Application Modernization Services Market by Service Type (Cloud Application Migration, Application Re-Platforming, Post Modernization), Application Type (Legacy, Cloud-hosted, Cloud-native) - Global Forecast to 2029
[300 Pages Report] The application modernization services market is projected to grow from USD 19.82 billion in 2024 to USD 39.62 billion by 2029 at a compound annual growth rate (CAGR) of 14.8% from 2024 to 2029. Application modernization services aim to significantly update and transform the legacy software systems to meet the current business needs. Application modernization is a complex process which involves, moving applications to the cloud, restructuring codes to increase their effectiveness and speed, and transforming cloud architecture to modern ones such as microservices, containers and serverless. After a detailed analysis of the current systems in place, the process continues with the formulations of a plan that focuses on the implementation of the technologies such as AI and ML and their needs into the organization and its business processes. These services are focused towards saving costs of operation, enhancing scalability and flexibility, and boosting creativity to help the organizations compete effectively in the digital space that is constantly changing.
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IMPACT OF AI/GEN AI ON APPLICATION MODERNIZATION SERVICES MARKET
Generative AI is transforming application modernization services by facilitating the completion of certain tasks. For instance, OpenAI Codex and GitHub Copilot tools assist in fast coding of modern applications, hence speeding their development. Due to machine learning, older systems can also benefit from tools like AWS Code Guru, which helps ‘rehabilitate’ the legacy code. Furthermore, Generative AI allows better efficiency even in the design of test automation tools such as Testim allow doing this in a fully automated mode. For crafting creative designs such as user interfaces, Adobe Firefly helps in making appealing and responsive designs. Tools such as MuleSoft’s Any point Platform also contain AI that helps in Integrating Systems and migrating data easily. In conclusion, generative AI expedites the enhancement process, minimizes the amount of manual work involved and improves the service offered by the applications.
Application modernization services market Dynamics
Driver: Rising digital transformation initiatives
The worldwide integration of digitalization is creating an upsurge in the demand for application modernization services. Enabling mobility has become a norm for most organizations which have chosen to abandon the old and overused legacy systems. Organizations are therefore embracing a modern architectural framework comprising of microservices, containerization, cloud-native and others. These systems operate on high efficiency reducing the order fulfillment time, ensuring real time processing of information and actively managing the market demand fluctuations. For instance, Ford has partnered with Google Cloud to completely digitize its operations and processes by automating the IT infrastructure. This progression is necessary for businesses that wish to stay competitive in the market and boost the number of modernization projects executed. In addition, other factors contribute to the increasing requirement for application modernization such as the need to improve business operations, cut down on legacy systems, and implement technologies like Artificial intelligence and the Internet of Things. As more and more organizations begin to understand the importance of such transformations, the need for application modernization services will be on the rise.
Restraint: High costs and complexity
An application modernization services business must contend with the high cost and complexity of replacing obsolete systems as ‘the major challenge’. The process of modernization often requires huge amounts of money and rich technical know-how to redesign or overhaul existing applications. For example, for a SME, hundreds of millions of dollars would be considered as upfront cost incurred to upgrade its old legacy e-commerce systems. Shifting from one core enterprise systems to other new systems may not only take a long time but can be most discouraging due to the already existing systems in place, this becomes even more challenging in the context of big corporations that have carried out large scale system implementations. Smaller firms which do not have funds for additional IT infrastructure development may decide to postpone modernization in favor of the existing management information systems even if this prolongation leads to its operational inefficiencies in the future. These high expenditures may serve as significant barriers to growth, restricting the growth potential of the application modernization services industry.
Opportunity: Proliferation of Kubernetes and containerization
The growing embrace of Kubernetes entails the use of effective management and operations at scale. With increasing numbers of stateful applications, so does the challenge in managing such applications along with the resources that are needed to support them. Considering this, it becomes imperative for organizations to put in place some management tools to tackle the challenges associated with Kubernetes workloads while providing for growth. Numerous organizations are embracing this technology to package applications in containers to enhance movement of applications and manage information throughout different systems. At the operating system level, containers allow for the virtualization of storage and other computing resources which helps in arranging applications in a way that they exist alone. The major players in application modernization services such as IBM, Schneider, AWS, Alibaba Cloud, Microsoft, HPE, Dell and Google have incorporated the use of containers in their architecture by utilizing cloud storage and cloud-native storage revolving around persistent storage, where applications read and write data on the storage as needed. The convergence of containers, DevOps and cloud storage services will have a positive impact on the growth of application modernization services market in the future.
