Mainframe Modernization Market Size & Outlook, 2026-2034

Mainframe Modernization Market Overview

The global mainframe modernization market size is valued at USD 8.23 billion in 2025 and is estimated to reach USD 18.42 billion by 2034, growing at a CAGR of 9.5% during the forecast period. The steady growth of the market is primarily driven by the increasing shift toward cloud-native architectures, API-based integration, and automation platforms that help enterprises enhance legacy system efficiency, reduce operational costs, and accelerate digital transformation initiatives across critical industries.

Key Market Trends & Insights

• North America dominated the market with a revenue share of 31.9% in 2025.
• Asia Pacific is anticipated to grow at the fastest CAGR of about 10.1% during the forecast period.
• Based on the Modernization Approach, the Refactoring segment held the highest market share of 39.3% in 2025.
• By Solution, the Automated Code Conversion Tools segment is estimated to register the fastest CAGR growth of 11.0%.
• Based on the Deployment Environment, the Hybrid Cloud segment is projected to grow at a CAGR of 14.2% during the forecast period.
• Based on Service Type, Consulting led the market with the highest revenue share of 27.6% in 2025.
• Based on End Use Industry, the BFSI segment is projected to grow at a CAGR of 8.9% during the forecast period.
• The U.S. dominates the market, valued at USD 2.45 billion in 2024 and reaching USD 2.68 billion in 2025.

Table: U.S Mainframe Modernization Market Size (USD Million)

Source: Straits Research

Market Size & Forecast

• 2025 Market Size: USD 8.23 billion
• 2034 Projected Market Size: USD 18.42 billion
• CAGR (2026-2034): 9.5 %
• Dominating Region: North America
• Fastest-Growing Region: Asia Pacific

The global legacy application modernization market comprises comprehensive technological strategies that upgrade and transform outdated software systems through approaches such as re-platforming, re-hosting, re-engineering, refactoring, and replacing. These modernization efforts are enabled through advanced solutions, including automated code conversion tools, cloud enablement platforms, application integration solutions, UI/UX transformation tools, and supporting services such as consulting, implementation, and maintenance.

The delivery of these solutions spans diverse deployment environments, including on-premise, public cloud, private cloud, and hybrid cloud architectures. With the objective of improving performance, scalability, security, and operational efficiency, these modernization initiatives serve multiple end-use industries such as BFSI, healthcare, retail, manufacturing, IT & telecom, government, and others, ensuring digital continuity while unlocking long-term technological agility for global enterprises.

Latest Market Trends

Evolution to Monolithic Legacy Systems to Composable Enterprise Architectures

Mainframe modernization is shifting away from costly, monolithic architecture towards modular and API-based architecture to enable seamless integration with cloud offerings. Mainframes in the past were isolated computer installations, limiting data usage, innovation tempo, and digital customer interactions. Platforms for modernization today enable COBOL workloads to be containerized, re-platformed, or fully re-factored into microservices run in hybrid or public clouds. This shift offers organizations greater agility, real-time scalability, and inherent resilience, reducing dependency on customized systems. Those companies adopting composable frameworks are accelerating product release cycles and monetizing data accessibility across channels, accelerating a fundamental change in long-standing operational architectures.

Acceleration of Al-Driven Automated Code Modernization

The industry is seeing tremendous adoption of automation-based tools of modernization that break the bottlenecks of manual code conversion and testing. Rewriting millions of lines of legacy code used to take years of engineering effort, risk of system downtime, and high rates of failure in the past.

As AI-powered refactoring engines are able to convert COBOL, PL/I, and RPG to cloud-native programming languages like Java or C become available, modernization schedules are shortened from years to months. They also detect dead code, optimize memory consumption, and maintain business logic integrity. Organizations utilizing automated transformation are experiencing impressive cost savings in modernization and accelerating the movement of mission-critical applications in BFSI, telecom, and government sectors.

