Application Modernization Services Market Report 2025

The application modernization services market size has grown rapidly in recent years. It will grow from $21.13 billion in 2024 to $24.58 billion in 2025 at a compound annual growth rate (CAGR) of 16.3%. The growth in the historic period can be attributed to business process optimization, cost efficiency, user experience enhancement, data management challenges, market competition, innovation requirements.

The application modernization services market size is expected to see exponential growth in the next few years. It will grow to $51.92 billion in 2029 at a compound annual growth rate (CAGR) of 20.6%. The growth in the forecast period can be attributed to mobile-first strategies, remote work dynamics, customer expectations, elastic scalability requirements, data privacy and compliance, environmental sustainability. Major trends in the forecast period include cloud-native adoption, microservices architecture, containerization and orchestration, DevOps integration, API-first approach, security and compliance, hybrid and multi-cloud strategies.

The growing number of businesses adopting digital technologies and applications is anticipated to propel the application modernization services market in the future. Digital technologies encompass electronic systems, devices, and resources that generate, store, or process data. Application modernization services assist organizations in updating their IT infrastructure and applications using advanced technologies. For example, in October 2023, Whatfix, an Indian SaaS-based digital adoption platform, reported that global IT spending is expected to reach $5 trillion in 2024, representing an 8.6% increase from 2023. This growth underscores the heightened emphasis businesses are placing on digital technologies to enhance operations and respond to changing market demands. Therefore, the increasing adoption of digital technologies and applications is driving the growth of the application modernization services market.

The growing adoption of cloud computing is expected to significantly boost the application modernization services market in the future. Cloud computing refers to the provision of various computing services - including servers, storage, databases, networking, software, and analytics - over the internet. It offers a scalable and flexible infrastructure, enabling businesses to adjust their applications according to demand seamlessly. Application modernization services help organizations modify their existing applications to take full advantage of the scalability and flexibility provided by cloud platforms. For example, in July 2024, CloudZero, a U.S.-based cloud cost intelligence platform, reported that over 90% of organizations are utilizing cloud services, with approximately 67% operating in a public cloud environment and 45% using private clouds. Furthermore, 48% of organizations plan to migrate at least half of their applications to the cloud within the next year, indicating a strong trend toward cloud adoption. Therefore, the increasing utilization of cloud computing is driving the growth of the application modernization services market.

Technological advancements are a significant trend shaping the application modernization services market. Leading companies in this sector are incorporating new technologies, such as SMART Modernization services, which utilize AI and machine learning to accelerate digital transformation and gain a competitive edge. For example, in October 2023, AVEVA, a UK-based industrial software company, introduced an enhanced strategy that includes a new Hybrid Cloud Manufacturing Execution System. This innovative system features advanced capabilities for real-time data processing and analytics, allowing manufacturers to optimize their operations and enhance decision-making. The launch underscores AVEVA's dedication to facilitating digital transformation in the manufacturing sector by providing a flexible solution that harnesses the advantages of hybrid cloud technology.

Major players within the application modernization services market are intensifying their focus on product development, particularly in the realm of AI-powered assistants, to fortify their market standing. AI-powered assistants, specifically enterprise coding assistants, are software tools leveraging artificial intelligence to aid developers in writing code swiftly and accurately. For instance, in October 2023, International Business Machines Corporation (IBM), a renowned US-based multinational technology and consulting company, unveiled Watsonx Code Assistant. This cutting-edge generative AI-powered assistant targets enterprise developers and IT operators, enhancing their coding efficiency and precision. The tool's innovative approach employs natural language prompts to streamline coding processes, catering to two significant enterprise use cases. Firstly, it supports IT automation through Watsonx Code Assistant for Red Hat Ansible Lightspeed, enabling tasks like network configuration and code deployment. Secondly, it addresses mainframe application modernization with Watsonx Code Assistant for Z, facilitating the translation of COBOL to Java. IBM's Watsonx Code Assistant aims to bolster coding productivity by harnessing AI's capabilities to comprehend and respond to natural language queries, simplifying intricate coding tasks for enterprise users.

In May 2024, Rocket Software, a US-based software firm, acquired OpenText's application modernization and connectivity (AMC) business for $2.275 billion. This acquisition boosts Rocket Software's capabilities in mainframe modernization, equipping the company with industry-leading tools for updating legacy systems and establishing it as a key player in the transition to hybrid cloud environments. OpenText, also a US-based software company, provides various strategies for application modernization, including platform upgrades, enhancements in user experience, and operational optimizations.

Major companies operating in the application modernization services market are Accenture PLC, Aspire Systems Inc., Asysco Inc., Bell Integrator Inc., Blu Age Corp., Capgemini SE, Cognizant Technology Solutions Corporation, Dell Inc., DXC Technology Company, EPAM Systems Inc., HCL Technologies Limited, Hexaware Technologies Limited, IBM Corporation, Infosys Limited, Micro Focus International PLC, Microsoft Corporation, Modern Systems Inc., Oracle Corporation, Tata Consultancy Services Limited, Tech Mahindra Limited, The Software Revolution Inc., Wipro Limited, Atos Information Technology Incorporated, Deloitte Touche Tohmatsu LLC, Cuelogic Technologies Pvt. Ltd., Mindtree Consulting Private Limited, Larsen & Toubro Infotech Ltd., Virtusa Consulting Services Private Limited, Nippon Telegraph and Telephone Public Corporation, Trianz Holdings Private Limited, Persistent Systems and Solutions Limited, Sonata Software Ltd.

North America was the largest region in the application modernization services market in 2024. The regions covered in the application modernization services market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the application modernization services market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Application modernization involves the process of updating older software to align with newer computing methodologies, aiming to enhance agility, foster innovation, reduce costs and risks, and ultimately streamline business operations for growth. Application modernization services are instrumental in revitalizing older software by incorporating new computing approaches, including the adoption of newer languages, frameworks, and infrastructure platforms.

The primary types of application modernization services encompass COBOL, ADA, PL/1, RPG, assembler, power builder, and other variations. COBOL, for example, is utilized for migrating COBOL applications either in mass or through staged processes to the preferred programming language and platform. COBOL, which stands for Common Business-Oriented Language, is a high-level programming language designed for business computer programs, commonly used in industries such as finance and human resources. Various cloud development modes, including private cloud, public cloud, and hybrid cloud, play a significant role in the application modernization landscape. Different types of applications targeted for modernization include post-modernization, application portfolio assignment, UI modernization, cloud application mitigation, application integration, and application re-platforming. The application modernization services cater to diverse industry verticals such as BFSI, healthcare, life sciences, telecommunications, IT and ITeS, retail and consumer goods, government and public sector, energy and utilities, manufacturing, and other sectors.

The application modernization services market research report is one of a series of new reports that provides application modernization services market statistics, including application modernization services industry global market size, regional shares, competitors with an application modernization services market share, detailed application modernization services market segments, market trends and opportunities, and any further data you may need to thrive in the application modernization services industry. This application modernization services market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

The application modernization services market includes revenues earned by entities by providing rehosting, rearchitecting and recoding application modernization services. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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