Challenge: Vendor Lock-in and Platform Dependencies
Organizations that have committed their IT infrastructure around certain vendors or platforms struggle with vendor lock-in issues when it comes to upgrading their applications. There is loss of flexibility in application modernization, which increases the cost since the modernization process is dependent upon a single vendor technology’s stack. This only makes the challenge of modernization more pronounced, making it less attractive for organizations to modernization initiatives, especially for core solutions that require a total replacement.
Application modernization services market Ecosystem
The application modernization ecosystem comprises various technology solutions and service providers along with various regulatory bodies. These companies have been operating in the market for several years and possess a diversified product portfolio and state-of-the-art technologies. Prominent companies in this market include Oracle (US), IBM (US), Microsoft (US), HCL Technologies (India), Accenture (Ireland), ATOS SE (France), Capgemini (France), Cognizant (US), Tata Consultancy Services (India), Aspire Systems (India), NTT Data Group Corporation (Japan), Infosys (India), Dell Technologies (US), Innova Solutions (US), EPAM Systems (US), DXC Technology (US), MongoDB (US), LTIMindtree (India), and Wipro (India).
By service type, the Cloud Application Migration segment is expected to have the largest market size during the forecast period.
Cloud application migration is expected to hold the largest market size within the application modernization services market during the forecast period because of increasing demand from organizations to shift their legacy applications to cloud environments. Migration enables companies to make a scalable, efficient operations model, which reduces the cost of maintaining the outdated on- premises infrastructure. Meanwhile, hybrid cloud environments are coming to the fore as cloud adoption accelerates even faster, increasing the demand for greater business agility. All these drivers will push organizations toward focusing on cloud application migration as a modernization imperative. Tailored cloud migration solutions offered by cloud service providers are also on the rise as each cloud provider seeks a bigger share in this growing market by addressing the needs of specific industries.
“By vertical, Telecom segment is expected to hold a higher market share during the forecast period.”
The telecom segment is expected to account for a large portion of the application modernization services market owing to the sector’s ongoing digitalization. Application modernization services help telecom operators to extend life of current applications, adopt new technologies and raise the efficiency of operations. This is because it is important to adopt IT infrastructure that is flexible to enhance and support the technological advancements such as 5G, cloud computing and the IoT among other things. In addition, telecom service providers are also focusing on these services as a means of enhancing customer satisfaction, improving the network and competing effectively in the market, thus consolidating their position within the industry.
“Asia Pacific's highest growth rate during the forecast period.”
The application modernization services market in the forecast period is anticipated to grow at a higher pace in the Asia-Pacific region owing to digital transformation in the region, which is facilitated by the growing use of cloud computing and other emerging technologies as well as the quest for efficiency by business operations. There is an increase in IT spending and digital activities in the likes of China and India, and this creates a need for such services to modernize the aging management systems and incorporate new technologies. The growth of the sector is also enhanced by the efforts of global technology providers and the inflow of local enterprises which enhancing competition. The trend towards a population that is more technologically inclined is another major factor that is increasing the need for sophisticated and high-capacity application modernization services within the region.
Market Players:
The major players in the application modernization services market are Oracle (US), IBM (US), Microsoft (US), HCL Technologies (India), Accenture (Ireland),ATOS SE (France), Capgemini (France), Cognizant (US), Tata Consultancy Services (India), Aspire Systems (India), NTT Data Group Corporation (Japan), Infosys (India), Dell Technologies (US), Innova Solutions (US), Epam Systems (US), DXC Technology (US), MongoDB (US), LTIMindtree (India), Wipro (India), Rocket Software (US), Fujitsu (Japan), Hexaware Technologies (India), Virtusa (US), Softura (US), CloudHedge (US), D3V Technology (US), Bayshore Intelligence (US), Opinov8 (UK), Icreon (US), Symphony Solutions (Netherlands), Cleveroad (Ukraine), Soft Suave (India), TechAhead (US), and Geomotiv (US). These players have adopted various growth strategies, such as partnerships, agreements and collaborations, new product launches and enhancements, and acquisitions to expand their application modernization services market footprint.
