Application Transformation Market Size By Deployment Model, By Organization Size, By Service Type, By Industry Vertical, Forecast, 2024 - 2032

Application Transformation Market Size

The global application transformation market was valued at USD 14.8 billion in 2023 and is projected to grow at a CAGR of 14.9% between 2024 and 2032. The market is often biased by digital transformation projects, especially as companies strive to digitally enhance. Those projects propose the use of technology to improve business processes, customer experiences, and innovation. Companies seeking agility and responsiveness to the market usually face a challenge with their existing applications due to stale functions and features. This pushes them towards investing in application transformation projects that help them update and replace legacy systems, support new technologies, and move to the cloud.
 

In September, 2024 Cognizant partnered with the Danish municipally owned IT company KOMBIT with respect to testing and quality assurance of public service application systems in order to enhance the efficiencies and user experience for the 26 public service applications that are used by 98 municipalities in Denmark.
 

The application transformation market is starting to develop as issues related to legacy systems persist. These already established systems which were designed with the earlier technology architecture, may be costly and inefficient as well as incompatible with modern solutions. Obsolete legacy systems block agile and innovative enterprise capabilities because they have a limited ability to respond to changes in market conditions and consumers’ behavior. In addition, these systems are outdated and cannot integrate modern data analysis tools or even cloud-based solutions, which creates additional challenges for the businesses.
 

Hence, the service for transformation of enterprise applications is emerging to help organizations re-engineer their legacy systems by means of refactoring, modernizing, or agile replacing the set legacy systems with cloud-driven applications.
 

Application Transformation Market Trends

A global alteration is the growing proclivity towards the adoption of cloud-native architectures. More and more businesses are consolidating their applications to gain the benefits of their size and flexibility and cost savings for fast deployment and continuous integration. To aid these changes, more focus is being put into microservices architecture, which helps in building applications as a set of components that can be changed independently to enable more agile business responses.
 

The user experience is essential for businesses prior to the construction or redesign of an application. This is a dire need which prompts the adoption of new design methodologies and technologies to create better applications that suit users. Such applications are in high demand now because of the increase in mobile and remote work as companies have to ensure that there is high usability and performance of their applications on many different devices and situations.
 

App transformation, however, faces hurdles, including the emerging cyber threats that are more challenging to protect against. There may be several reasons why the transformation initiatives fail, such as migration of data to new repositories and systems, integration of different systems, and shifts to cloud systems without proper planning and implementation.
 

The constant fear of data breaches has resulted in companies having to tighten the protection of customers’ personal data, billing info, and businesses confidential documents or else suffer financial loss and damage to the company’s reputation. Furthermore, regulatory policies like GDPR and HIPAA restrict them further as it makes them modify their data handling processes entirely. Most of the time, organizations are likely to abandon or limit their application transformation projects if it means switching from a legacy system that is perceived to be more secure but less efficient. It stifles competitiveness and innovation within the ever-changing business environment.
 

Application Transformation Market Analysis

Based on service type, the market is segmented into application portfolio analysis, application modernization services, cloud migration services, integration services, application replatforming, and others. The application modernization services segment accounted for 25% of the application transformation market share in 2023 and is expected to exceed USD 10.5 billion by 2032.
 

• This growth is driven by the desperate need of many organizations to modify pre-developed applications in order to keep abreast of rapidly changing business environments. As companies grow, they run into problems with underperforming software and legacy products that can constrain productivity or innovation.
   
• With the contemporary challenges being faced, modernization services provides the solution by either re-engineering, upgrading or even replacing existing applications. Such actions allow the organization to make use of new technology, improve functional capabilities and increase user satisfaction.
   
• The process of applications modernization also assists an organization to progressively reduce their technical debt which is the cost incurred in maintaining systems that are out of date.
   
• Companies that are modernized become more scalable, more agile, and better equipped to deal with changing environments by deploying new features faster.
   

Based on organization size, the application transformation market is divided into SME and large enterprises. In 2023, the large enterprises segment held around 69% of the market share.  
 

• Due to the large scope of operational complexities and techno-resource capabilities of this segment, large enterprises dominate the organization size segment.
   
• These companies are typically international in scope, requiring them to maintain large-scale IT national infrastructures that integrate both existing and new systems. This intricacy results in a compelling need for application transformation to aid in procedural automation, process effectiveness, and technology performance.
   
• Equally important, the large enterprise application transformation market possesses an adequate degree of large enterprises’ strategic growth initiatives. Their goal is to implement digital transformation in order to improve agility, service delivery innovation, as well as customer experience. This also appeals to the broader market, particularly large enterprises, who intend to remain competitive in a fast-changing market.
   