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Mainframe Modernization Market Driver

Government Push Toward Legacy System Overhaul in Critical Sectors

National infrastructure modernization is becoming a key force in the mainframe modernization market, with governments requiring change in old systems in finance, defense, taxation, health, and citizen service platforms. Public agencies are facing great pressure to suppress business risks that come with three-decade-old mainframes and move towards secure, scalable digital operating spaces.

For instance, several U.S. federal agencies have invested in modernization budgets under legislative initiatives aimed at eradicating cybersecurity loopholes, improving data governance, and increasing the efficiency of service delivery. Comparable digital mandates initiated throughout Europe and Asia are speeding up the large-scale replacement of old systems in government-controlled sectors, substantially increasing demand for modernization services worldwide.

Market Restraint

Regulatory Barriers Retarding Modernization Efforts

A major restraint in the legacy application modernization sector is the rigorous and changing compliance environment with respect to data security and system renewal. Various governments impose severe laws related to data locality, cybersecurity, and business continuity, mainly in industries like finance, government administration, and healthcare.

Such regulations demand comprehensive documentation, certification, and audit procedures prior to embarking on modernization work, resulting in lengthy approval processes and installation delays. Since modernization tends to revamp fundamental systems that manage sensitive data, companies are careful not to fall short of compliance, hindering market growth and prolonging transformation periods worldwide.

Market Opportunity

Growing Move Towards Ecosystem-Based Modernization Partnerships

The mainframe modernization market is experiencing increasing opportunities fueled by robust industry momentum towards integrated ecosystem partnerships that substitute standalone modernization initiatives. Organizations are increasingly partnering with cloud hyperscalers, modernization experts, and API-led integrators to safely unlock legacy mainframe workloads and drive business transformation. One is the increasing trend of strategic co-development initiatives and go-to-market partnerships between top IT service providers and modernization platforms, facilitating fast deployment of modernization blueprints developed from established success models.

Such ecosystem-led engagements enable organizations to preserve mission-critical business logic and introduce agile delivery, continuous modernization, and operational resilience. As more businesses embark on co-operative modernization blueprints in line with next-generation digital operating models, ecosystem partnerships are becoming a significant business opportunity for mainframe modernization vendors in the global market.

Regional Analysis

North America continued to be the largest regional market in 2025, accounting for 31.9% revenue share. This dominance is a result of aggressive modernization efforts among large businesses in sectors like telecom, federal services, and aviation, where high-compute performance and rigorous uptime requirements are non-negotiable. The region still enjoys highly competitive cloud vendor environments and robust enterprise demand for agility, system resiliency, and legacy batch workload modernization to real-time digital services. Moreover, the increased growth of hyperscale and large system integrator modernization-centric partnerships is driving cloud migration pipelines in the U.S. and Canada.

The U.S. market is progressing steadily as organizations focus on modernizing to offset increasing technical debt and incorporate analytics-led service delivery. Large cloud modernization contracts executed by major banks, healthcare networks, and federal agencies reflect the move away from monolithic COBOL systems to cloud-native architectures with automated testing and security orchestration. The country's well-established IT services sector, especially in the areas of modernization consulting and managed operations, is allowing companies to ramp up modernization roadmaps quickly, facilitating sustained, healthy revenue growth through 2034.

Asia Pacific Market Insights

Asia Pacific is proving to be the fastest-growing region with a CAGR of 10.1%, driven by large-scale digitization across the BFSI and government services sectors. Businesses in Japan, India, Singapore, and South Korea are focusing on modernization to provide stronger cybersecurity, decrease latency in operations, and facilitate high-volume, API-based customer transactions. More investments in next-generation data centers, and the emergence of local cloud service providers, are largely fueling mainframe transformation efforts in the region. Scalable uptake of mobile-first customer touchpoints is also driving organizations to upgrade backend infrastructure for real-time data availability a key driver of demand in Asia Pacific.