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Report Metrics |
Details |
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Market size available for years |
2018-2029 |
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Base year considered |
2023 |
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Forecast period |
2024–2029 |
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Forecast units |
Value (USD) Million/Billion |
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Segments Covered |
By Service Type, Application Type, and Vertical, and Region |
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Region covered |
North America, Europe, Asia Pacific, Middle East & Africa, and Latin America |
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Companies covered |
The major players in the Application Modernization Services market are Oracle (US), IBM (US), Microsoft (US), HCL Technologies (India), Accenture (Ireland), ATOS SE (France), Capgemini (France), Cognizant (US), Tata Consultancy Services (India), Aspire Systems (India), NTT Data Group Corporation (Japan), Infosys (India), Dell Technologies (US), Innova Solutions (US), Epam Systems (US), DXC Technology (US), MongoDB (US), LTIMindtree (India), Wipro (India), Rocket Software (US), Fujitsu (Japan), Hexaware Technologies (India), Virtusa (US), Softura (US), CloudHedge (US), D3V Technology (US), Bayshore Intelligence (US), Opinov8 (UK), Icreon (US), Symphony Solutions (Netherlands), Cleveroad (Ukraine), Soft Suave (India), TechAhead (US), and Geomotiv (US). |
This research report categorizes the application modernization services market to forecast revenues and analyze trends in each of the following submarkets:
Based on Service Type:
- Application Portfolio Assessment
- Cloud Application Migration
- Application Re-Platforming
- Application Integration
- UI/UX Modernization
- Post Modernization
Based on Application Type
- Legacy Applications
- Cloud-hosted Applications
- Cloud-native Applications
Based on Verticals
- BFSI
- Healthcare & Life Sciences
- Telecom
- IT & ITeS
- Retail & Ecommerce
- Government
- Energy & Utilities
- Transportation & Logistics
- Media & Entertainment
- Manufacturing
- Other Verticals (Education and Travel & Hospitality)
By Region:
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North America
- United States (US)
- Canada
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Europe
- United Kingdom (UK)
- Germany
- France
- Italy
- Spain
- Nordic Countries
- Rest of Europe
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Asia Pacific
- China
- Japan
- India
- South Korea
- Australia & New Zealand
- Southeast Asia
- Rest of Asia Pacific
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Middle East & Africa
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Middle East
- Kingdom of Saudi Arabia (KSA)
- United Arab Emirates (UAE)
- Kuwait
- Bahrain
- Rest of Middle East
- Africa
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Middle East
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Latin America
- Brazil
- Mexico
- Rest of Latin America
Recent Developments
- In August 2024, Capgemini signed an agreement to acquire Syniti, one of the leading companies in the enterprise data management software and services including platform and migration services. This acquisition will strengthen Capgemini’s data-driven solutions, especially for large-scale SAP transformations like the shift to SAP S/4HANA.
- In June 2024, Oracle and Google Cloud announced a partnership in which Google Cloud will offer Oracle Cloud Infrastructure (OCI) database services and high-speed network interconnect with Oracle. This partnership will enable users to accelerate their application migrations and modernization.
- In June 2024, Cognizant expanded its partnership with Cengage Group. This move highlights the trend of modernizing educational platforms by integrating advanced technologies to enhance digital learning experiences, reflecting the broader push towards modernizing application infrastructures across sectors.
- In April 2024, Cloud Software Group Inc. and Microsoft Corp. deepened their collaboration with a focus on Citrix virtual applications and cloud AI solutions. This partnership underscores the importance of cloud migration and AI integration in application modernization, emphasizing the need for businesses to update their legacy systems to leverage these technologies.