• All these operational conditions combined with the need to comply with legislation, resource availability, and strategic objectives make large enterprises major participants in the market.

In 2023, U.S. accounted for a application transformation market share of over 78.5% of the North America region and is expected to reach around USD 10 billion by 2032.
 

• The U.S. has a well established technology infrastructure with a significant number of IT companies, application software, and technological innovation firms located in it. This situation provides endless possibilities for innovation and development which, in turn, increases the demand for application transformation services for businesses that wish to sustain a competitive advantage to newer technologies.
   
• Additionally, the U.S companies including finance, healthcare, retail, manufacturing divisions are focusing on digital transformation development strategies to enhance online efficiency, user engagement, and market competition. Having such organizations that have out-of-date systems still in use, modernization is core to adopting new technologies that include cloud computing, artificial intelligence, machine learning, etc.
   
• Therefore, U.S. companies are taking action for increasing investment with different application transformation programs in regard to these challenges and scaling their IT resources.
   

Application Transformation Market Share

Google, AWS, and Microsoft collectively held a substantial market share of 11% in the application transformation industry in 2023.
 

• These tech companies have acquired a leading market position as they offer cloud platforms that allow organizations to easily move, update, and integrate applications. To expand their market position, these companies have adopted several tactics.
   
• They never stop working towards expanding their range of services and updating their cloud-based solutions to meet new customer expectations. By partnering and forming alliances with companies, they create specialized solutions, which increases the demand for their products.
   
• AWS offers multiple services, including computing and storage, as well as machine learning, which allows businesses to improve their applications with minimal effort.
   
• The Azure platform from Microsoft enables hybrid solutions because it integrates both on-premises resources with cloud-based ones together with enterprise applications like Microsoft 365.
   
• Google Cloud leads in analytics and machine learning, making products that help companies process their data and enhance their applications.
   

Application Transformation Market Companies

Major players operating in the application transformation industry are:

• Accenture
• Atos
• AWS
• Bell Integration
• Capgemini
• Cognizant
• DXC Technology
• Fujitsu
• Google
• HCL
   

The application transformation market is seeing a lot of international companies practicing merger and acquisition strategies to strengthen their presence in the market. With the goal of modernizing applications in an all-encompassing way, companies started forming alliances with IT consultants, software publishers, and cloud service providers. This aids in streamlining the Modernization of applications, improving operational effectiveness, and even increasing the scalability for enterprise clients due to heavy investment in emerging technologies such as AI, ML, and even low code/no code technologies.
 

In particular, the cloud-native development strategies of application built above coupled with the principles of DevOps aid these companies to accelerate the way their applications are transformed. Because of the greater attention being paid towards sustainability within IT, enterprises have started looking for green application transformation practices.
 

These enterprises are helping their clients reduce energy consumption and carbon emissions by modernizing their legacy systems while reducing the reliance on hardware. Further, these enterprises gain competitive advantage in the industry by meeting the new sustainable IT practice standards with the efficient use of resources and green cloud technology.
 

Application Transformation Industry News 

• In June 2024, Simplify Healthcare partnered with Capgemini to enhance its offerings through the Simplify Health Cloud and Simplify App Fabric. This collaboration is aimed at driving innovation and transformation within the healthcare payer sector. This low-code application development platform allows healthcare organizations to build enterprise solutions rapidly. It supports innovation by enabling users to create customized applications that meet specific business needs without extensive coding
   
• In March 2024, NETAPP announced a partnership with NVIDIA to further the development of Retrieval-Augmented Generation (RAG) technology for generative AI applications. This initiative is intended to provide augmentative capabilities for enterprises via the service of integrating NVIDIA NeMo Retriever microservices into the intelligent data infrastructure provided by NetApp so that customers can securely extract value from large datasets.
   

The  application transformation market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue ($ Mn/Bn) from 2021 to 2032, for the following segments:

Click here to Buy Section of this Report

Market, By Deployment Model

• On-premises
• Cloud-based
• Hybrid solutions

Market, By Organization Size

• SME
• Large enterprises

Market, By Service

• Application portfolio analysis
• Application modernization services
• Cloud migration services
• Integration services
• Application replatforming
• Others

Market, By Industry Vertical

• BFSI
• Healthcare & life sciences
• Retail & consumer goods
• Manufacturing
• IT & telecommunications
• Government & public sector
• Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Nordics
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • ANZ
  • Southeast Asia
• Latin America
  • Brazil
  • Mexico
  • Argentina
• MEA
  • UAE
  • Saudi Arabia
  • South Africa