PUNE, India, June 18, 2025 /PRNewswire/ -- According to a recent market analysis published by Credence Research, the global Mainframe Modernization Services Market is set to experience extraordinary growth, expanding from USD 21.5 billion in 2024 to USD 76.16 billion by 2032. This surge reflects a strong compound annual growth rate (CAGR) of 15.1% from 2025 to 2032. The report attributes this growth to the rising demand among enterprises to upgrade legacy infrastructure, reduce maintenance costs, and enhance agility through digital transformation.
Credence Research notes that enterprises across sectors—particularly banking, insurance, healthcare, and government—are accelerating mainframe modernization to align with cloud-first strategies and future-ready IT ecosystems. The growing need for integration with modern digital platforms, along with advancements in automation, AI, and microservices architecture, is expected to further drive market momentum in the years ahead.
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Key Growth Determinants – Mainframe Modernization Services Market
Demand for Operational Efficiency and Business Agility
Organizations are under pressure to respond quickly to market changes and customer demands. Legacy mainframes often lack the flexibility and speed needed for modern operations. By modernizing these systems, companies can improve performance, streamline workflows, and increase adaptability—leading to faster decision-making and reduced time-to-market.
- A leading French bank achieved a 70% increase in operational performance and realized ROI within six months after migrating its mainframe application to a distributed Linux environment, demonstrating the tangible efficiency gains possible through modernization.
- In the retail sector, a major UK retailer modernized its mainframe environment, supporting critical operations like branch management and claims processing, by migrating to a cloud-based, open-standard platform. This shift enabled the organization to respond more adeptly to market demands and customer expectations, laying a robust foundation for future competitiveness.
Accelerated Adoption of Cloud Technologies
Cloud computing plays a central role in modern IT infrastructure. Businesses are increasingly migrating mainframe workloads to public, private, or hybrid cloud environments to benefit from scalability, lower infrastructure costs, and seamless access to advanced tools. Mainframe modernization enables integration with cloud platforms, supporting cloud-native development and DevOps practices.
- Scalability and flexibility, allowing systems to expand or contract based on real-time needs.
- Lower infrastructure and maintenance costs, as cloud providers assume responsibility for hardware and security.
- Seamless integration with advanced tools, supporting cloud-native development and DevOps practices, which accelerates innovation and deployment cycles.
- For example, the aforementioned retailer transitioned from IBM z/OS to Java and PostgreSQL on Google Cloud Platform, aligning IT infrastructure with modern standards and reducing risks tied to legacy systems.
Rising Costs and Risks of Legacy System Maintenance
Maintaining outdated mainframes is becoming increasingly expensive and complex. Hardware support is declining, and specialized skills are scarce, leading to higher operational risks and costs. Modernization allows companies to replace rigid legacy frameworks with more cost-effective, future-proof solutions.
- On average, legacy systems cost teams nearly $40,000 annually to maintain, with IT workers losing about 17 hours per week just on upkeep—almost half the workweek. In sectors like manufacturing and energy/utilities, annual maintenance costs can exceed $53,000 per worker.
- The scarcity of specialized mainframe skills, as many experts retire, further increases operational risks and costs.
- Modernization efforts can result in significant cost savings, with some organizations reporting up to 80% reductions in operational and maintenance expenses after transitioning to modern platforms.
Enterprise-Wide Digital Transformation Initiatives
Industries such as banking, insurance, retail, and healthcare are investing in digital transformation to stay competitive. Mainframe modernization is a foundational step in this journey, enabling seamless data flow, real-time analytics, and integration with emerging technologies like AI, IoT, and blockchain—driving innovation and customer-centric solutions.
- Modernization enables seamless data flow, real-time analytics, and integration with emerging technologies like AI, IoT, and blockchain, which are critical for driving innovation and delivering customer-centric solutions.
- In the banking sector, moving high-volume document management off the mainframe to distributed platforms not only reduced technical debt but also ensured secure, modernized assets and uninterrupted service for end users.
- Retailers and other enterprises have validated that modernized environments support broader digital transformation, positioning organizations to adapt to future technological advancements and market shifts.
