Europe Application Modernization Services Market Research Report By Vertical (Healthcare, IT, Telecommunications, Energy and utilities, Manufacturing, Consumer goods and retail), By Deployment Type (Hybrid cloud, Private cloud, Public cloud), By Application (Post modernization, Application portfolio assignment, UI modernization, Cloud application mitigation, Application integration, Application re-platforming) and By Regional (Germany, UK, France, Russia, Italy, Spain, Rest of Europe)- Forecast to 2035

Europe Application Modernization Services Market Overview

As per MRFR analysis, the Europe Application Modernization Services Market Size was estimated at 2.74 (USD Billion) in 2023.The Europe Application Modernization Services Market Industry is expected to grow from 3.19(USD Billion) in 2024 to 17.13 (USD Billion) by 2035. The Europe Application Modernization Services Market CAGR (growth rate) is expected to be around 16.503% during the forecast period (2025 - 2035).

Key Europe Application Modernization Services Market Trends Highlighted

The need for companies to improve operational efficiency and stay competitive in a fast-changing digital environment is driving several notable trends in the Europe Application Modernization Services Market. Growing demand for cloud-based solutions is one main market driver as companies all throughout Europe are moving from on-site systems to cloud settings. This shift helps companies to gain from scalability, lower IT expenses, and more freedom. Furthermore, rigorous data privacy rules all throughout Europe, including the General Data Protection Regulation (GDPR), are forcing businesses to update their systems to guarantee compliance and keep consumer confidence.

There are several market opportunities, especially for service suppliers that can supply creative ideas and customized modernization plans. Using application modernization tools to solve certain issues, such as old legacy systems, ineffective procedures, and security risks, excites companies, including retail, finance, and healthcare. Further increasing need for application modernization is the emergence of remote work, which has hastened the need for contemporary, user-friendly solutions able to facilitate cooperation across scattered teams. Recent trends also show a concentration on integrating artificial intelligence (AI) and machine learning into attempts at application modernization.

Businesses want smart technology to improve decision-making capacity and automate tasks. The necessity of flexible, quick, creative application services is critical as digital transformation takes the front stage for European companies. As companies react to technology developments and shifting customer expectations, thereby matching their plans with the present digital age, the European market for application modernization services is expected to rise generally.

Source: Primary Research, Secondary Research, MRFR Database and Analyst Review

Europe Application Modernization Services Market Drivers

Increasing Demand for Digital Transformation

The rising pressure on organizations within Europe to enhance their digital capabilities is a significant driver for the Europe Application Modernization Services Market Industry. According to a survey conducted by the European Commission, 63% of European companies reported that they are in the process of digital transformation initiatives, a trend that has accelerated due to the COVID-19 pandemic. This shift is evident across various sectors, including retail, finance, and healthcare, as businesses strive to modernize legacy systems to be more agile and efficient.

Major firms such as Siemens and SAP have actively promoted their application modernization services to facilitate this transition, creating a robust market environment where modernization services are paramount for competitive advantage. The necessity to remain relevant in a rapidly evolving digital landscape is pushing European organizations towards adopting modern application infrastructures, thereby fueling market growth. Additionally, support from government initiatives emphasizing digitalization, such as the European Union's Digital Single Market strategy, reinforces the ongoing investment in application modernization, making it a cornerstone for future business operations.

Surge in Cloud Adoption

The rapid growth of cloud technology is another critical driver in the Europe Application Modernization Services Market Industry. Recent statistics show that 78% of European organizations have adopted cloud-based solutions, reflecting a noteworthy shift from on-premises systems to cloud infrastructures. This trend is spurred by the advantages offered by cloud services, such as scalability, cost-efficiency, and enhanced collaboration tools. 

Prominent companies, including Microsoft and Amazon Web Services, have capitalized on this trend by offering tailored cloud migration and application modernization services.In Europe, cloud adoption is further motivated by strict data regulations like the General Data Protection Regulation (GDPR), which demands robust data handling practices. The reliance on cloud services is prompting European businesses to modernize their applications to fully leverage the benefits of cloud computing, thus propelling service demand in this market segment.