- In January 2024, Accenture acquired Work & Co, enhancing its capabilities in creating innovative digital products. This acquisition reflects the increasing importance of blending design and technology to modernize applications, helping clients improve user experiences and stay competitive in the digital age.
Frequently Asked Questions (FAQ):
What is the definition of the application modernization services market?
Application modernization is the process of modernizing legacy applications by rehosting, re-platforming, rearchitecting, and migrating them to the cloud with the help of the latest technologies and frameworks for ensuring compatibility and upgrading with technological advancements. It enables organizations to achieve developer efficiency, scalability, and alignment of applications with current business needs. The study focuses only on service vendors catering to various application modernization services market verticals.
What is the market size of the application modernization services market?
The application modernization services market is estimated at USD 19.9 billion in 2024 to USD 39.7 billion by 2029 at a compound annual growth rate (CAGR) of 14.9% from 2024 to 2029.
What are the major drivers in the application modernization services market?
The major drivers in the application modernization services market are the rising digital transformation initiatives, demand for flexibility and scalability through cloud computing, rapid technological advancements, shift towards modernization by cloud-native technologies, and stringent regulatory compliance and security.
Who are the key players operating in the application modernization services market?
The key market players profiled in the application modernization services market include Oracle (US), IBM (US), Microsoft (US), HCL Technologies (India), Accenture (Ireland), ATOS SE (France), Capgemini (France), Cognizant (US), Tata Consultancy Services (India), Aspire Systems (India), NTT Data Group Corporation (Japan), Infosys (India), Dell Technologies (US), Innova Solutions (US), EPAM Systems (US), DXC Technology (US), MongoDB (US), LTIMindtree (India), Wipro (India), Rocket Software (US), Fujitsu (Japan), Hexaware Technologies (India), Virtusa (US), Softura (US), CloudHedge (US), D3V Technology (US), Bayshore Intelligence (US), Opinov8 (UK), Icreon (US), Symphony Solutions (Netherlands), Cleveroad (Ukraine), Soft Suave (India), TechAhead (US), and Geomotiv (US).
What are the key technology trends prevailing in the application modernization services market?
The key technology trends in enterprise networking include Cloud Computing, Microservices Architecture, Containers and Kubernetes, DevOps, API Management, Legacy System Integration, Continuous Integration/Continuous Deployment (CI/CD), Serverless Computing, Artificial Intelligence/Machine Learning, Big Data Analytics. .
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This research study involved the extensive use of secondary sources, directories, and databases, such as Dun & Bradstreet (D&B) Hoovers and Bloomberg BusinessWeek, to identify and collect information useful for a technical, market-oriented, and commercial study of the application modernization services market. The primary sources have been mainly industry experts from the core and related industries and preferred suppliers, manufacturers, distributors, service providers, technology developers, alliances, and organizations related to all segments of the value chain of this market. In-depth interviews have been conducted with various primary respondents, including key industry participants, subject matter experts, C-level executives of key market players, and industry consultants, to obtain and verify critical qualitative and quantitative information.
Secondary Research
In the secondary research process, various secondary sources were referred to identify and collect information for the study. The secondary sources included annual reports, press releases, investor presentations of companies, white papers, certified publications, and articles from recognized associations and government publishing sources. Several journals and associations, such as the application modernization services associations/forums, Cloud Native Computing Foundation (CNCF), Open Mainframe Project, Open Mainframe Project, were also referred to. Secondary research was used to obtain key information about industry insights, the market’s monetary chain, the overall pool of key players, market classification and segmentation according to industry trends to the bottom-most level, regional markets, and key developments from both the market and technology-oriented perspectives.
Primary Research
In the primary research process, various primary sources from both the supply and demand sides were interviewed to obtain qualitative and quantitative information for the report. The primary sources from the supply side included industry experts, such as Chief Executive Officers (CEOs), Chief Technology Officers (CTOs), Chief Operating Officers (COOs), Vice Presidents (VPs), marketing directors, technology and innovation directors, and related key executives from various key companies and organizations operating in the application modernization services market. The primary sources from the demand side included application modernization services end users, consultants/specialists, Chief Information Officers (CIOs), and subject-matter experts from enterprises and government associations.
