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

Application Transformation Market Size

The global application transformation market size was valued at USD 14.8 billion in 2023 and is projected to grow at a CAGR of 13.8% between 2024 and 2032. Digital transformation initiatives are driving growth in the market as organizations recognize the need to adapt to evolving technology.
 

These initiatives aim to leverage technology for enhancing business processes, improving customer experiences, and driving innovation. Companies striving for agility and market responsiveness often find their existing applications hindering progress due to outdated functionalities and limitations. This realization leads organizations to invest in application transformation services, enabling them to modernize legacy systems, integrate new technologies, and adopt cloud solutions.
 

For instance, in September 2024, Cognizant partnered with KOMBIT, a municipally owned IT firm in Denmark, to transform the testing and quality assurance of public service applications. This collaboration aims to enhance operational efficiency and improve user experience across 26 public service applications utilized by 98 Danish municipalities.
 

Legacy system challenges are also driving demand for the industry as organizations face limitations from outdated technology. These systems, built on older architectures, often lead to inefficiencies, high maintenance costs, and compatibility issues with modern solutions. As businesses aim for agility and innovation, legacy systems hinder their ability to respond quickly to market changes or customer demands. Outdated software may not support new features or integrations, making it difficult for companies to use advanced data analytics or cloud-based solutions. This creates a need for application transformation services, which help organizations modernize their legacy systems through refactoring, replatforming, or replacing them with more agile, cloud-native applications.
 

Application Transformation Market Trends

The market is experiencing significant trends that reflect the evolving technology landscape and business requirements. A notable trend is the growing adoption of cloud-native architectures. Organizations are increasingly migrating applications to cloud environments to benefit from scalability, flexibility, and cost-efficiency, enabling rapid deployment and continuous integration. This transition is complemented by a rising focus on microservices architecture, allowing businesses to develop and deploy applications as a set of loosely coupled services, thereby enhancing agility and adaptability to change.
 

Organizations are increasingly prioritizing user experience (UX) in application design and transformation. This focus drives the adoption of modern design principles and tools to create intuitive, engaging applications that meet user expectations. The expansion of mobile and remote work has intensified this demand, as businesses aim to ensure their applications are accessible and perform well across various devices and environments.
 

Data security concerns impede the growth of the market as organizations navigate the challenges of protecting sensitive information against rising cyber threats. The transformation process, which often involves data migration to new platforms, system integration, and cloud adoption, can create vulnerabilities if not properly managed.
 

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 market share in 2023 and is expected to exceed USD 10 billion by 2032. This dominance stems from organization urgent need to enhance existing applications to maintain competitiveness in an increasingly digital landscape.
 

As businesses evolve, they face challenges with outdated software and legacy systems that can impede operational efficiency and restrict innovation capabilities. Modernization services address these issues by updating, re-engineering, or completely overhauling existing applications. This process allows organizations to leverage modern technologies, improve performance, and enhance user experiences.
 

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. Large enterprises hold a significant share in the organization size segment due to their operational complexities and resource capabilities. These companies often operate globally, managing extensive IT infrastructures that combine legacy systems with modern applications. This complexity drives the need for application transformation to enhance operational efficiency, streamline processes, and improve overall technology performance.
 

Additionally, the market is significantly influenced by large enterprises' strategic expansion initiatives. These organizations aim to enhance agility, innovate services, and improve customer experiences through digital transformation. This approach aligns with broader market trends, as large enterprises strive to adapt swiftly to evolving market conditions. The convergence of operational requirements, regulatory compliance, resource availability, and strategic goals positions large enterprises as key players in the industry.
 

In 2023, U.S. accounted for a application transformation market share of over 78% of the North America region and is expected to reach around USD 9.5 Billion by 2032. The United States has a robust technology ecosystem with a high concentration of leading IT firms, software developers, and technology startups. This environment fosters continuous innovation and development, driving demand for application transformation services. Businesses seek these services to maintain a competitive edge and leverage the latest technologies.
 

Furthermore, U.S. companies across finance, healthcare, retail, and manufacturing sectors are pursuing digital transformation strategies to enhance efficiency, improve customer experiences, and adapt to market changes. The presence of legacy systems in these organizations necessitates modernization to leverage emerging technologies such as cloud computing, artificial intelligence, and machine learning.
 

The development of market in Europe is driven by digital transformation initiatives and regulatory compliance. Companies in the region are undergoing digital modernization to stay competitive in the market and comply with compliance. This led to increase in demand for modernized, secure, and scalable applications.
 

Application Transformation Market Share

Google, AWS, and Microsoft collectively held a substantial market share of 11% in the market in 2023. These technology companies have secured leadership positions by providing scalable cloud platforms that facilitate seamless application migration, modernization, and integration for organizations. To strengthen their market presence, these firms have implemented several strategic measures. They consistently invest in broadening their service portfolios, upgrading their cloud platforms with new functionalities to address changing customer requirements.
 

AWS provides a wide range of services, including computing power, storage, and machine learning capabilities, enabling businesses to transform their applications efficiently. Microsoft's Azure platform facilitates hybrid cloud solutions, allowing organizations to combine on-premises and cloud resources while integrating with enterprise applications such as Microsoft 365. Google Cloud focuses on data analytics and machine learning, offering tools that help organizations extract insights from their data and enhance application performance.
 

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

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 advance retrieval-augmented generation (RAG) for generative AI applications. This collaboration aims to enhance the capabilities of enterprises by integrating NVIDIA's NeMo Retriever microservices with NetApp’s intelligent data infrastructure, allowing organizations to leverage vast amounts of data securely
   

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:

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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