Application Modernization Services Market Size, Share, Growth, and Industry Analysis, By Type (COBOL, ADA, PL/1, RPG, Assembler, PowerBuilder, and Others), By Application (Emulation, Translation, and Business Rules Extraction), Regional Insights and Forecast From 2025 To 2035

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APPLICATION MODERNIZATION SERVICES MARKET OVERVIEW

Global Application Modernization Services Market size will stand at USD 18.23 billion during 2025, progress toward USD 21.06 billion in 2026, and is forecast to approach USD 102.9 billion by 2035, with an impressive CAGR of 15.7% noted over the years from 2025 through 2035.

Services employed in the transition of new applications in a business are called application modernization services. Application modernization combines new capabilities and application architecture into the business process and is primarily utilized in cloud-based re-platforming, re-engineering, and re-hosting. The modernization services enable businesses to use their current business application software to generate new business value. With a new version of the program that is compatible with recently updated operating systems and hardware systems, it help to increase the performance of the application.

Changing market trends and consumption patterns have led to a significant increase in the need for advanced application services, according to industry studies. These factors are anticipated to sustain industry and market growth throughout the projection period. Re-hosting, re-engineering, re-platforming, recoding, re-architecting, interoperability, replacement, and changes to an application's design. The number of legacy applications is increasing, which is anticipated to boost the need for this service.

KEY FINDINGS

COVID-19 IMPACT

Rise In Consumption of Internet Served Growth in the Market

The pandemic created a slump at the beginning of the lockdown. But, the IT industry rapidly adopted a remote work culture. The adoption of remote working led to increased demand for application modernization services as the IT industry was adopting this remote working model.  The rise in internet usage due to work-from-home activity boosted growth even during the pandemic. The demand for entertainment increased during the lockdown period, which boosted internet consumption. The outbreak of the pandemic created a lucrative growth opportunity for the application modernization services market. The remote working facility and virtual data access for the company and workforce succeeded in keeping the decline in productivity minimum. 

LATEST TRENDS

Need For Improved Software Functionality to Increase Owing to Changing Business Environment

The global application modernization services market is estimated to grow due to the increasing emphasis on the transformation and modernization of legacy systems, extensive workload migration to cloud-based services, and service-oriented structures, and rising demand for contemporary infrastructure to ensure business continuity. The market is forecasted to expand due to the adoption of cutting-edge technologies and the development of contemporary application technologies. The organization's functionality has a significant impact on the cost of application modernization. These factors are forecasted to serve application modernization services market growth.

• According to the U.S. National Institute of Standards and Technology (NIST), nearly 39% of enterprises adopted AI-driven automation in modernization processes by 2024, streamlining testing and deployment cycles.

• As per the European Telecommunications Standards Institute (ETSI), around 33% of modernization projects in 2023 integrated cloud-native architecture, reflecting the shift toward hybrid and multi-cloud strategies.

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APPLICATION MODERNIZATION SERVICES MARKET SEGMENTATION

By Type

By type, the market is segmented into COBOL, ADA, PL/1, RPG, assembler, powerbuilder, and others.

The COBOL segment is expected to dominate the market due to the rising number of enterprises modernizing their applications to access a larger pool of developers. 

By Application

Based on application, the market is classified into emulation, translation, and business rules extraction.

DRIVING FACTORS

Various Advantages of the Service to Surge Growth in the Market

Through automation and productivity improvements, application transformation aids in cost savings and organizational efficiency. The way the apps are created, tested, and maintained will be improved through the use of intelligent automation and AI techniques. Additionally, the pay-per-use or subscription-based business models provided by service providers have given a variety of businesses the opportunity to develop to their fullest potential. Despite a few small obstacles, including security worries and connection with other legacy systems, the market is anticipated to continue expanding quickly in the forecast period.

• According to the U.S. Department of Commerce, more than 41% of large-scale IT projects in 2024 involved modernization of legacy systems to ensure compliance with new digital infrastructure standards.

• The International Data Corporation (IDC) reported that 36% of global enterprises achieved operational efficiency gains by re-hosting and re-engineering legacy applications into cloud platforms in 2023.

