Application Modernization Services Market By Modernization Type (Rehosting, Refactoring, Replatforming, Rebuilding, Replacing), By Application Type (Legacy Applications, Cloud-Native Applications, Packaged Applications), By Deployment Mode (On-Premises, Cloud-Based), By Organisation Size (Large Enterprises, Small and Medium-sized Enterprises), By End-User (Banking, Financial Services, and Insurance, Healthcare and Life Sciences, Retail and E-commerce, Government and Public Sector, Manufacturing, IT and Telecom, Energy and Utilities, Others). Global Market Size, Segmental analysis, Regional Overview, Company share analysis, Leading Company Profiles And Market Forecast, 2025 – 2035

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Industry Outlook

The Application Modernization Services market accounted for USD 20.82 Billion in 2024 and USD 24.40 Billion in 2025 is expected to reach USD 119.42 Billion by 2035, growing at a CAGR of around 17.21 % between 2025 and 2035. The Application Modernization Services Market provides the upliftment and transformation of the old software system, where in-cloud technologies, microservices, containerization, and DevOps practices are utilized for a modern framework. This could rehost, re-platform, or re-engineer an old application to enhance its operational costs, agility, and UX of the business.

The evolution of the market towards growth will be due to enhanced digital transformation and the soaring demand for cloud-native solutions. The future scope will include AI-assisted modernization, low-code platforms, and sector-specific change management approaches for banking, health, and manufacturing.

Industry Experts Opinion

"With Google Cloud, we see AI as the most important way we can help advance your mission—the opportunity with AI is as big as it gets."

• Sundar Pichai, CEO, Google

Report Scope:

Market Dynamics

Rapid cloud adoption is pushing enterprises to modernize legacy applications for better scalability.

The growth of the Application Modernization Services Market is linked with cloud adoption in several sectors of the world. The current trend shows companies migrating from legacy systems to the cloud as it enhances scaling, agility, and spending control. Government initiatives like Digital India and Make in India are aimed at modernizing service automation and technology development. According to NASSCOM, the cloud emulation at a national level is predicted to increase the GDP of India by almost $380 billion while creating around 14 million new direct as well as indirect jobs by 2026.

The development of the country’s economy will benefit hugely from cloud computing because of the drive towards digital transformation. With the increasing need for application modernization services, businesses are looking to upgrade their legacy systems to cloud-enabled infrastructure, increasing the scope of the Application Modernization Services Market. This transition not only enhances operational efficiency but also fosters innovation across sectors. As more industries adopt cloud technologies, the market is poised for sustained growth and expanded opportunities.

Rising demand for business agility encourages companies to upgrade outdated, rigid application infrastructures.

By 2023, 900 million people in India were using the internet, with about 885 million subscribers to broadband, making the country’s digital base solid and boosting business agility. The rising demand for flexibility is the main reason behind the rise of the Application Modernization Market. Too much dependence on outdated legacy applications limits the response of many organizations to what their customers need and what happens in the market.

To modernize these systems is not only to improve them, but also to promote innovations and make operations more flexible. Using modern applications, companies can handle customer demands quickly, increase their processes, and easily change the use of resources as needed. More companies are turning to modern technologies, so the call for modernization services keeps growing. As a result, more companies are competing and creating new solutions in digital markets, which is helping the Application Modernization Market grow.

Modernization initiatives require high upfront investments, which can burden small and medium enterprises financially.

One of the main barriers in the Application Modernization Market is the large amount of money necessary to start modernization initiatives. The expenses include buying and installing new equipment, paying for licenses, hiring consultants, and finding people with the right skills. Large initial expenses are a bigger issue for SMEs, since they are usually more limited with their resources and don’t have as much financial flexibility as bigger companies. Because of this, many SMEs cannot use modernization tools, which keeps them out of the game as the world goes digital.

Besides, updating a facility requires a lot of effort and time, and the process can be ongoing, which further affects costs. Since there is no guarantee about the profit on investment and the business operations may face obstacles during the change, decision-makers are reluctant. Because the technology costs so much, most small businesses find it hard to make a place in the market, despite the benefits of speed, ease of expansion, and efficiency. Dealing with the challenge calls for personal solutions, adaptable pricing models, and support to make sure smaller and larger enterprises can take advantage of CRM.

AI and automation tools can streamline and accelerate application modernization for large enterprises.

To deal with AI computerization, the update procedure for legacy applications needed new resources, so the Application Modernization Services Market has specifically shaped around this whole computing paradigm. These technologies are changing the game when it comes to updating old systems into modern, cloud-based solutions. Some AI constructs execute activities such as code inspection, system analysis, testing, and modification without relying on manual effort. According to a recent study by the UK government, involving over 20,000 civil servants, employees using AI-based assistance such as Microsoft's Copilot were productive about two weeks out of every five, suggesting that the AI-assisted methods can theoretically automate an important portion of the work being done.

This is a real opportunity for better operational modernization and scale in public sector services. Also, larger companies are benefiting from a newly introduced maximization of competencies and flexible operations in the shadow of AI and automation. This trend is accelerating digital transformation efforts across industries, driving efficiency and cost savings. It also highlights the growing importance of integrating AI tools into modernization strategies to stay competitive.

Low-code/no-code platforms offer simplified modernization paths for non-technical business users and teams.

Low-code and no-code apps are democratizing application development in the application modernization service market by enabling modernization users to participate in the modernization process. These platforms offer spontaneous, drag-and-drop interfaces that allow professional users to develop and deploy applications without wider coding knowledge. According to Gartner, by 2025, 70% of new applications developed by organizations will use low-code or no-code techniques, an increase of less than 25% in 2020.

