The global application modernization services market is expected to expand from USD 19.82 billion in 2024 to USD 39.62 billion by 2029, reflecting a CAGR of 14.9%. This growth is driven by the increasing need for businesses to adapt to rapidly evolving market conditions. Traditionally, organizations relied on rigid, costly, and outdated legacy systems that were difficult to maintain and upgrade. These systems struggled to integrate with emerging technologies like cloud computing and artificial intelligence, leading to operational inefficiencies and delays.
Over time, the focus has shifted toward modernization strategies that transform legacy applications, ensuring seamless integration with contemporary IT environments, reducing costs, and enhancing performance. This shift has been crucial as businesses prioritize digital transformation and innovation to stay competitive in an increasingly tech-driven world.
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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
Modernization services are increasingly focused on migrating legacy applications to cloud-native architectures, leveraging microservices, containerization (Docker, Kubernetes), and serverless computing. This shift enhances scalability, flexibility, and cost efficiency while enabling seamless integration with modern cloud platforms.
Artificial intelligence (AI) and machine learning (ML) are playing a critical role in automated code refactoring, intelligent workload assessment, and predictive analytics. AI-powered tools accelerate application migration, optimize performance, and reduce manual efforts in transforming legacy systems.
The rise of low-code and no-code platforms allows businesses to modernize applications faster with minimal coding expertise. These platforms enable rapid workflow automation, process digitization, and application upgrades, significantly reducing development time and costs.
Modernization services now prioritize an API-first strategy, enabling seamless integration between legacy systems and modern applications. APIs facilitate data exchange, interoperability, and connectivity with third-party services, ensuring that businesses can extend the functionality of existing applications without full replacement.
Organizations are embracing hybrid and multi-cloud strategies to avoid vendor lock-in, optimize workload distribution, and ensure high availability. Modernization services support cloud-agnostic solutions, allowing applications to run efficiently across AWS, Azure, Google Cloud, and private cloud environments.
Major Highlights of the Application Modernization Services Market
Artificial intelligence (AI) and machine learning (ML)-powered automation are revolutionizing the modernization process. AI-driven code refactoring, intelligent workload analysis, and predictive analytics are reducing manual intervention, accelerating legacy application transformation, and improving efficiency.
Modernization is increasingly API-first, enabling seamless integration between legacy applications and modern digital ecosystems. Organizations are leveraging APIs to ensure enhanced interoperability, data connectivity, and flexibility in IT environments, reducing reliance on monolithic architectures.
With rising cyber threats and stringent regulatory requirements (GDPR, HIPAA, PCI-DSS), security-first modernization is becoming a top priority. Companies are implementing Zero Trust security frameworks, encryption protocols, IAM (Identity and Access Management), and DevSecOps to secure modernized applications.
Industries such as banking, healthcare, retail, and manufacturing are rapidly modernizing their applications to meet compliance mandates, improve customer experience, and enhance operational efficiency. Mainframe modernization is also a key focus for enterprises looking to transition from legacy COBOL-based systems to modern cloud platforms.
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Top Companies in the Application Modernization Services Market
Various globally established players, such as Oracle (US), IBM (US), Microsoft (US), AWS (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.
Oracle (US)
Oracle is a global leader in cloud technology and enterprise software, offering a comprehensive suite of solutions for application modernization. In the Application Modernization Services market, Oracle focuses on helping organizations transform legacy systems into modern, agile, and scalable architectures. By leveraging Oracle Cloud Infrastructure (OCI), containerization, microservices, and advanced analytics, the company enables businesses to optimize performance, reduce costs, and accelerate digital transformation. Oracle’s extensive expertise in databases, middleware, and SaaS solutions makes it a trusted partner for enterprises seeking seamless migration, modernization, and innovation in their application portfolios.
Microsoft (US)
Microsoft is a global leader in technology and a key player in the application modernization services market. Through its Azure cloud platform, Microsoft provides robust tools and services for rehosting, re-platforming, and refactoring legacy applications. With a focus on scalability, integration of AI, and seamless migration, Microsoft empowers businesses to modernize their applications while enhancing performance and reducing operational costs.
Capgemini (France)
Capgemini is a renowned IT services provider, offering comprehensive application modernization services that help organizations transform legacy systems into agile, cloud-native applications. Leveraging expertise in cloud computing, DevOps, and emerging technologies, Capgemini focuses on improving scalability, operational efficiency, and customer experience while supporting digital transformation initiatives globally.
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.
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