PUBLISHER: Stratistics Market Research Consulting | PRODUCT CODE: 1587588
PUBLISHER: Stratistics Market Research Consulting | PRODUCT CODE: 1587588
According to Stratistics MRC, the Global Application Modernization Services Market is accounted for $21.2 billion in 2024 and is expected to reach $59.8 billion by 2030 growing at a CAGR of 18.9% during the forecast period. Application Modernization Services involve updating and transforming legacy applications to enhance performance, scalability, and user experience. This process typically includes migrating applications to cloud environments, re-architecting them using microservices, and adopting modern development practices like Agile and DevOps. By integrating new technologies, such as artificial intelligence and machine learning, organizations can improve functionality and responsiveness to changing business needs.
According to a McKinsey analysis, governments worldwide are boosting their digital transformation initiatives, with spending estimated to exceed USD 1 trillion by 2025.
Rising digital transformation initiatives
Rising digital transformation initiatives are substantially enhancing Application Modernization Services by driving organizations to adopt more agile, cloud-based and scalable solutions. As businesses increasingly prioritize speed and efficiency, modernizing legacy applications becomes essential for staying competitive. This transformation involves re-engineering existing software to leverage contemporary technologies, such as microservices, containerization, and serverless architectures. By integrating these modern approaches, companies can improve application performance, enhance user experiences, and reduce operational costs.
Compliance and regulatory issues
Compliance and regulatory issues pose significant challenges to Application Modernization Services, hindering organizations from effectively updating their systems. As businesses seek to modernize their applications to enhance efficiency and innovation, they often encounter complex regulatory frameworks that vary by industry and geography. These regulations, which include data protection laws like GDPR and industry-specific compliance requirements, can restrict the use of certain technologies or necessitate additional security measures. This not only complicates the modernization process but can also lead to increased costs and extended timelines.
Surge in adoption of mobile services
As consumers increasingly rely on mobile devices for daily activities, organizations must ensure their applications are not only accessible but also optimized for mobile performance and user experience. This shift compels companies to modernize their existing applications by integrating cloud technologies, microservices architecture, and responsive design principles. Such modernization allows for greater scalability, faster deployment cycles and improved security features. Moreover, with the rise of mobile-first strategies, businesses can leverage advanced analytics and user feedback to refine their applications continuously.
Data security concerns
Data security concerns are a significant barrier to effective application modernization services. As organizations strive to upgrade their legacy systems to more agile, cloud-based architectures, they face increasing risks associated with data breaches, compliance violations, and unauthorized access. Sensitive information, often embedded in outdated applications, poses a challenge during migration processes. The integration of new technologies can inadvertently expose vulnerabilities, making it critical for businesses to implement robust security measures. However, companies must invest in advanced encryption, identity management, and continuous monitoring to safeguard data throughout the modernization journey.
The COVID-19 pandemic significantly accelerated the demand for application modernization services as organizations sought to adapt to rapid digital transformation. With remote work becoming the norm, businesses needed agile, scalable and secure applications to support their operations and enhance customer experiences. Many legacy systems proved inadequate for the sudden shift to online services, prompting companies to invest in cloud-based solutions and modern application architectures. This shift not only improved operational efficiency but also facilitated better data integration and analytics capabilities. However, the crisis highlighted the importance of resilience and adaptability in technology strategies, leading organizations to prioritize modernization efforts to future-proof their operations.
The Application Re-platforming segment is expected to be the largest during the forecast period
Application Re-platforming segment is expected to dominate the largest share over the estimated period, which focuses on updating existing applications to leverage modern platforms and technologies while minimizing disruption. This process involves moving applications from legacy systems to more flexible cloud environments or contemporary architectures, such as microservices or serverless computing. By re-platforming, organizations can improve scalability, performance, and maintainability, enabling faster deployment of new features and services. This transition often involves re-architecting certain components without a complete overhaul, allowing businesses to retain valuable functionality while enhancing their applications' responsiveness to market changes.
The Automotive segment is expected to have the highest CAGR during the forecast period
Automotive segment is estimated to grow at a rapid pace during the forecast period. As vehicles become more connected and integrated with software solutions, the need for modernized applications that can support functionalities like advanced driver-assistance systems (ADAS), vehicle-to-everything (V2X) communication, and over-the-air (OTA) updates has surged. By leveraging cloud computing, artificial intelligence, and big data analytics, automotive companies are transforming legacy systems into agile, scalable platforms that enhance operational efficiency and improve the customer experience. This modernization not only facilitates real-time data processing and predictive maintenance but also enables automakers to innovate faster and respond to market changes more effectively.
North America region is poised to hold the largest share of the market throughout the extrapolated period as it streamline operations and improve efficiency. By connecting outdated systems with modern technologies, businesses can leverage existing investments while adopting innovative solutions. This integration allows for better data accessibility, real-time analytics, and improved user experiences. Companies can replace siloed processes with seamless workflows, fostering collaboration and agility.
Europe region is estimated to witness the highest CAGR during the projected time frame by promoting standards that ensure data security, privacy, and interoperability. Initiatives such as the General Data Protection Regulation (GDPR) compel organizations to modernize their applications to comply with stringent data handling requirements. This drives businesses to adopt cloud technologies and microservices architectures that enhance agility and scalability. The European Union's focus on fostering a digital single market further stimulates innovation, as businesses must adapt their applications to operate seamlessly across borders.
Key players in the market
Some of the key players in Application Modernization Services market include Accenture, Capgemini, Cognizant, Deloitte, HCL Technologies Limited, Infosys Limited, International Business Machines Corporation, Microsoft Corporation, NTT DATA Corporation, Oracle Corporation, Tata Consultancy Services Limited, Tech Mahindra Limited and Wipro Limited.
In January 2024, AveriSource launched the AveriSource Platform 2.0, a solution for analyzing and modernizing applications. This version offers enterprises an enhanced user experience whether they are transitioning from mainframe to cloud or accelerating their modernization efforts. Featuring visually appealing and interactive dashboards, along with comprehensive reporting and analytics, the AveriSource Platform 2.0 provides intelligent guidance throughout every stage of the application modernization process.
In January 2024, IBM Corporation acquired application modernization capabilities from Advanced, increasing IBM Consulting's offerings in mainframe application and data modernization services. The acquisition is intended to enhance IBM's ability to provide a comprehensive range of options for modernizing mainframe applications, aligning with the abilities of IBM Watsonx Code Assistant for Z, a generative AI-assisted tool designed to expedite mainframe application modernization.
In November 2023, Rocket Software acquired OpenText's Application Modernization and Connectivity business (AMC). AMC offers top-tier tools such as COBOL and host connectivity. These tools enable organizations to utilize their core applications and provide adaptability for modernization, enabling them to operate applications in various environments. Through this acquisition, Rocket Software expands its modernization portfolio to better cater to customer needs, whether on-premises or via a hybrid cloud approach.
In November 2023, Kyndryl collaborated with Amazon Web Services (AWS) to streamline customers' efforts in modernizing their mainframe systems. Furthermore, Kyndryl's integration of AWS services with its Kyndryl Bridge open integration platform offers real-time visibility into operational data. This integration facilitates improved planning, utilization, and understanding of mainframe applications and data in the cloud, thereby enhancing overall business outcomes.