India's growth in the market is driven by large companies shifting towards cloud-powered modernization to maximize core banking infrastructure, country-wide telecommunication infrastructure, and large public-facing applications. Prevalent presence of IT service providers that are modernization-oriented and competitive digital transformation outsourcing models are further boosting modernization adoption. India is emerging as a critical worldwide hub for mainframe transformation delivery, with organizations globally depending on Indian modernization experts to deliver automation-facilitated code conversion, integration modernization, and cloud migration implementation fueling robust industry growth.

Regional Market share (%) in 2025

Source: Straits Research

Europe Market Insights

The mainframe modernization market in Europe is progressing through harmonized private-public digital programs and high adoption among large enterprise groups dedicated to industrial digitalization and cross-border data interoperability. Pan-European banking and logistics consortia are investing in modernization to support improved cross-border settlement speed, real-time tracking, and centralized regulatory reporting over multi-jurisdictional operations. Sustainability needs are also driving migration from traditional data centers to more energy-efficient architectures, increasing investments in modernization initiatives that bring both operational enhancements and reduced carbon intensity.

Germany's modernization drive is fueled by its massive manufacturing and automotive ecosystems that aim to modernize ERP and supply-chain backends for Industry 4.0 applications. High demand emanates from mid-tier "Mittelstand" companies replacing custom mainframe interfaces with event-driven, API-first platforms to facilitate predictive maintenance, digital twin integration, and just-in-time production analytics. Local systems integrators' strategic collaborations with cloud players are making it possible for phased modernization factories that limit production disruption while making real-time analytics available for factory operations.

Latin America Market Insights

Latin America is experiencing growing modernization activity as top regional banks and retail chains modernize underlying transaction engines to enable real-time payments and omnichannel commerce. Regional fintech ecosystems driving the change demand backend modernization to enable instant settlement, fraud detection, and capacity during peak retail periods. Furthermore, rising investments in on-premises cloud regions and managed modernization service offerings are reducing migration hurdles for businesses throughout the region.

Brazil's market expansion is backed by major financial institutions and national retailers, replacing traditional batch processing with event-streaming architectures to enable instant payment rails and consumer digital experiences. Local IT service providers are bundling outcome-based modernization services, tying fees to improvements in transaction throughput, which is promoting broader use across banks and large retailers that seek quantifiable business benefits from modernization initiatives.

Middle East & Africa Market Insights

Middle East & Africa are speeding up mainframe modernization as large telco operators and national utilities modernize legacy customer management, billing, and grid-control systems to handle growing digital services. The region's focus on fast mobile adoption and high-scale infrastructure investments is creating demand for modernization strategies that provide high availability and competitive time to market for digital offerings.

The UAE market stands out for the fast embrace of hybrid models of modernization by large telecommunications carriers and financial institutions looking to reconcile regulatory data controls with cloud scalability. Providers that provide localized managed modernization operations and compliance-savvy cloud stacks are gaining ground, allowing enterprises to modernize core systems without compromising low-latency services to local customers.

Modernization Approach Insights

The Refactoring segment led the market with a revenue of 39.3% in 2025. It owes its leadership to organizations' focus on migrating monolithic COBOL legacy workloads into cloud-ready, modular architectures to support continuous modernization without affecting mission-critical operations.

The Replatforming segment is expected to experience the fastest growth, expected to record a CAGR of approximately 10.7% over the forecast period. Enterprises are driving high growth by moving away from conventional mainframe environments to scalable cloud environments with low-code modifications, delivering operational agility and minimizing licensing overheads.

By Modernization Approach Market Share (%), 2025

Source: Straits Research

Solution Insights

The Application Integration segment led the market with a 29.8% revenue share in 2025. Leadership is driven by companies focusing on seamless integration of new cloud applications and older mainframe systems to maintain unbroken business processes during transformation.

Automated Code Conversion Tools segment is likely to grow at the highest rate and is expected to achieve a CAGR of about 11.0% during the forecast period. Growth is supported by mounting pressure to accelerate modernization cycles through converting legacy COBOL or PL/I codebases into modern programming languages with minimal manual intervention.

