The size of the global application modernization services market is expected to increase at a Compound Annual Growth Rate (CAGR) of 14.9%, from USD 19.82 billion in 2024 to USD 39.62 billion by 2029. The increased requirement for companies to adapt to the rapidly changing business environment is driving market growth. Businesses used to rely on antiquated, rigid, costly to maintain, and particularly costly to upgrade technologies. These outdated systems experienced operating delays as a result of their inability to integrate cutting-edge technologies like cloud computing and artificial intelligence. However, the market has focused on alternative solutions throughout the years that assist businesses in changing the way some of their apps operate, integrating them with the existing IT infrastructure, reducing costs, and improving speed.
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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
Application modernization services are increasingly focused on transforming legacy systems into cloud-native applications, leveraging microservices and containerization technologies. This allows businesses to scale operations more efficiently, ensure high availability, and accelerate deployment cycles. The shift away from monolithic architectures enables flexibility, improves resilience, and supports continuous integration/continuous delivery (CI/CD).
Modernization service providers are embedding artificial intelligence (AI) and machine learning (ML) to enhance legacy system functionality, automate code conversion, and optimize business logic. AI-powered modernization tools can analyze existing codebases, identify performance bottlenecks, and suggest improvements, drastically reducing manual intervention and risk.
The rise of low-code/no-code platforms is a unique enabler in the application modernization landscape. These tools allow for rapid development and transformation of legacy applications with minimal coding, enabling faster time-to-market and empowering non-developer stakeholders to participate in the modernization process.
A key differentiator in this market is the use of business-driven application assessment frameworks. These frameworks prioritize modernization efforts based on business value, technical debt, and future scalability, ensuring that investments in modernization directly align with strategic business goals.
Major Highlights of the Application Modernization Services Market
The surge in digital transformation initiatives across industries is a primary driver of growth in the application modernization services market. Organizations are under increasing pressure to upgrade outdated legacy systems to remain competitive, agile, and responsive to customer expectations in the digital economy.
The widespread adoption of cloud technologies is significantly influencing the modernization landscape. Enterprises are modernizing applications to become cloud-ready or cloud-native, enabling better scalability, performance, and cost efficiency. Public, private, and hybrid cloud models are all contributing to this shift.
Organizations are seeking agile, modular, and scalable applications to support dynamic business needs. Application modernization helps eliminate the constraints of monolithic legacy systems, allowing companies to adapt rapidly to market changes and accelerate time-to-value.
Modernization efforts are increasingly focused on addressing security vulnerabilities in outdated systems and ensuring compliance with evolving regulatory frameworks. Services often include code refactoring and architecture redesigns to improve security posture and data protection.
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Top Companies in the Application Modernization Services Market
The major vendors covered in the application modernization services market are Oracle (US), IBM (US), Microsoft (US), AWS (US), HCL Technologies (India), Accenture (Ireland), ATOS SE (France), Capgemini (France), Cognizant (US), Tata Consultancy Services (India), Aspire Systems (India), NTT Data Group Corporation (Japan), Infosys (India), Dell Technologies (US), Innova Solutions (US), EPAM Systems (US), DXC Technology (US), MongoDB (US), LTIMindtree (India), Wipro (India), Rocket Software (US), Fujitsu (Japan), Hexaware Technologies (India), Virtusa (US), Softura (US), CloudHedge (US), D3V Technology (US), Bayshore Intelligence (US), Opinov8 (UK), Icreon (US), Symphony Solutions (Netherlands), Cleveroad (Ukraine), Soft Suave (India), PalmDigitalz (India), AveriSource (US) TechAhead (US), and Geomotiv (US). These players have adopted various growth strategies, such as partnerships, agreements and collaborations, new product launches, enhancements, and acquisitions to expand their footprint in the application modernization services market.
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.
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.
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