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Market Size Estimation
Multiple approaches were adopted to estimate and forecast the size of the application modernization services market. The first approach involves estimating market size by summing up the revenue generated by companies through the sale of application modernization services.
Both top-down and bottom-up approaches were used to estimate and validate the total size of the application modernization services market. These methods were extensively used to estimate the size of various segments in the market. The research methodology used to estimate the market size includes the following:
- Key players in the market have been identified through extensive secondary research.
- In terms of value, the industry’s supply chain and market size have been determined through primary and secondary research processes.
- All percentage shares, splits, and breakups have been determined using secondary sources and verified through primary sources.
Application modernization services market Size: Bottom-Up Approach<
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Application modernization services market Size: Top-Down Approach
Data Triangulation
After arriving at the overall market size, the application modernization services market was divided into several segments and subsegments. A data triangulation procedure was used to complete the overall market engineering process and arrive at the exact statistics for all segments and subsegments, wherever applicable. The data was triangulated by studying various factors and trends from the demand and supply sides. Along with data triangulation and market breakdown, the market size was validated by the top-down and bottom-up approaches.
Market Definition
Application modernization is the process of modernizing legacy applications by rehosting, re-platforming, rearchitecting, and migrating them to the cloud with the help of the latest technologies and frameworks for ensuring compatibility and upgrading with technological advancements. It enables organizations to achieve developer efficiency, scalability, and alignment of applications with current business needs.
VMware defines application modernization, also known as legacy modernization or legacy application modernization, as the practice of updating older software for newer computing approaches, including newer languages, frameworks, and infrastructure platforms.
Cognizant defines application modernization is the process of updating legacy applications to scalable, cloud-native app environments using modern technology stacks. This process allows applications to meet modern user expectations as they evolve.
Key Stakeholders
- Application Modernization Service Providers
- Cloud Service Providers (CSPs)
- Independent Software Vendors (ISVs)
- System Integrators
- Enterprises/Businesses
- Technology Consultants
- Regulatory Bodies
- Cloud-Native Development Communities
- Managed Service Providers (MSPs)
- DevOps Teams
- Data Security Providers
- Open-Source Software Communities
- API Management Solution Providers
- Infrastructure Vendors
- AI and Automation Solution Providers
- Network and Connectivity Providers
- Middleware and Integration Tool Vendors
- Platform-as-a-Service (PaaS) Providers
Report Objectives
- To determine, segment, and forecast the application modernization services market based on service type (application portfolio assessment, cloud application migration, application re-platforming, application integration, UI/UX modernization, and post-modernization), application type, vertical, and region in terms of value
- To forecast the size of the market segments with respect to five main regions: North America, Europe, Asia Pacific, Middle East & Africa, and Latin America
- To provide detailed information about the major factors (drivers, restraints, opportunities, and challenges) influencing the growth of the market
- To study the complete value chain and related industry segments and perform a value chain analysis of the market landscape
- To strategically analyze the macro and micromarkets1 with respect to individual growth trends, prospects, and contributions to the total market
- To analyze the industry trends, pricing data, patents, and innovations related to the market
- To analyze the opportunities for stakeholders by identifying the high-growth segments of the market
- To profile the key players in the market and comprehensively analyze their market share/ranking and core competencies2
- To track and analyze competitive developments, such as mergers & acquisitions, product launches & developments, partnerships, agreements, collaborations, business expansions, and R&D activities
Available Customizations
With the given market data, MarketsandMarkets offers customizations as per the company’s specific needs. The following customization options are available for the report:
Country-wise information
- Analysis for additional countries (up to five)
Company Information
- Detailed analysis and profiling of additional market players (up to 5)
Generating Response ...
Growth opportunities and latent adjacency in Application Modernization Services Market
Indepth understanding of the Silverthreads Total Addressable Market.
Interested in Microsoft / Windows application modernization.
Good information. Really helpful.