The Global Application Modernization Services Market share was at USD 8.4 billion in 2023. The market size is expected to grow at a CAGR of 16.80% throughout the forecast period to reach USD 24.9 billion by the end of 2028.
Application modernization services are the process of migrating an old program or platform to a new one and integrating new features to bring the latest capabilities to your enterprises. Modernization may also require moving to containers or serverless architectures to deploy application code on a regular basis and decouple apps from the underlying host environment to be more efficient than virtual machines. Businesses need to accelerate innovation and cost efficiency while maintaining or improving performance and reliability. Many of these companies continue to use outdated hardware and software, increasing operating costs and putting operations at risk. IT leaders recognize the need to upgrade legacy programs primarily for faster time to market, reduced technical debt, and lower operating costs.
Move to modernization with cloud-based technologies-
The application modernization and migration services will see a sudden shift towards modernization enabled by advanced cloud-based technologies and, correspondingly, less infrastructure-based lift and move migration. At the same time, hyperscale cloud services providers have become a major part of the migration and modernization of customers, not only becoming important strategic partners for large enterprise customers but also participating in dedicated market-leading entities for which large system integrators are found.
The application modernization services market demand is also driven by higher levels of automation, including the increasing prevalence of service delivery accelerators. Quality improvement techniques can often be used to modernize individual parts of legacy operations.
High cost and complexity of application modernization services-
New application capabilities can help organizations streamline operations and increase revenue, but organizations should first consider ROI before deciding to invest in application modernization. The cost of application modernization is highly influenced by the characteristics and capabilities of the organization performing it. It is important for organizations to start the process with an application assessment, choose the best application modernization techniques based on business goals, and consider the costs and complexities associated with the modernization process. The global application modernization services market is, therefore, restrained by the rising cost and complexity of application modernization.
Kubernetes adoption and containerization- Kubernetes adoption is growing rapidly, making it increasingly important to address operations and management at scale. Due to the large number of stateful applications, the management overhead of the applications can be expected to increase depending on the capacity required to support the applications. Enterprises need tools to reduce the complexity of Kubernetes-based workloads and prepare for continuous operations and scalability. Several companies have adopted containerization to improve the portability of applications and data across computing environments. Containers virtualize storage and other computing resources at the operating system level, allowing developers to logically isolate their applications. Therefore, containers are expected to fully modernize application development in combination with DevOps and cloud storage, creating opportunities in the application modernization services market.
The COVID-19 pandemic has disrupted the demand-supply chain, creating demand for technology in other industries. As businesses adopt cutting-edge technology and go fully digital due to the pandemic, continuous technology updates to outdated apps and software are essential for immediate business continuity. Telemedicine, for example, has seen a tremendous increase in the number of users, and healthcare applications must adapt to the exponential growth of the population. If so, it may require a rebuild of the medical app’s past infrastructure. Similarly, food delivery services and hospitality companies will need new GPS-equipped modules so they can quickly stop serving customers in pandemic-hit areas. As a result, the application modernization services market is expected to grow throughout the forecast period due to the COVID-19 modernization strategies adopted to ensure business continuity. Therefore, this factor will determine the CAGR of the market.
On the basis of deployment mode, the application modernization services market can be segmented into hybrid cloud, public cloud, and private cloud. The hybrid cloud segment is expected to dominate the market and become the fastest-growing segment over the forecast period. A hybrid cloud makes sense to reduce the efficiency of legacy systems. Many countries are increasing the use of these application services. This high demand is driven by increasing software capabilities and widespread demand from different economies.
Depending on the verticals, the telecommunication sector will dominate the application modernization services market growth in 2023 and is projected to witness the fastest-growing segment throughout the forecast period. Large telecommunications companies are demanding a variety of cloud infrastructures, including containerization and microservices, to support their businesses. An extension of the hybrid cloud infrastructure will be promoted to evaluate the mitigation of apps to the hybrid cloud.
Based on application, the application replat forming segment has been dominating the application modernization services for a few years now and is anticipated to be the fastest growing segment throughout the forecast period owing to network speed, flexibility, scalability, and faster application delivery. Many large enterprises and small medium companies across all industries are requesting application modernization services to operate and troubleshoot legacy systems. The need for cloud mitigation services to mitigate applications to the cloud environment is also growing.
In terms of region, the North American application modernization services market was valued at USD 3.1 billion in 2023 and is anticipated to grow by 43.20% over the forecast period. The growth of this market is mostly driven by large enterprises, SMEs, and new cybersecurity solutions. To reduce costs for companies, emerging IT equipment manufacturers and distributors in the United States are replacing physical servers with virtualized environments.
The application modernization services market in Asia Pacific is growing fastest in terms of market share. The Asia Pacific application modernization services market is driven by population growth, significant technological advancements, and intensive technology to meet the growing demand for software services in countries such as Australia, China, Japan, and India. Several countries in Asia are expected to offer great opportunities to implement application modernization solutions. In addition, China’s application modernization services market accounted for the largest market share, while India’s application modernization services market size is growing at a faster rate.
The European application modernization services market value is expected to grow at a significant CAGR over the forecast period. Rapid advances in related technologies and increased knowledge of the benefits of modernization services are having a positive impact on the expansion of the regional market. This market is also boosted by some well-known companies operating in the sector. Additionally, the UK application modernization services market accounted for the largest share, while the German market for application modernization services was the fastest-growing market in the region.
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