Need for Enhanced Security Solutions

With the increasing frequency of cyber threats, the demand for enhanced security measures is driving growth in the Europe Application Modernization Services Market Industry. A recent report from the European Union Agency for Cybersecurity indicated a 75% increase in reported cyber incidents across Europe. In response, many organizations recognize that modernizing their applications is crucial to fortifying their cybersecurity posture. 

Companies such as IBM and Cisco Systems have introduced comprehensive security-focused application modernization services to assist organizations in mitigating these risks.European businesses are now prioritizing the integration of advanced security features during application modernization projects to protect their data and minimize vulnerabilities. This heightened emphasis on security not only supports the modernization of existing applications but also creates a robust ecosystem for service providers specializing in secure application transformation.

Government Support for Technological Advancements

Government initiatives aimed at fostering technological advancement play a significant role in accelerating the adoption of application modernization services in Europe. For instance, in 2021, the European Commission launched the 'Digital Europe Programme' with an allocation of 7.5 billion euros aimed at equipping businesses with the necessary tools to enhance their digital capabilities. This program encourages public-private partnerships which are crucial for funding modernization projects.

Established companies in sectors such as telecommunications and infrastructure, like Orange and Vodafone, are actively utilizing these governmental incentives to innovate and modernize their services. Furthermore, various national governments in Europe are also providing tax incentives for businesses that invest in digital transformation. This supportive framework creates a favorable environment for the Europe Application Modernization Services Market Industry, significantly boosting demand as organizations leverage these opportunities to modernize their applications.

Europe Application Modernization Services Market Segment Insights

Application Modernization Services Market Vertical Insights

The Europe Application Modernization Services Market is experiencing remarkable growth, especially within the Vertical segment, which encompasses various critical industries, including Healthcare, IT, Telecommunications, Energy and Utilities, Manufacturing, and Consumer Goods and Retail. The convergence of technological advancements and increasing digital transformation strategies has fueled a significant demand for modernization services across these sectors. In Healthcare, the push for improved patient care and better management systems positions it as a vital market, as organizations seek to enhance their software applications to streamline processes and ensure compliance.

The IT sector, on the other hand, remains a dominant player due to its continuous evolution and the need for businesses to remain competitive by revitalizing legacy systems and adopting cloud technologies. With the Telecommunications sector on the rise, modernization services are crucial for enhancing network efficiency and delivering innovative communication solutions, especially as the demand for 5G technology grows. Similarly, the Energy and Utilities sector recognizes the importance of modernization to achieve sustainability goals and improve operational efficiency through Internet of Things (IoT) integration and data analytics.

Manufacturing is equally trending towards modernization, as firms work to implement smart manufacturing practices, which require the application of advanced software to optimize production processes. Lastly, in the Consumer Goods and Retail sector, the necessity for personalized customer experiences and data-driven decision-making drives investment in modernization services, facilitating the integration of robust e-commerce platforms and supply chain management systems. This diverse range of industries reflects the broader European shift towards enhanced efficiency, agility, and innovation, positioning the Europe Application Modernization Services Market as a pivotal contributor to the region's economic growth and technological advancement.

Such transformative initiatives not only enhance operational capabilities but also align with the European Union’s goals towards digitalization and sustainability, establishing a conducive environment for further growth and investment across all verticals in the coming years.

Source: Primary Research, Secondary Research, MRFR Database and Analyst Review

Application Modernization Services Market Deployment Type Insights

The Europe Application Modernization Services Market, under the Deployment Type segment, is undergoing significant transformation. Among its key categories, Hybrid cloud solutions are becoming increasingly popular as businesses seek to leverage both on-premises and cloud infrastructures for enhanced flexibility and scalability. This deployment type allows for optimized resources, catering to varying workloads and improving operational efficiency. Meanwhile, Private cloud services are favored by organizations requiring heightened security and control over their sensitive data, especially in sectors such as finance and healthcare, where data privacy is paramount.

