The global market for application modernization services is expected to expand from USD 19.82 billion in 2024 to USD 39.62 billion by 2029, with a Compound Annual Growth Rate (CAGR) of 14.8%. This growth is driven by the rising need for organizations to adapt to a rapidly changing business landscape. Traditionally, businesses relied on legacy systems that were poorly designed, inflexible, and costly to maintain and upgrade. These systems struggled to integrate with emerging technologies like cloud computing and artificial intelligence, leading to operational inefficiencies. However, in recent years, the market has shifted its focus towards alternative solutions that enable organizations to modernize their applications, integrate them into current IT environments, reduce costs, and increase efficiency. This shift is crucial, given the growing emphasis on digital transformation and innovation across industries.
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“Based on Application Type, the cloud-hosted applications will hold the largest market size during the forecast period.”
Cloud-hosted applications are expected to hold the largest market size in the application modernization services market during the forecast period, as cloud provides scalability, flexibility, and cost-efficiency. Cloud helps businesses in modernizing their existing applications without making huge investments in new hardware. It enables transformation through modern technology stacks like AI and analytics in order to improve application performance and build newer intelligent applications. Furthermore, the need for cloud based infrastructure has grown with increasing remote work culture and digitalization where data and applications can be accessed from any device. cloud provides multiple additional advantages over on-premises deployment model such as security, backup, disaster recovery etc.
“By service type, Cloud Application Migration segment is expected to hold a highest growth rate during the forecast period.”
In the market of application modernization services, cloud application migration is projected to grow at a fastest pace during the forecast period owing to its essential contribution to the transformation of IT structures and the operational efficiencies therein. Companies are moving away from the traditional on-premise systems to the cloud in order to capitalize on the infusion of scalability, flexibility and cost-effective solutions that comes with the cloud. Factors such as growing data volumes, rising need of robust infrastructure and flexible deployments are responsible for driving the shift from on-premise or legacy systems to cloud-based environments. Additionally, the end of support for legacy systems such as SAP Business Suite and ECC6 is further pushing the enterprises to accelerate cloud migration initiatives in order avoid disruptions and remain competitive in the market. Furthermore, the widespread adoption of hybrid and multi-cloud strategies is fueling the growth of cloud application migration services. It can touted that as companies continuously seeking ways to optimize workloads and integrate modern technologies into their systems, the importance of cloud application services is bound to grow in the application modernization services landscape.
“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 highest share of the application modernization services market and its share will remain high during the forecast period owing to the sector’s ongoing digitalization and adoption of 5G networks. Digital Technologies have gradually become imperative for every telecom provider, and yet, with so many changes, conquest of legacy systems occurs naturally. Application modernization services help telecom operators to extend life of current applications, adopt new technologies and raise the efficiency of operations as a whole. As it is imperative to adopt IT infrastructure that is strong and flexible in order to enhance and support the technological advancements such as 5G, cloud computing and the IoT among other things. Furthermore, due the rapidly increasing demand for high-speed connectivity and advanced communication solutions, telecom vendors are investing heavily into modernizaing their IT landscapes, optimize network performance, and streamline operations. 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. Owing to these factors, the telecom sector is expected to witness the highest growth during the forecasted period.
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Unique Features in the Application Modernization Services Market
This impressive growth reflects the rising demand for modernization services, which is driven by organizations’ need to stay competitive in a dynamic business environment. The shift highlights the importance of digital transformation as companies seek to enhance their technological capabilities to meet current and future market demands.
Challenges with Legacy Systems One of the unique aspects of the market is its focus on addressing the limitations of legacy systems. These older systems, which were poorly designed and difficult to maintain or upgrade, have become significant hurdles for businesses. They lack flexibility and are expensive to operate, particularly when integrating new technologies like cloud computing and artificial intelligence. Modernization services aim to resolve these issues by offering solutions that streamline operations, reduce maintenance costs, and improve system flexibility.
Focus on Innovation and Integration A key feature of the market’s evolution is the emphasis on innovation, with a particular focus on digital transformation. Modernization services are designed not just to upgrade outdated systems but also to transform how applications function within the modern IT environment. By integrating with current technologies, businesses can lower costs, improve operational speed, and enhance overall performance. The ability to merge legacy systems with cutting-edge technologies is a unique aspect of the market that helps organizations remain competitive in an era where innovation is a strategic priority.
