Network Transformation Market Size, Share & Trends Analysis Report By Component (Hardware, Software, Services), By Technology (Software-Defined Networking (SDN), Network Function Virtualization (NFV), Network Automation, Cloud Networking, Edge Computing), By Deployment Mode (On-Premises, Cloud-Based, Hybrid), By End-User (Telecommunications, Banking, Financial Services, and Insurance (BFSI), Healthcare, Manufacturing, IT and ITES, Government) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2025-2033

Network Transformation Market Size

The global network transformation market size was valued at USD 85.73 billion in 2024 and is projected to grow from USD 125.83 billion in 2025 to USD 3,727.01 billion by 2033, with a CAGR of 52.74% during the forecast period (2025-2033).

Network Transformation refers to the comprehensive process of modernizing and upgrading traditional network infrastructures to support next-generation digital services and applications. It involves adopting cloud computing, software-defined networking (SDN), network function virtualization (NFV), and 5G technologies to enhance scalability, efficiency, and security. This transformation enables businesses and service providers to optimize network performance, reduce operational costs, and support new digital experiences, such as IoT, edge computing, and AI-driven automation, to meet the increasing demands of a hyper-connected world.

The global network transformation market size is driven by rising investments in software-defined networking (SDN), network function virtualization (NFV), and the growing emphasis on network automation and edge computing. While North America leads the market with early adoption and robust infrastructure, the Asia-Pacific region is expected to exhibit the fastest growth, driven by expanding digital infrastructure and increasing investments in 5G.

Source: Straits Research

Latest Market Trends

Growth of 5G deployments

The widespread deployment of 5G networks drives network transformation, enabling faster speeds, reduced latency, and support for many connected devices. This trend accelerates demand for technologies like SDN and NFV, which enhance scalability and flexibility while reducing operational costs. 5G drives innovation across industries such as smart cities, autonomous vehicles, and IoT applications.

• In July 2022, Ericsson announced a partnership with T-Mobile to deploy its advanced 5G standalone core, enabling network slicing and advanced automation capabilities. This partnership enhances T-Mobile’s ability to deliver tailored connectivity solutions for enterprise applications. In November 2024, the company announced the successful deployment of the world’s first full-stack Digital Monetization Platform (DMP), benefitting around 100 million Indosat Ooredoo Hutchison (IOH) subscribers in Indonesia.

Edge computing integration

As enterprises rapidly embrace edge computing, there is a growing need for network transformation technologies that support this paradigm. Edge computing involves processing data closer to its source, such as IoT devices, sensors, or local servers, rather than relying solely on centralized data centers. This approach significantly reduces latency, enabling faster responses and real-time processing for critical applications. Additionally, it enhances application performance by reducing data transmission distances and optimizing bandwidth usage, leading to lower operational costs and improved efficiency in data management.

• In November 2023, Amazon Web Services (AWS) launched its "AWS Local Zones" in 10 new cities, facilitating edge computing adoption for enterprises by providing low-latency cloud services closer to end-users.

Global Network Transformation Market Growth Factor

Rising demand for network automation

The growing complexity of modern networks, driven by the proliferation of connected devices, cloud computing, and advanced applications, underscores the need for robust automation solutions. These tools streamline network management by automating repetitive and time-consuming tasks like configuration, monitoring, and troubleshooting. By minimizing human intervention, automation reduces the likelihood of errors, enhances operational efficiency, and ensures faster issue resolution, decreasing downtime. Additionally, automation enables consistent delivery of quality of service (QoS), optimizing resource utilization and significantly lowering enterprise operational costs.

• In October 2024, Nokia announced the integration of AI-driven operations (AIOps) into its Altiplano Access Controller, an automation platform for broadband networks. The new AIOps uses artificial intelligence (AI) from Nokia’s Altiplano Marketplace applications to analyze network data and drive automation. By combining AI and smart analytics, AIOps allows operators to detect network anomalies faster, anticipate service-affecting issues before they occur, and improve network utilization.

Moreover, migrating to cloud-native architectures revolutionizes how enterprises manage their networks, enabling greater flexibility, scalability, and cost-efficiency. This transition aligns with the growing preference for hybrid and multi-cloud environments.

Market Restraint

Cybersecurity concerns

As networks grow in complexity and interconnectedness, they also expand the surface area for potential cyberattacks. Integrating advanced technologies like IoT, cloud computing, and edge devices introduces new vulnerabilities, making exploiting weaknesses easier for malicious actors. To safeguard sensitive data and critical infrastructure, organizations must invest significantly in robust security measures, including firewalls, encryption, intrusion detection systems, and zero-trust architectures. These heightened security requirements can create financial and operational challenges, often delaying or complicating the adoption of network transformation solutions as companies prioritize risk mitigation.

