Application Modernization Services Market Overview:

The application modernization services market industry has been steadily growing, with a projected value of USD 7.2 billion in 2021. This market is expected to reach USD 24.9 billion by 2030, exhibiting a compound annual growth rate (CAGR) of 16.80% during the forecast period (2022-2030). The demand for these services is primarily driven by the need to enhance software functionalities due to changing business regulations and processes, as well as evolving consumer demands and increasing market competition. Businesses are increasingly realizing the importance of agility in order to thrive in competitive environments, leading to a surge in the demand for application modernization services globally.

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Key Players:

Key companies in the application modernization services market include,

• Wipro
• Virtusa
• IBM
• Capgemini
• Software
• Aspire Systems
• Oracle

In today's rapidly evolving business landscape, companies are constantly seeking ways to stay competitive and meet the ever-changing demands of their customers. One of the key strategies adopted by businesses to achieve this is through application modernization services. These services enable organizations to update and transform their legacy applications, making them more efficient, scalable, and adaptable to modern technologies. The application modernization services market is projected to witness significant growth in the coming years, driven by the need for improved software functionalities, the rise of cloud computing, and the benefits of combining modern technologies with software systems.

Trends Driving the Application Modernization Services Market

The COVID-19 pandemic has disrupted the global demand-supply chain, leading to a surge in technology demands across various industries. To ensure business continuity, organizations are adopting cutting-edge technologies and fully digitizing their operations. This has created a need for constant technological upgrades for outdated apps and software. For example, the healthcare industry has witnessed exponential growth in telemedicine, leading to a need for the reconstruction or replatforming of healthcare apps to accommodate the growing user population. Similarly, food delivery services and hotel firms require new GPS-powered modules to swiftly adapt their services in pandemic-affected areas. As a result, the application modernization services market is expected to experience significant growth from 2022 to 2027, driven by the modernization strategies adopted after the COVID-19 pandemic to ensure business continuity.

Another trend shaping the application modernization services market is the rise of partnerships and collaborations between companies. These partnerships enable organizations to enhance their digital innovation and business transformation capabilities. For instance, in 2021, IBM collaborated with ARCAD Software and Skytap to offer a multi-tenant public cloud offering, while Cloud4C and Cloud Hedge teamed up to provide next-generation application modernization services worldwide [^2^]. Such partnerships allow businesses to modernize their legacy applications, hardware components, databases, and platforms, thereby generating business value. With the increasing number of partnerships in the market, organizations have the opportunity to accelerate their digital transitions by developing and deploying new, secure applications quickly.

Segmenting the Application Modernization Services Market:

The application modernization services market can be segmented based on various factors, including vertical, deployment mode, and application. Understanding these segments provides insights into the key growth areas and opportunities within the market.

Vertical Insights:

In terms of verticals, the application modernization services market covers healthcare, IT, telecommunications, energy and utilities, manufacturing, and consumer goods and retail. Among these, the telecommunications segment dominated the market growth in 2021 and is projected to be the fastest-growing segment during the forecast period (2022-2030). Major telecom providers are adopting various cloud infrastructures, including containerization and micro-services, to support their businesses. This promotes the expansion of hybrid cloud infrastructure and drives the demand for application modernization services.

Deployment Mode Insights

The application modernization services market can also be segmented based on deployment mode, including hybrid cloud, private cloud, and public cloud. In 2021, the hybrid cloud segment dominated the market and is expected to be the faster-growing segment during the forecast period (2022-2030). Hybrid clouds are valuable in reducing the inefficiencies of legacy systems and are in high demand in many economies. The use of these application services is expanding due to enhanced software features and diverse demand from various economies.

Application Insights:

Regarding applications, the market can be categorized into post modernization, application portfolio assignment, UI modernization, cloud application mitigation, application integration, and application re-platforming. Among these, the application re-platforming segment dominated the market in 2021 and is projected to be the faster-growing segment during the forecast period (2022-2030) . This segment offers better networking speeds, flexibility, scalability, and faster application delivery. Businesses from all industry verticals, including small, medium, and large-scale enterprises, are requesting application modernization services to interact with their legacy systems and fix issues. Additionally, the demand for cloud migration services to move applications to cloud environments is increasing.

Regional Insights:

The application modernization services market is analyzed across North America, Europe, Asia-Pacific, and the Rest of the World. North America accounted for a significant market share in 2021, driven by the rapidly evolving IT infrastructure, the growth of small and medium-sized businesses (SMEs), and the emergence of cybersecurity solutions. In this region, businesses are replacing physical servers with virtualized environments to cut costs and improve operational effectiveness. Asia-Pacific is expected to witness the fastest growth in the application modernization services market, fueled by the rising population, technological advancements, and increasing demand for software services in countries like Australia, China, Japan, and India. Europe is also projected to grow at a substantial CAGR, driven by advancements in associated technology and a greater awareness of the benefits of modernization services.

Key Market Players and Competitive Landscape:

The application modernization services market is highly competitive, with major players investing significantly in research and development to expand their product lines. These players also employ various strategic initiatives to grow their worldwide footprint, such as new product launches, contractual agreements, mergers and acquisitions, increased investments, market developments, and collaborations with other organizations. To expand and survive in this competitive market, competitors must offer cost-effective solutions that meet the evolving needs of businesses.

Some of the key players in the application modernization services market include Wipro, Virtusa, IBM, Capgemini, Software, Aspire Systems, Oracle, DXC Technology, NTT Data, Accenture, HCL, Bell Integrator, Dell, Cognizant, Blu Age, and Fujitsu. These companies play a crucial role in shaping the market and driving innovation in application modernization services.

Cognizant, an American multinational provider of consulting and IT services, has collaborated with CECONY to update its legacy IT platform, technological infrastructure, and applications. This collaboration aims to increase operational effectiveness, provide better agility, and enhance the customer experience at its locations in New York and the surrounding area.

Oracle Corporation, based in Austin, Texas, specializes in computer technology and is one of the largest software companies globally. The company offers a wide range of enterprise software products and database software and technology, catering to various business needs.

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Conclusion:

The application modernization services market is witnessing significant growth as businesses recognize the importance of updating and transforming their legacy applications. With the rise of cloud computing, the need for enhanced software functionalities, and the benefits of combining modern technologies with software systems, organizations are increasingly adopting application modernization services to stay competitive and meet customer demands. By leveraging partnerships, collaborations, and strategic initiatives, market players are driving innovation and expanding their global footprint. As businesses continue to prioritize agility and digital transformation, the application modernization services market is poised for substantial growth in the coming years.

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