Are Small Language the Winning Strategy for Enterprise?

Anurag Singh
6 min readNov 23, 2023


In the world of artificial intelligence (AI), the advent of large language models (LLMs) like GPT-4 has sparked both awe and concern, as these giant AI models have demonstrated remarkable natural language understanding and generation capabilities. However, in the shadow of these behemoths, a quiet revolution is taking place. Recent research suggests that smaller language models, once thought to be mere stepping stones to their larger counterparts, are starting to outperform — or at least match — the performance of LLMs in various applications.

Rise of Small Language Models

Language models (LMs) are powerful tools for natural language processing, but they often struggle to produce coherent and fluent text when they are small. However, recent studies have demonstrated that smaller language models can be fine-tuned to achieve competitive or even superior performance compared to their larger counterparts in specific tasks. For example, research found that performance similar to GPT-3 can be obtained with language models that are much “greener” in that their parameter count is several orders of magnitude smaller.

Advantages of Small Language Models over Large Language Models

Efficiency: Small language models are more efficient to train and deploy. They require less data, computing power, and energy, resulting in cost savings and environmental benefits.

Accuracy: Small language models are less prone to biases or factual errors that may arise from large and diverse datasets. They can also be fine-tuned to specific tasks and domains, resulting in more reliable and relevant results.

Customization: Small language models offer greater flexibility and control for enterprises. They can be trained on proprietary or industry-specific data, tailored to business objectives, and adapted to changing needs.

Security: Small language models are safer and more secure than large language models. They can run on local devices, reducing the risk of data breaches or privacy violations. They can also be more easily audited and verified for quality and compliance.

While Small Language Models (SLMs) have many advantages, they also have some limitations:

1. Limited Exposure to Linguistic Patterns: SLMs have limited exposure to linguistic patterns compared to Large Language Models (LLMs). This can make them struggle with complex cases.

2. Few-Shot Learning: LLMs offer better few-shot generalization, meaning they can learn to perform tasks with minimal examples. SLMs may not perform as well in these scenarios.

3. Resource Requirements: Although SLMs require fewer computational resources than LLMs, they still require significant resources for training and deployment.

4. Data Quality: The performance of SLMs heavily depends on the quality of the training data. If the data is biased or of poor quality, the model’s performance will be affected.

5. Domain Knowledge: SLMs may lack the broad domain knowledge that LLMs possess due to their smaller size and more focused training.

Despite these limitations, SLMs are still a powerful tool in many applications, especially when fine-tuned for specific tasks.

Some Common Usages of Small Language Models

Small Language Models (SLMs) have a wide range of applications, including but not limited to:

1. Text Completion: SLMs can be used to generate or complete text based on the context provided.

2. Language Translation: They can be used to translate text from one language to another.

3. Chatbots: SLMs can power chatbots, providing them with the ability to understand and respond to user queries.

4. Virtual Assistants: They can be used in virtual assistants to understand and execute user commands.

5. Speech Recognition: SLMs can be used to convert spoken language into written text.

6. Optical Character Recognition (OCR): They can be used to recognize and convert images of text into machine-encoded text.

7. Handwriting Recognition: SLMs can be used to recognize and convert handwritten text into machine-encoded text.

8. Specialized Tasks: With fine-tuning, smaller models can perform specialized tasks relatively well.

9. Enterprise Settings: Small language models can be trained on enterprise-specific data, so the answers the models generate are tailored to your team.

These are just a few examples. The potential applications of SLMs are vast and continue to grow as the field of AI advances.

Choosing the right small language model for your use case involves several considerations:

1. Define Your Objective: Understand what you want to achieve with the model. This could be a specific task like text classification, sentiment analysis, or question answering.

2. Understand the Trade-offs: Each model differs in their number of parameters and trade-offs. Smaller models are cheaper and easier to manage, but might deliver predictions of poorer quality.

3. Choose the Right Frameworks and Libraries: Selecting the right frameworks and libraries becomes crucial. Popular choices include Python-based libraries like TensorFlow and PyTorch.

4. Consider the Model’s Training Data: The data the model was trained on can greatly affect its performance. Models trained on more diverse and comprehensive data will generally perform better on a wide range of tasks.

5. Consider the Model’s Size: The size of the model (i.e., the number of parameters) can affect both its performance and its resource requirements. Larger models may perform better but require more computational resources1.

6. Test and Iterate: It’s often beneficial to start with a model that’s easy to implement and iterate on its performance. You can then transition to more complex models as your needs become more clear.

7. Seek Expert Advice: If you’re unsure, consider seeking advice from AI experts or developers who have experience with language models.

Remember, the goal is to find a model that fits your specific needs and constraints.

In few cases you might need to fine tune SML for specific use cases as suggested above and Fine-tuning a small language model for your specific use case involves several steps listed below:

1. Define Your Objective: Decide what you want to accomplish with the model. This could be a specific task like text classification, sentiment analysis, or question answering.

2. Gather and Format Data: Collect the data you need for your task. The data should be relevant to your objective and formatted correctly for the model. For example, if you’re fine-tuning a model for sentiment analysis, you might need a dataset of text samples labeled with their sentiment.

3. Choose a Pretrained Model: Choose a small language model that has been pretrained on a large dataset. This model will serve as the starting point for your fine-tuning.

4. Fine-Tune the Model: Feed your data to the model and adjust the model’s parameters to improve its performance on your task1. This process is known as fine-tuning. You can use a deep learning framework of your choice for this step, such as Hugging Face’s Transformers, TensorFlow with Keras, or native PyTorch.

5. Evaluate the Results: After fine-tuning the model, evaluate its performance on your task. You might do this by measuring the model’s accuracy on a validation dataset.

Remember, the goal of fine-tuning is to adapt a general-purpose language model to perform well on a specific task. With the right data and fine-tuning, a small language model can become a powerful tool for your use case.

Future of Small Language Models

The future of AI seems to be leaning towards smaller, more specialized models. Most companies will realize that smaller, cheaper, more specialized models make more sense for 99% of AI use-cases. Sam Altman, OpenAI’s CEO, echoes the sentiment. In a discussion at MIT, Altman envisioned a future where the number of parameters decreases, and a group of smaller models outperforms larger ones. In conclusion, while large language models have their place in the AI landscape, the future seems to be favoring smaller, more specialized models. And in this race, Microsoft is certainly leading the pack.

Microsoft’s researchers are working on a new method to train small language models that can outperform large language models in conversational tasks. The team has trained a 6-billion parameter model that can generate more engaging and diverse responses than GPT-4, a 175-billion parameter model from OpenAI that underpins the ChatGPT chatbot.

At Ignite 2023, Microsoft announced the newest iteration of the Phi Small Language Model (SLM) series termed Phi-2. This model, which has been developed by Microsoft’s Research Wing on highly specialized datasets, can rival models 150 times bigger. Phi-2 has 2.7 billion parameters and demonstrates state-of-the-art performances against benchmark testing parameters such as common sense, language understanding, and logical reasoning.

Parting with a comprehensive list of LLM(courtesy my LLM buddy)you could use based on the use case you want to apply to.



Anurag Singh

A visionary Gen AI, Data Science, Machine Learning, MLOPS and Big Data Leader/ Architect