Key Growth Barriers – Mainframe Modernization Services Market
- High Upfront Capital Expenditure
Despite long-term operational savings, mainframe modernization projects often require substantial initial investments. Costs can include new hardware, software licenses, cloud services, and skilled consulting. For many organizations—especially small and mid-sized enterprises—budget limitations may delay or restrict modernization plans, making it difficult to justify the transition financially in the short term. - Complexity of Legacy Systems and Architecture
Many mainframes have been in operation for decades, containing tightly coupled, business-critical applications with custom code and undocumented processes. Migrating these systems involves high technical risk, as even small errors can disrupt core operations. This complexity can slow down project execution, inflate costs, and make some organizations hesitant to modernize altogether. - Lack of Skilled Resources
There is a dual talent gap in the market—experienced legacy system experts are retiring, while professionals skilled in modern platforms often lack mainframe-specific knowledge. This shortage hinders smooth migration and increases dependency on specialized service providers, driving up project costs and timelines. - Regulatory and Compliance Challenges
Organizations in regulated industries must maintain strict data security, auditability, and compliance standards during modernization. Ensuring that the new environment meets all legal and operational requirements can increase project complexity and duration, especially when dealing with cross-border data governance or financial regulations.
Key Market Opportunities – Mainframe Modernization Services Market
- Expansion of Cloud-Native and Hybrid Cloud Integration
Enterprises increasingly seek to integrate mainframe applications with cloud-native architectures. Modernization services that enable seamless migration to hybrid environments—leveraging containerization, microservices, and API-driven connectivity—stand to gain significant traction. - Advent of AI-Driven Automation
Incorporating AI and machine learning into modernization workflows—such as code refactoring, workload optimization, and predictive maintenance—presents a compelling opportunity. Automated tools can accelerate migration timelines and reduce errors, unlocking cost savings and improved performance. - Rise in Industry-Specific Solutions
Tailored modernization offerings for regulated industries (like banking, healthcare, and utilities) are in demand. Services that embed compliance, data governance, and sector-specific integrations provide differentiated value and reduce adoption barriers for regulated customers. - Modernization as a Service (MaaS) Models
Consumption-based offerings—such as pay-as-you-go or managed modernization platforms—are gaining appeal. These flexible models reduce upfront investment and risk, enabling customers to modernize incrementally while benefiting from expert-managed support. - M&A and Legacy System Consolidations
As organizations undergo mergers, acquisitions, or business restructuring, consolidating legacy mainframes becomes essential. Modernization services that simplify platform consolidation and rationalization across diverse environments are ripe for growth. - Emergence of Microservices and API Monetization
Transforming monolithic mainframe workloads into modular microservices enables enterprises to create new digital offerings and monetization opportunities. Service providers that specialize in modern API frameworks and ecosystem integration can tap into this growing demand.
Segmentation
Based on Type
- Enterprise Size Modernization
- Cloud Migration
- Data Modernization
Based on Enterprise Size
- Small and Medium Enterprise (SME's)
- Large Enterprise
Based on End User
- IT and Telecom
- BFSI
- Retail & Healthcare
- Government
- Others
Based on region
- North America
- The U.S.
- Canada
- Mexico
- Europe
- Germany
- France
- UK.
- Italy
- Spain
- Rest of Europe
- Asia Pacific
- China
- Japan
- India
- South Korea
- South-east Asia
- Rest of Asia Pacific
- Latin America
- Brazil
- Argentina
- Rest of Latin America
- Middle East & Africa
- GCC Countries
- South Africa
- The Rest of the Middle East and Africa
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Regional Analysis – Mainframe Modernization Services Market
North America, especially the United States, dominates the mainframe modernization market. Enterprises in banking, insurance, and telecom are prioritizing modernization to drive digital transformation and reduce legacy operational costs. Strong presence of major IT service providers and early adoption of cloud and AI-driven tools bolster regional growth. Additionally, favorable regulatory frameworks and large-scale corporate investments support robust spending in modernization services.
Europe shows steady growth driven by government, healthcare, and financial institutions focused on data security and compliance. The European Union's evolving data privacy regulations (e.g., GDPR) compel organizations to modernize legacy systems to meet stringent standards. Hybrid cloud adoption is accelerating as businesses embrace modernization to support cross-border business use cases and achieve system consolidation.