Major Highlights of the Application Modernization Services Market
This growth is driven by the increasing need for organizations to adapt to the fast-paced, ever-evolving business environment. The ability to modernize and optimize existing applications is becoming a strategic priority for companies across industries.
Overcoming Legacy System Limitations A major highlight of this market is its focus on addressing the challenges posed by legacy systems. These systems are typically rigid, inefficient, and costly to maintain or upgrade. They also struggle to incorporate modern technologies like cloud computing and artificial intelligence, leading to operational inefficiencies. The market is focused on providing solutions that help organizations overcome these limitations, enabling smoother transitions to advanced digital ecosystems.
Emphasis on Digital Transformation and Innovation The market’s increasing attention to digital transformation and innovation is another standout feature. Application modernization services now focus on transforming outdated applications to work seamlessly with modern IT environments. These services not only reduce costs and operational delays but also enhance the overall speed and performance of business processes. By helping organizations integrate legacy systems with emerging technologies, the market enables businesses to stay competitive and innovative in a rapidly changing technological landscape.
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Top Companies in the Application Modernization Services Market
Various globally established players, such as Oracle (US), IBM (US), Microsoft (US), HCL Technologies (India), Accenture (Ireland), ATOS (France), Capgemini (France), Cognizant (US), TCS (India), are dominating the application modernization services market. To increase their market share in the application modernization services market, these competitors have used various growth methods, including partnerships, agreements, collaborations, new product releases, product enhancements, and acquisitions.
IBM
IBM(International Business Machines Corporation) is a worldwide technology and consulting firm that provides solutions to its customers business problems. The company has four primary operational segments, which are Software Development, Consulting, Infrastructure and Financing. The first of these segments refers to the hardware and software of the company including cloud systems and Al systems with analytical, artificial intelligence, automated control, block-chain and information assurance technologies. The second area of the company’s operations, i.e., consulting, includes business transformation engagements, technology consulting, and application services. This segment provides IT resources such as storage systems, servers, and even mainframes as means to enhance the existing IT environments of clients. This particular segment helps enhance the IT resources of the company by providing financial solutions such as leasing and lending in order to facilitate the acquisition of new IT resources.
In the application modernization services market, IBM is engaged in the provision of diverse services through its IBM Garage platform. The platform is designed for creative approaches for the specific needs of customers. It assists organizations in the process of the renewal of their existing and legacy applications in order to achieve a quicker digital evolution of the company and creating a better experience for the developers and the easing the of process of migrating applications on the clouds.
In the application modernizations services portfolio for the company potential clients, preliminary app readiness assessment is followed by application refactoring, repackaging and replatforming utilizing the containerization and DevOps pipelines. It also extends the scope of services and includes assistance in moving relevant applications to the cloud, or following the banking crisis, app decommissioning processes. The company offers these services through the tools within its IBM Garage system.
To evaluate application portfolios, IBM relies on the Cloud Transformation Advisor tool which assists organizations in identifying the most suitable modernization approach. This tool falls under the umbrella of IBM Cloud Pak for Applications, which is a solution specializing in containerization software. When it comes to cloud migrations, the platforms and the cloud services are provided by the IBM Cloud Migration Factory, and the applications are hosted on the IBM WebSphere Liberty platform for purposes of refactoring. Other tools such as IBM Cloud Pak for Integration provide features like application and data integration, and so on. Employing about 2,82,200 employees, IBM registered an annual revenue of USD 61.86 billion in 2023. Moreover, it has a wide global reach with operations in North America, Europe, Asia, the Middle East and Africa, as well as in Latin America.
Accenture
Accenture is a global management consulting, technology services and outsourcing company which was previously called Andersen Consulting. The company adds value through its strategy focused on competing effectively with other firms which includes strategic alliance, constant R&D investment, and keeping employees on a regular training schedule. The company’s operations are far-reaching, covering the entire globe and therefore gives healthy competition to big names like Deloitte, Atos, NTT Data, IBM, Capgemini, etc. in the provision of diverse products and services.
Accenture offers services to a wide range of industries such as, aerospace and defense, chemicals, healthcare and life sciences, software and its platforms, automotive industry, communication and media, banking sector, consumer products and services, retailing, and the public sector. The segments of the company include Communications, Media & Technology, Financial Services, Health & Public Services, Products, and Resources.
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