Application Modernization Services Market Overview
Application Modernization Services Market size is estimated to reach $31.5 billion by 2027 at a CAGR of 19.1% during the forecast period 2022-2027. Growing need for business agility and faster time to market, benefits of leveraging big data technologies in the connected era, cloud computing-a major component of application modernization strategy are driving the application modernization services market. In addition, increasing adoption of advanced software functionalities in business applications to increase business efficiency is expected to drive the growth of the application modernization services market. Further companies are investing in advanced technologies to maintain their technological growth with changing customer demands. Application modernization services such as Cloud Application Migration, Data Migration, UI Modernization, and Application Portfolio Assessment help companies to create new business value by using existing business application programs. Furthermore, technological advancement is also expected to boost the growth of the application modernization services industry in the forecast period 2022-2027.
Application Modernization Services Market Segment Analysis – By Organization Size
In Application Modernization Services Market, SMEs are growing at the highest CAGR of 21.8% during the forecast period, owing to the high adoption of the lift-and-shift migration strategy, which enables their businesses to scale and grow faster. Modern SMEs have realized that immediate response, quick business decisions, and customer satisfaction are the most important features needed to expand businesses, generate revenues, and ensure desired outcomes. In addition SMEs are expected to adopt application modernization services to enhance agility and reduce TCO to a significant extent. Further SMEs face a greater resource crunch than large enterprises and require better methods to solve complexities and increase the cost optimization of their business processes. Furthermore, the adoption of application modernization services has been increasing in SMES across the globe due to the utilization of cutting-edge technologies such as DevOps, Automation, Artificial Intelligence, Machine Learning, and so on to remain competitive, and create more customer value at a much quicker pace in the forecast period 2021-2027.
Application Modernization Services Market Segment Analysis – By End-User Industry
The BFSI sector in Application Modernization Services market is growing at the highest CAGR of 22.5% during the forecast period. The recent pandemic has spurred the demand for digital transformation amongst BFSI, with a need for an agile and scalable IT environment to meet the ever-growing customer needs. In addition, these banking institutes are realigning their legacy applications with new business requirements, in order to become a complete digital-native enterprise and create new business value from aging legacy applications. Further the BFSI industry is adopting newer technologies & models, to survive and thrive in a competitive market and meet emerging customer needs. Additionally, they also need to comply with continuously changing regulations. Hence these factors are analysed to drive the Application Modernization Services Industry Outlook in the forecast period 2022-2027.
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Application Modernization Services Market Segment Analysis – By Geography
APAC dominated the Application Modernization Services market size in 2021 with a share of 31.5% due to higher revenue contribution from the market in China, Australia, India, and Japan as compared to other countries in the region. The trend is expected to continue over the forecast period, owing to a major technological shift towards the adoption of application modernization services in the region. Several organizations are investing in modernizing their application portfolios, including legacy modernization and other app modernization efforts. Moreover, many organizations need business agility to survive and expand in competitive business environments. This is realized by adopting the latest technologies, and developing and delivering modern applications technology, thus driving the growth for the application modernization services market. As per report given by IBM more than 70% of APAC organizations will be digitally transformed by 2030. Hence these factors are analyzed to drive the Application Modernization Services market share in the forecast period 2021-2026.
Application Modernization Services Market Drivers
Post-pandemic demand for modern infrastructure to ensure business continuity is analysed to drive the Application Modernization Services market in the forecast period:
COVID-19 has disrupted the demand-supply chain and triggered technological exigencies across verticals. As enterprises embrace latest technologies and complete digitization through the pandemic, a consistent technology upgrade for archaic applications and software has become imperative for imminent business continuity. Telemedicine, for instance, has observed a sudden surge in the number of users which means that applications in healthcare must brace for exponential growth in the user base. This in turn might require re-plat forming, or re-building of the legacy infrastructure of healthcare apps. Similarly, food ordering and hospitality businesses will require new GPS powered modules that can help them in identifying areas that are infected by a pandemic and quickly stop catering to these areas. Hence the approach to modernization post Covid-19 to ensure business continuity will drive the Application Modernization Services industry in the forecast period 2022-2027.
Growing Collaborations and Partnerships in between companies is driving the growth of the market growth:
New Partnerships and collaboration will enable customers to enhance their digital innovation and business transformation with enterprise control. In 2019, ARCAD Software, partnered with Skytap, global cloud provider delivering an industry-first, multi-tenant public cloud offering for IBM. In 2021, Cloud4C partnered with Cloud Hedge to deliver next-generation application modernization services to businesses worldwide. The services are aimed at helping application and IT leaders modernize their landscape of legacy applications, hardware components, databases, platforms and ecosystems built through old technologies resulting in creation of business value. Similarly, in 2021, Kyndryl and VMware have made strategic partnership focused on app modernization and multi-cloud services. Hence rising collaborations will enable companies to enhance their digital innovation and business transformation with enterprise control in the forecast period. In addition, Application Modernization services help companies speed their digital transformations by rapidly building and deploying new, more secure applications in the forecast period 2022-2027.
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Application Modernization Services Market Challenges
Skill Shortage and High costs involved in application modernization infrastructure are hampering the market growth
The lack of skilled IT specialists is a global problem. According to the Organization for Economic Co-operation and Development (OECD), in 2020 the lack of IT skills will incur losses worldwide totaling $390 billion annually. This lack is reflected in the vast number of unfilled vacancies across the globe. Similarly, according to Digital Skills for the UK Economy, in 2020 the UK was lacking about 40,000 IT specialists which leads to losses of $60 billion every year. Further, the high cost associated with application modernization is also analyzed to hamper the Application Modernization Services market share in the forecast period 2021-2026.
Application Modernization Services Industry Outlook
Technology launches, acquisitions, Partnerships, and R&D activities are key strategies adopted by players in the Application Modernization Services Market. In 2021, the market of Application Modernization Services industry outlook has been fragmented by several companies. Application Modernization Services top 10 companies include:
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