LATAM and MEA regions are gradually embracing modernization, with modern cloud and digital initiatives predominantly led by government and financial sectors. Public sector transformation initiatives and infrastructure upgrades in countries like Brazil, the UAE, and South Africa are creating fresh modernization opportunities. However, progress remains somewhat constrained by economic volatility, limited technical expertise, and budgetary limits.
Credence Research's Competitive Landscape Analysis – Mainframe Modernization Services Market
According to Credence Research, the competitive landscape of the Mainframe Modernization Services Market is characterized by a blend of global IT integrators, cloud hyperscalers, and niche modernization vendors. Leading players such as IBM, Accenture, Cognizant, and DXC Technology dominate the market with comprehensive service portfolios covering consulting, cloud migration, and platform modernization. Major cloud providers like Microsoft Azure and AWS are instrumental in enabling hybrid and cloud-native transformations. Indian IT giants including TCS, Infosys, and Wipro continue to expand their modernization offerings globally, leveraging domain-specific accelerators and cost-efficient delivery models. Meanwhile, specialized vendors like Rocket Software, Unisys, and TmaxSoft offer tailored solutions focused on rehosting, refactoring, and legacy integration with modern technologies such as AI and containerization. Regional players in Europe and Asia-Pacific are also strengthening their presence, supported by growing enterprise demand for industry-specific modernization and regulatory compliance. The market remains highly competitive and innovation-driven, with strategic partnerships and acquisitions playing a vital role in service differentiation and capability enhancement.
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Key Player Analysis
- TATA Consultancy Services
- Software AG
- Oracle Corporation
- Mphasis Ltd.
- Innova Solutions
- IBM Corporation
- Fujitsu Limited
- DXC Technology
- Dell EMC
- Cognizant
- Capgemini SE
- Atos Syntel Inc
- Accenture plc
Recent Industry Developments
- April 2025 – AWS released version 4.8.0 of AWS Blu Age Runtime and Transformation Engines, featuring enhanced database transformation capabilities and performance improvements tailored for mainframe modernization projects.
- March 2025 – Astadia was recognized as a Leader in the ISG Provider Lens Mainframes – Services and Solutions 2025 report for its innovative use of GenAI agents to accelerate mainframe migration and modernization.
- January 2025 – BMC announced major enhancements to its BMC AMI suite, integrating hybrid AI functionalities that combine machine learning and generative AI to improve root cause analysis and operational efficiency.
- November 2024 – Cognizant and IBM partnered to launch the FinOps Center for Cloud Innovation, focused on transforming legacy applications through tools like Watsonx Code Assistant for Z, enabling hybrid cloud adoption and driving cloud cost optimization, ethical AI deployment, and multi-cloud efficiency.
- March 2024 – Accenture Federal Services collaborated with Microsoft to launch an end-to-end Cloud Modernization and Migration Factory on Microsoft Azure Government, designed for secure modernization across U.S. federal agencies, including those operating in the national security domain.
- March 2024 – Fujitsu partnered with AWS to support modernization of legacy mission-critical applications running on mainframes and UNIX servers, offering comprehensive assessment, migration, and modernization services for industries such as finance, retail, and automotive.
- March 2024 – Accenture Federal Services secured the U.S. Army's Enterprise Application Modernization and Migration (EAMM) contract, with a potential value of USD 127 million, to deliver large-scale cloud assessments, migrations, and application modernizations.
Reasons to Purchase this Report:
- Gain a comprehensive understanding of the market through qualitative and quantitative analyses, considering both economic and non-economic factors, with segmentation and sub-segmentation details provided in terms of market value (USD Billion).
- Identify regions and segments expected to experience the fastest growth or dominate the market, with a detailed analysis of geographic consumption patterns and the factors driving or hindering market performance in each region.
- Stay informed about the competitive environment, with rankings of major players, recent product and service launches, partnerships, business expansions, and acquisitions from the past five years.
- Access detailed profiles of major market players, including company overviews, insights, product benchmarking, and SWOT analysis, to understand competitive advantages and market positioning.
- Explore the present and forecasted market landscape, with insights into growth opportunities, market drivers, challenges, and constraints for both developed and emerging regions.
- Benefit from Porter's Five Forces analysis and Value Chain insights to evaluate various market perspectives and competitive dynamics.
- Understand the evolving market scenario, including potential growth opportunities and trends expected in the coming years.
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