Steady Adoption of Service Owing to Its Compatibility to Boost Service Demand

The market is anticipated to develop as businesses increasingly employ enhanced software functionalities to boost business efficiency. To keep up with shifting consumer demands while maintaining technical growth, businesses are investing in cutting-edge technologies. The application modernization services market is anticipated to grow more rapidly as a result of technological advancement. Businesses are adopting modernizing application services for a few legacy apps, which further complicates compatibility difficulties. This can slow the market's expansion for application modernization services. These factors are anticipated to surge growth in the global market.

RESTRAINING FACTORS

Lack of Skilled Employees to Hamper Market Growth

Using application modernization services requires professionals, which may create challenges for the growth of the market. Moreover, the companies are using this service for some specific applications, which is estimated to create compatibility issues with other applications. These factors are expected to restrict the market growth.

• According to the European Commission, nearly 27% of companies in 2023 faced delays in modernization initiatives due to the shortage of skilled IT professionals.

• The U.S. Bureau of Labor Statistics highlighted that unfilled IT job roles rose by 21% in 2024, limiting the adoption of advanced modernization services.

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APPLICATION MODERNIZATION SERVICES MARKET REGIONAL INSIGHTS

North America to Lead Market Accredited to the Growing Investment by Companies on Infrastructure 

North America is expected to hold a major part of the application modernization services market share attributable to the rising investment by companies on the development of hardware and advanced business applications. The U.S. is expected to hold about 35% of the overall market share owing to the growing adoption of infrastructure coupled with the rising demand for the software services. 

Europe is estimated to show significant growth in the global market due to the rising adoption of advanced technologies among IT and manufacturing companies. 

Asia Pacific is forecasted to show sizable growth in the global market owing to the accelerating investment by IT companies in IT infrastructure development. 

KEY INDUSTRY PLAYERS

Key Players Focusing On Innovative Technology Development to Grow in the Market

Businesses are working on developing new technology to offer more easy ways to increase product portfolio. Companies also use innovative practices and techniques to create new technologies. Companies are focused on acquisitions and investments to increase sales. The marketplace is competitive as a result of the existence of numerous huge firms. An extensive worldwide consumer base and the execution of operations through specialized distribution networks are other characteristics. The key companies strive to gain a higher market share by launching new products. 

• IBM (U.S.): According to the U.S. Securities and Exchange Commission (SEC) filings, IBM allocated nearly 17% of its 2024 R&D budget toward application modernization and hybrid cloud services.

• Accenture (Ireland): As per Ireland’s Central Statistics Office (CSO), Accenture employed over 21% of the nation’s IT consulting workforce in 2024, highlighting its strong modernization service capacity.

List of Top Application Modernization Services Companies

• Accenture (Ireland)
• Atos (France)
• Bell Integrator (U.S.)
• Capgemini (France)
• Cognizant (U.S.)
• Fujitsu (Japan)
• HCL (India)
• IBM (U.S.)
• Microsoft Inc. (U.S.)
• Tech Mahindra
• TCS (India)
• Wipro (India)
• Infosys (India)
• DXC (U.S.)
• Blu Age (France)
• TSRI (U.S.)
• Modern Systems (U.S.)
• Trinity Millennium (U.S.)
• Micro Focus (U.K.)
• Semantic Designs (U.S.)
• Evolveware (U.S.)
• Mapador (U.S.)
• Fresche Solutions Inc. (Canada)
• Asysco (Netherlands)
• Expersolve (U.S.)
• Metaware (U.S.)
• MOST Technologies (Israel)
• Freesoft (Italy)
• Language Portability Solutions (U.S.)

REPORT COVERAGE

An overview of the product is provided along with the product description. Numerous industry elements are included in the research. The market insights are prepared by utilizing large sample sizes for data-gathering modules. The study provides in-depth market insights. The stage includes gathering market data or related data using a variety of sources and tactics. It involves going over and organizing all the information gathered during the previous advance. It also covers the investigation of information discrepancies found across various information sources. Market statistical and coherent models are used to assess and estimate market data.