On the other hand, Public cloud solutions are attracting a broad range of enterprises due to their cost-effectiveness and ease of implementation, making IT resources accessible without the need for substantial capital investment. Together, these deployment types contribute to a dynamic landscape, reflecting a shift towards greater innovation and adaptability in the European region. The ongoing digital transformation efforts, along with evolving regulatory frameworks, are driving organizations to adopt application modernization strategies that favor these various deployment types, enhancing their competitive edge in an ever-changing market environment.

Application Modernization Services Market Application Insights

The Europe Application Modernization Services Market is poised for significant growth as organizations prioritize the enhancement of their software capabilities to align with current and future technological demands. This segment includes several essential areas such as Post modernization, Application portfolio assignment, UI modernization, Cloud application mitigation, Application integration, and Application re-platforming. Each component plays a crucial role in helping businesses streamline operations and improve efficiency. 

Among these, UI modernization has garnered attention for its ability to elevate user experience and engagement.In contrast, Application re-platforming assists companies in transitioning to modern platforms, ensuring compatibility and scalability in a rapidly evolving landscape. Cloud application mitigation is particularly relevant as organizations seek to leverage cloud technologies while managing associated risks. As a result, the Europe Application Modernization Services Market segmentation is characterized by these diverse avenues for enhancing operational effectiveness, catering to a growing demand for innovative solutions within the European landscape.With the region's concerted efforts toward digital transformation and modernization initiatives, these elements are expected to play a pivotal role in shaping the industry's future.

Application Modernization Services Market Regional Insights

The Europe Application Modernization Services Market is witnessing significant growth across various regions, with key players driving digital transformation efforts. Germany stands out as a major player, attributed to its robust industrial base and emphasis on innovation. The UK is also a strong contender, focusing on cloud-based solutions to enhance efficiency and scalability. 

France's market is bolstered by a surge in demand for digital applications across enterprises, while Russia is gradually increasing its investment in modernization services, facilitating enhanced operational practices.Italy shows promise with a growing number of SMEs adopting modernization strategies, and Spain's emphasis on technological advancements places it in a strong position within the market. The Rest of Europe contributes to the diversity and dynamism of the market landscape, with various countries engaging in modernization efforts to foster economic growth. 

The collective regional trends highlight an increasing shift towards digitalization, driven by the need for businesses to adapt to changing consumer demands and technological advancements. Overall, the regional insights showcase a competitive environment that is expected to continue evolving as businesses recognize the importance of application modernization in achieving their strategic objectives.

Source: Primary Research, Secondary Research, MRFR Database and Analyst Review

Europe Application Modernization Services Market Key Players and Competitive Insights

The competitive landscape of the Europe Application Modernization Services Market is characterized by a myriad of players striving to meet the demands of a rapidly evolving technological environment. Organizations are increasingly recognizing the need to rejuvenate legacy applications to enhance operational efficiency and agility. In this market, companies are not only competing on service quality but also on the value they deliver through innovative solutions tailored to individual client needs. 

The growing emphasis on digital transformation has spurred investment in application modernization, resulting in a vibrant ecosystem where competition is defined by the ability to leverage cutting-edge technologies, including cloud computing, machine learning, and microservices. Additionally, the regulatory landscape and changing customer expectations further refine the strategies adopted by market participants, setting the stage for a complex competitive dynamic.In the context of the Europe Application Modernization Services Market, NTT DATA has established a significant presence characterized by its robust capabilities and extensive industry expertise. The company offers a variety of services aimed at revitalizing legacy systems, thereby enhancing operational efficiency for its clients. 

NTT DATA’s strength lies in its deep understanding of regional market requirements, enabling it to deliver customized solutions that cater specifically to European businesses. Furthermore, the company's commitment to innovation and self-sufficiency in technology development allows it to stay ahead of emerging trends, positioning itself favorably against competitors. NTT DATA's strategic partnerships within Europe have also bolstered its service offerings, allowing for increased scalability and flexibility in addressing client needs.Cognizant has successfully positioned itself in the Europe Application Modernization Services Market by providing innovative solutions that aid businesses in transforming their application landscape. The company is recognized for its extensive portfolio of services, including application development, cloud migration, and legacy system modernization. 