Market Opportunity

Expansion in emerging economies

Emerging markets in Asia-Pacific, Latin America, and the Middle East are undergoing a swift digital transformation fueled by various factors. Government-led initiatives, such as smart city projects and digital economy strategies, drive technological adoption and connectivity improvements. Expanding internet penetration, particularly in underserved and rural areas, enables more people to access online services and digital tools.

Furthermore, the rollout of 5G infrastructure is revolutionizing industries by providing high-speed, low-latency connectivity for applications such as IoT, smart manufacturing, and e-commerce. These advancements present substantial opportunities for network transformation providers to meet the rising demand for scalable, secure, and efficient network solutions in these high-growth regions.

• According to GSMA, 5G is likely to benefit the Indian economy by USD 455 billion between 2023 and 2040, or more than 0.6 percent of the GDP forecast for 2040 (and the global economy by USD 960 billion in global GDP by 2030). 5G will be a key enabler of enterprise digital transformation processes across manufacturing, energy and utilities, banking, transportation, healthcare, sports, and retail in the country.

Regional Insights

North America: Largest market share

North America remains the dominant region in the global network transformation market, driven by its advanced technology infrastructure and high adoption rate of next-generation network solutions. The United States is responsible for deploying 5G, SDN, and NFV technologies across industries. The region benefits from the presence of key telecom operators, technology giants, and government initiatives aimed at driving digital transformation, all of which reinforce North America’s position as the largest market for network transformation solutions.

Asia Pacific (APAC): Fastest growing region

The Asia-Pacific region is experiencing the fastest growth in the global network transformation market, spurred by increased defense budgets, modernization efforts, and rising military investments in countries such as China, India, and Japan. These countries prioritize advanced technologies to boost military capabilities and enhance training efficiency. China’s investments in radar and simulation technologies and Japan’s expanding military infrastructure serve as significant growth drivers. The region’s growing focus on strengthening security across maritime, airborne, and ground-based platforms plays a pivotal role in the rapid expansion of the market.

Countries Insights

• United States: The United States leads the market, fueled by its robust defense sector and significant investments in military modernization. Advanced simulation programs for training, particularly in airborne and ground-based radar systems, drive market growth. The U.S. military's heavy investments in R&D, government contracts, and a strong military-industrial base continue solidifying its dominance. Additionally, initiatives like modernizing radar systems increase demand for radar simulators.
• China: China is a key player in the market, propelled by its expanding defense infrastructure and advancements in radar technologies. Large-scale investments in military modernization, particularly in naval and airborne platforms, significantly contribute to market growth. China's commitment to enhancing training capabilities through government-driven programs and its focus on high-tech defense systems accelerates the demand for radar simulators.
• India: India is witnessing robust growth in the market, supported by its expanding defense budget and focus on modernizing military training systems. The Indian government's push for technological upgrades and defense innovation accelerates the adoption of advanced radar simulators. Strategic partnerships and increased defense investments drive demand for high-fidelity training solutions, especially in airborne and ground-based radar simulations.
• Germany: Germany plays a central role in Europe's market thanks to its advanced defense industry and focus on military modernization. The country’s high investments in defense and R&D, particularly in radar and simulation technologies, fuel market growth. Germany’s commitment to enhancing training methods for air, naval, and ground forces through sophisticated simulators ensures a steady demand for radar simulation solutions.
• Japan: Japan's market is driven by its technological advancements and strategic defense investments. Military modernization efforts, mainly focusing on counterstrike capabilities, drive demand for radar simulators, especially for airborne and naval applications. Japan’s defense initiatives and emphasis on advanced training solutions contribute significantly to the growing radar simulation market in the Asia-Pacific region.
• Canada: Canada’s market is steadily growing, driven by its strong defense sector and rising investments in military training technologies. The Canadian military’s focus on modernizing radar capabilities, particularly for air and ground forces, boosts the demand for advanced simulation systems. Ongoing defense investments and collaborations with global technology providers make Canada a growing market for radar simulators, ensuring continued innovation in the sector.
• South Korea: South Korea is emerging as a major player in the market, bolstered by its cutting-edge defense technologies and focus on radar simulation solutions. The country’s strong emphasis on military modernization, particularly in naval and airborne platforms, fuels the demand for radar simulators. South Korea’s commitment to advanced training systems positions it as a key contributor to the radar simulation market's growth.
• Brazil: Brazil is becoming an essential market for radar simulators, driven by its focus on strengthening defense capabilities and modernizing military training systems. A growing defense budget and increasing adoption of advanced military training technologies, particularly for ground-based and airborne radar systems, create favorable conditions for radar simulator demand. Brazil’s focus on improving military efficiency and preparing forces for complex operational scenarios further boosts market growth in the region.