This change empowered organizations to accelerate digital change initiatives and reduce dependence on specific IT resources. Adopting LCNC platforms not only accelerates modernization but also promotes innovation by incorporating a wide range of stakeholders in the development process. As a result, the market of app modernization services is experiencing a change in patterns towards more corporate and tight development methods. In addition, this platform enables faster time-to-market and low development costs, making modernization accessible to all sizes. The shift is increasing in the industry in search of dexterity and scalability.

Segment Analysis

Based on the modernization type, the Application Modernization Services Market has been classified into Rehosting, Replatforming, Refactoring, Rebuilding, and Replacing. Rehosting is a dominant segment that involves transferring to a new infrastructure without changing the core functions, ideal for metamorphic cloud migration. Refactoring applications focuses on customizing the code and composition, which improves scalability and performance, to avail cloud-native features.

Reforming modifications to parts of the application to fit the new environment while maintaining most core architecture. Reconstruction involves writing an application from scratch using a modern framework, often selected when existing systems cannot meet future needs. The replacement refers to switching inheritance applications perfectly with the new off-the-shelf or mother-in-law solution. Each type meets the needs of various enterprises depending on cost, time, and business goals.

Based on the application, the Application Modernization Services Market has been classified into Legacy Applications, Cloud-Native Applications, and Packaged Applications. The Legacy application is dominant, which contains old, monolithic systems that require re-hosting, platforming, or code refactoring to configure with modern architecture. Cloud-native applications made of micro services and containerization require constant optimization and integration to maintain performance in the vibrant cloud environment.

Packaged applications such as ERP or CRM systems are modernized by upgrades, cloud migration, or custom extensions to meet developed business needs. In this, Legacy modernization still has the largest part of the large number of old enterprise systems. However, cloud-native application services are a witness to the fastest growth, powered by digital transformation and a cloud-first strategy.

Regional Analysis

The North America application modernization service market dominates due to the adoption of digital technologies, the strong presence of global IT service providers, and high cloud maturity in industries. Enterprises in the US and Canada are upgrading the infrastructure of their heritage to improve rapid operating efficiency, safety, and scalability. The region is also led by strong investment in cloud computing, AI integration, and enterprise application development. In addition, the initiative of the favourable government is supporting digital changes in public services and further promoting healthcare. BFSI, large enterprises in the retail and telecom sectors, are the major contributors to market expansion in North America.  

The Asia-Pacific Application Modernization Services Market is rapidly growing, which has increased digitization in emerging economies such as India, China, and Southeast Asia. The rise of tech-service startups, government-backed digital initiatives (such as India's Digital India and China's cloud-first strategy), is accelerating modernization efforts by increasing cloud services in the SME sector. Many businesses in the region are migrating their Legacy system to cloud-based platforms to stay competitive and agile. Additionally, the cost-profit and extended presence of global IT service vendors in the Asia-Pacific contributes to its rapid market growth.

Competitive Landscape

The Application Modernization Services Market is very competitive, with major players focusing on innovation, partnership, and cloud integration to strengthen their market status. IBM offers the benefit of AI and hybrid cloud platforms to boost modernization for larger industries. Accenture emphasizes industry-specific modernization solutions through strategic connections with cloud providers such as AAPLS and Micros. FT Azure and Google Cloud. TCS and Infosys are investing in the automation and ownership framework to streamline Legacy Transformation.

HCL Technologies focuses on digital and cloud-native services with strong data capabilities. Capgemini and Cognizant are enhancing their service through acquisitions and platform-based delivery. These players are growing and also expanding their steps in emerging markets to tap into demand. Companies invest in developing tools for low-code/no-code to simplify the modernization processes. There is a strong focus on sustainability and green IT practices in modernization strategies. Continuous innovation in the integration of AI and machine learning helps companies offer smarter, predictive modernization solutions.

Application Modernization Services Market, Company Shares Analysis, 2024

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Recent Developments:

• In January 2025, Accenture announced the acquisition of Percipient, a Singapore-based fintech company specializing in digital twin technology for banks. This acquisition enhances Accenture's capabilities in core banking modernization, enabling financial institutions to create virtual replicas of their systems for real-time data integration and improved decision-making.
• In December 2024, Fujitsu announced the expansion of its strategic collaboration agreement with Amazon Web Services (AWS). This expanded partnership aims to accelerate digital transformation across various industries by providing fast and secure legacy application modernization solutions.

Report Coverage:

By Modernization Type:

• Rehosting
• Refactoring
• Replatforming
• Rebuilding
• Replacing

By Application Type:

• Legacy Applications
• Cloud-Native Applications
• Packaged Applications

By Deployment Mode

• On-Premises
• Cloud-Based

By Organisation Size

• Large Enterprises
• Small and Medium-sized Enterprises

By End-User

• Banking, Financial Services, and Insurance
• Healthcare and Life Sciences
• Retail and E-commerce
• Government and Public Sector
• Manufacturing
• IT and Telecom
• Energy and Utilities

• Others

By Region

North America

• U.S.
• Canada

Europe

• U.K.
• France
• Germany
• Italy
• Spain
• Rest of Europe

Asia Pacific

• China
• Japan
• India
• Australia
• South Korea
• Singapore
• Rest of Asia Pacific

Latin America

• Brazil
• Argentina
• Mexico
• Rest of Latin America

Middle East & Africa

• GCC Countries
• South Africa
• Rest of Middle East & Africa

List of Companies:

• IBM Corporation
• Accenture plc
• Tata Consultancy Services
• Infosys Limited
• Cognizant Technology Solutions
• Wipro Limited
• Capgemini SE
• HCL Technologies
• Deloitte
• DXC Technology
• Oracle Corporation
• Microsoft Corporation
• CGI Inc.
• NTT DATA Corporation
• Tech Mahindra Limited

Frequently Asked Questions (FAQs)