With a well-established footprint across Europe, Cognizant leverages its strong brand reputation and client relationships to offer tailored modernization strategies that meet regional demands. The company also focuses on enhancing its service capability through strategic mergers and acquisitions, which augment its technological expertise and market reach. Cognizant's strengths lie in its agility in adapting to market changes and its commitment to delivering seamless, integrated solutions that propel client success. The combination of robust product offerings, a strong presence in the market, and strategic growth initiatives positions Cognizant as a formidable player in the realm of application modernization services in Europe.

Key Companies in the Europe Application Modernization Services Market Include:

• NTT DATA


• Cognizant


• SAP


• Hewlett Packard Enterprise


• Capgemini


• Fujitsu


• Accenture


• Infosys


• Wipro


• Atos


• Tata Consultancy Services


• Deloitte


• Oracle


• IBM


• Micro Focus

Europe Application Modernization Services Market Industry Developments

In the Europe Application Modernization Services Market, notable recent developments include increased investments by major companies such as Accenture and IBM in cloud-native technologies to enhance their service offerings. Companies are focusing on automation and Artificial Intelligence to modernize legacy systems. For instance, in September 2023, Cognizant announced a strategic partnership with NTT DATA to enhance its cloud capabilities, leveraging their combined expertise in application modernization. 

Additionally, in October 2023, SAP launched a new suite of tools aimed at streamlining customer migrations to the cloud, underlining the trend towards cloud adoption across Europe. In terms of mergers and acquisitions, Oracle completed its acquisition of a leading European software firm in August 2023, strengthening its position in the market. Growth in this sector is significant, with a 15% increase in market valuation observed in the last two years, driven by increasing demand for digital transformation among European businesses. 

Government initiatives supporting technology adoption are further propelling this market, creating opportunities for companies like Capgemini and Deloitte to expand their modernization services across various industries.

Europe Application Modernization Services Market Segmentation Insights

Application Modernization Services Market Vertical Outlook

• Healthcare


• IT


• Telecommunications


• Energy and utilities


• Manufacturing


• Consumer goods and retail

Application Modernization Services Market Deployment Type Outlook

• Hybrid cloud


• Private cloud


• Public cloud

Application Modernization Services Market Application Outlook

• Post modernization


• Application portfolio assignment


• UI modernization


• Cloud application mitigation


• Application integration


• Application re-platforming

Application Modernization Services Market Regional Outlook

• Germany


• UK


• France


• Russia


• Italy


• Spain


• Rest of Europe

 

Report Attribute/Metric Source:	Details
MARKET SIZE 2023	2.74(USD Billion)
MARKET SIZE 2024	3.19(USD Billion)
MARKET SIZE 2035	17.13(USD Billion)
COMPOUND ANNUAL GROWTH RATE (CAGR)	16.503% (2025 - 2035)
REPORT COVERAGE	Revenue Forecast, Competitive Landscape, Growth Factors, and Trends
BASE YEAR	2024
MARKET FORECAST PERIOD	2025 - 2035
HISTORICAL DATA	2019 - 2024
MARKET FORECAST UNITS	USD Billion
KEY COMPANIES PROFILED	NTT DATA, Cognizant, SAP, Hewlett Packard Enterprise, Capgemini, Fujitsu, Accenture, Infosys, Wipro, Atos, Tata Consultancy Services, Deloitte, Oracle, IBM, Micro Focus
SEGMENTS COVERED	Vertical, Deployment Type, Application, Regional
KEY MARKET OPPORTUNITIES	Cloud migration demand, Legacy system upgrades, Increased focus on cybersecurity, Enhanced customer experience solutions, Adoption of microservices architecture
KEY MARKET DYNAMICS	Cloud adoption acceleration, Legacy system integration, Enhanced security requirements, Cost optimization pressures, Demand for agile solutions
COUNTRIES COVERED	Germany, UK, France, Russia, Italy, Spain, Rest of Europe