO ORG November

1995 DATE

Here, we get more types of named entities. Let us identify what type they are.


Output: Absolute or relative dates or periods


Output: Numerals that do not fall under another type

Now, we analyze the text as a whole in the form of a visual.



The ISO ORG mission resulted from a proposal made to ESA ORG in 1979 DATE . After a number of studies ISO ORG was selected in 1983 DATE as the next new start in the ESA Scientific Programme ORG . Following a Call for Experiment and Mission Scientist Proposals, the scientific instruments were selected in mid 1985 DATE . The two CARDINAL spectrometers ( SWS ORG , LWS ORG ), a camera (ISOCAM) and an imaging photo-polarimeter (ISOPHOT) jointly covered wavelengths from 2.5 CARDINAL to around 240 microns with spatial resolutions ranging from 1.5 CARDINAL arcseconds (at the shortest wavelengths) to 90 CARDINAL arcseconds (at the longer wavelengths). The satellite design and main development phases started in 1986 DATE and 1988 DATE , respectively. ISO ORG was launched perfectly in November 1995 DATE by an Ariane 44P vehicle.

We will utilize the Python package BeautifulSoup for web scraping to gather data from a news article and then perform NER on the extracted text data.

from bs4 import BeautifulSoup
import requests
import re

Now, we will use the URL of the news article

html_content = requests.get(URL).text
soup = BeautifulSoup(html_content, "lxml")

Now, we will move to the body content


Now, clean the text using regex. Let us have a look at the text.

ws »\n          \nCurrency News\n\n\n\n\n\nDollar index hits two-week high as data boosts Fed hike expectations\nUS dollar rate index news:\xa0The U.S. dollar index climbed to a two-week high on Thursday after economic data showed the labor market remained on a solid footing, giving the Federal Reserve a possible cushion to continue raising interest rates.\n\n\n\n\n\n\nView in App\n\n\n US dollar rate index news: The U.S. dollar index climbed to a two-week high on Thursday after economic data showed the labor market 

Proceeding with NER

text3= NER(body)

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Harness the power of your data using LeewayHertz’s NER solutions. We build robust solutions tailored to your specific business needs.

Use cases of named entity recognition

NER has various use cases across different domains and industries. Some of the common use cases of NER include:

Information extraction: NER is widely used to extract valuable information from unstructured text, such as news articles, research papers, and social media posts. By identifying and classifying named entities like people, organizations, locations, and dates, NER helps understand the key entities mentioned in the text.

Document organization and search: NER plays a crucial role in organizing and indexing documents for efficient information retrieval. By identifying and tagging named entities, documents can be categorized and searched based on specific entities, making it easier to find relevant information.

Social media analysis: NER is used in social media monitoring and sentiment analysis. It helps in extracting mentions of brands, products, and people in social media posts and comments, allowing companies to understand public opinions and trends.

Recommendation systems: NER can be employed in recommendation systems to understand user preferences and interests. Personalized recommendations can be generated by recognizing entities like movie titles, books, or music artists in user reviews or interactions.

Healthcare and medical records: In the medical domain, NER is used to extract information from medical records, such as patient names, medical conditions, treatments, and medications. It aids in organizing medical data and supporting clinical decision-making.

Chatbots and virtual assistants: NER is essential in natural language processing systems, including chatbots and virtual assistants. It helps understand user queries and extract relevant entities to provide accurate responses.

Language translation: NER is used in machine translation systems to identify named entities in the source language and ensure their proper translation into the target language.

Event detection and news summarization: NER can be applied to identify events and key entities mentioned in news articles, enabling automatic news summarization and event tracking.

NER is a versatile and valuable tool for extracting valuable information from unstructured text, enabling various applications that enhance data analysis, decision-making, and user experiences in diverse domains.


Named entity recognition emerges as a pivotal pillar within the realm of natural language processing, wielding the power to unlock the latent treasures embedded within vast oceans of textual data. With its ability to identify and categorize named entities, NER bestows structure and context upon the unstructured text, empowering machines to comprehend and interact with human language more effectively. As NER continues to evolve with advancements in machine learning and linguistic methodologies, its applications across industries are boundless, significantly impacting how we interpret, analyze, and extract meaningful insights from the written word. From aiding sentiment analysis to streamlining information retrieval and powering intelligent systems, NER remains an indispensable tool in harnessing the true potential of language in the age of data-driven decision-making.

NER helps transform texts into actionable insights. Unleash the power of your data with LeewayHertz’s NER solutions.

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Author’s Bio


Akash Takyar

Akash Takyar LinkedIn
CEO LeewayHertz
Akash Takyar is the founder and CEO of LeewayHertz. With a proven track record of conceptualizing and architecting 100+ user-centric and scalable solutions for startups and enterprises, he brings a deep understanding of both technical and user experience aspects.
Akash's ability to build enterprise-grade technology solutions has garnered the trust of over 30 Fortune 500 companies, including Siemens, 3M, P&G, and Hershey's. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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