Deployment Environment Insights

The Public Cloud segment was the largest with a 34.7% revenue market share in 2025. This dominance is a result of businesses shifting mainframe workloads to cloud-hosted environments in order to reduce the infrastructure cost of ownership and increase operational responsiveness.

The Hybrid Cloud segment is expected to witness the highest growth, which is expected to attain a CAGR of around 14.2% during the forecast period. It is driven by organizations adopting a balanced modernization strategy that combines the predictability of proven on-prem mainframes with cloud elasticity.

Service Type Insights

The Consulting business led the market in 2025 with a 27.6% revenue share as businesses increasingly depend on professional advice to determine modernization readiness, establish migration roadmaps, and reduce operational downtime during transformation.

The Data Modernization Services business segment is expected to see the most rapid growth over the forecast period. Growth is fueled by increasing legacy data restructuring projects, such as mainframe database conversion into cloud-native architectures to ensure real-time availability and enablement of advanced analytics.

End Use Industry Insights

The BFSI segment is expected to grow at the highest rate of 8.9% over the forecast period, fueled by the imperative to upgrade old core banking and payments processing infrastructure. With stricter regulatory requirements in place and digital transaction volumes burgeoning in real-time, financial institutions are placing greater emphasis on scalable modernization to improve security, automate more processes, and speed up digital banking innovation. This swift shift towards cloud-enabled and API-led architectures is making BFSI the prime growth driver in the mainframe modernization market.

Competitive Landscape

The global mainframe modernization market is moderately concentrated, with key technology leaders and specialized modernization service providers dominating the competitive landscape. Some legacy players enjoy significant market share by providing end-to-end modernization suites, hybrid cloud integration, and automation-based migration features.

The key players of the industry are IBM Corporation, Accenture, Amazon Web Services, Inc., and others. These industry leaders are enhancing their competitive edge with strategic partnerships, sophisticated modernization platforms, and ongoing innovation in AI-based code refactoring and cloud-native transformation offerings.

Heirloom Computing: An emerging market player

Heirloom Computing, a U.S. mainframe modernization expert, allows organizations to rewrite legacy systems at scale with automated refactoring and cloud-agnostic platforms.

• In 2025, Heirloom made its platform-driven migrations attain more than 80% cost savings in infrastructure for a large worldwide insurer following the migration of 3.8 million lines of COBOL to cloud-native services.

Heirloom Computing thus became a force to reckon with in the worldwide mainframe modernization space, riding on its speed-of-value model and refactoring by automation ability.

List of key players in Mainframe Modernization Market

1. IBM Corporation
2. Microsoft Corporation
3. Amazon Web Services, Inc.
4. Accenture
5. Micro Focus International plc
6. Broadcom Inc. (CA Technologies)
7. Dell Technologies
8. Infosys Limited
9. HCLTech
10. Tata Consultancy Services (TCS)
11. Wipro Limited
12. Cognizant Technology Solutions
13. Capgemini SE
14. Fujitsu Limited
15. DXC Technology
16. LTI Mindtree
17. Atos SE
18. Kyndryl Holdings, Inc.
19. Rocket Software, Inc.
20. Hitachi Vantara
21. Others

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Strategic Initiatives

• July 2025: mLogica achieved the AWS Migration & Modernization ISV Competency, reinforcing its credibility and expanding its portfolio to over 600 transformation projects worldwide, including mainframe legacy migrations.
• March 2025: Kyndryl and Google Cloud launched a “Mainframe Modernization with Gen AI Accelerator Program,” targeting qualified customers to modernize core workloads. The program expects to migrate mainframe applications globally by 2026.
• February 2025: Advanced (ModernSystems) released its Fourth Annual Mainframe Modernization Barometer Report, revealing that 53% of organizations planned a hybrid modernization strategy to reduce mainframe dependency without full decommissioning.
• May 2024: Fujitsu and Amazon Web Services (AWS) announced a “Modernization Acceleration Joint Initiative” to migrate mission-critical applications from on-premise mainframes and UNIX systems to AWS Cloud; the pilot covers up to 40 customers across Asia, Europe, and North America.