Segmentation Analysis

By Component

The hardware segment dominates the market, driven by the escalating demand for infrastructure upgrades to support digital transformation across industries. With the rise in IoT adoption, 5G deployments, and cloud computing, there is an increasing need for high-performance network equipment such as routers, switches, servers, and storage devices. These hardware components ensure network scalability, reliability, and speed, playing a pivotal role in the ongoing evolution of modern networks.

By Technology

Software-defined networking (SDN) is the leading technology in the market, enabling organizations to achieve greater flexibility and control over their network infrastructure. SDN allows for centralized management and dynamic allocation of network resources, optimizing performance and reducing operational costs. As enterprises adopt cloud-based solutions, SDN enables seamless integration, making it essential for building scalable and agile networks, particularly in telecommunications, BFSI, and healthcare sectors.

By Deployment Mode

Cloud-based deployment continues to lead in the market, driven by the increasing preference for scalable and flexible solutions. Cloud-based platforms, including network functions virtualization (NFV) and SDN, offer on-demand network services that can be easily scaled according to business needs. The growing adoption of cloud computing and the need for efficient, cost-effective infrastructure are major contributors to the dominance of this deployment mode, particularly in industries such as telecommunications, BFSI, and government.

By End-User

Telecommunications dominates the end-user segment of the market, mainly due to the ongoing rollouts of 5G networks and the need for high-performance network infrastructure. Telecom companies are transitioning to software-defined networks (SDN) and network function virtualization (NFV) to support the massive data traffic from mobile devices, IoT, and digital services. The demand for faster, more efficient, and secure networks in this sector ensures telecommunications remains the largest end-user for network transformation technologies.

Company Market Share

Network transformation market players are driving growth through technological innovation and strategic partnerships. Emerging players are making notable contributions by introducing advanced IoT solutions and AI-powered analytics.

Thales Group: An Emerging Player in the Network Transformation Market

Thales Group, traditionally known for its leadership in defense technologies, is positioning itself as an emerging player in the Network Transformation Market. The company’s expertise in AI, machine learning, and advanced radar technologies has enabled it to offer innovative solutions supporting network systems' ongoing transformation across industries. Thales Group is capitalizing on its strengths in simulation systems and secure data analytics to cater to the evolving needs of businesses, government agencies, and military forces in the network transformation space.

Recent Developments:

• In March 2024, Thales, a global leader in Software Monetization and Licensing, expanded its partnership with Neural Labs. This company provides video analysis for Smart Cities and AI-based Intelligent Transportation Systems (ITS) to enable secure, efficient, and practical solutions for vehicle access control and logistical planning. Thales and Palo Alto Networks Deliver New Security Integrations to Help Organisations Implement Zero Trust Security.

Recent Developments

• October 2024- Ericsson partnered with Singtel to streamline network service procurement for operators and enterprise customers. By integrating Singtel’s Paragon platform with Ericsson’s Service Orchestration and Assurance platform, the collaboration aims to simplify acquiring new network solutions.
• July 2024- Walmart's Executive Vice President of Supply Chain Operations, Dave Guggina, emphasized the company's commitment to supply chain modernization to enhance customer options. He noted the growing popularity of Walmart's delivery services and innovative in-store and online experiences as shoppers increasingly seek ways to save money and improve their lifestyles.

Analyst Opinion

As per our analyst, the global network transformation market is poised for robust growth as enterprises and service providers rapidly shift towards virtualized, cloud-native, and software-defined networking solutions. This transformation is driven by the increasing adoption of 5G, edge computing, and AI-powered network automation. Organizations are investing heavily in network modernization to enhance agility, scalability, and security, which has led to the widespread adoption of Network Function Virtualization (NFV) and Software-Defined Wide Area Networks (SD-WAN).

Despite its rapid expansion, the market faces key restraints, such as high implementation costs, complexity migrating legacy systems, and cybersecurity concerns. Enterprises transitioning to software-driven networks must tackle interoperability challenges and talent shortages in network automation and AI-driven management. However, advancements in AI, machine learning, and edge computing will continue to shape the future of network transformation, making it a critical enabler for next-generation digital services.