Serverless Architecture Market Size, Share & Trends Analysis Report By Service Type (Automatation and Integration, Monitoring, API management, Security, Analytics, Design and consulting, Others), By Deployment Mode (Public Cloud, Private Cloud), By organization size (Large Enterprises, SMEs), By Application (Real-time file/stream processing, Web Application Development, IoT Backend, Others), By Vertical (Banking, Financial Services, and Insurance, Telecommunications and IT, Retail and E-commerce, Healthcare and Life Sciences, Government and Public Sector, Manufacturing, Media and Entertainment, Others) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2024-2032

Market Overview

The global serverless architecture market was valued at USD 11.83 billion in 2023. It is estimated to reach USD 68.28 billion by 2032, growing at a CAGR of 21.50% during the forecast period (2024–2032). 

Serverless architecture is a software design pattern where applications are hosted by a third-party service, without a need of any server software. Serverless architecture is also called as serverless computing and is a type of cloud service where the hosting provider allocates adequate resources for clients. Companies need to pay for dedicated servers or capacity in advance.

Serverless computing is the next-generation evolution of IaaS (Infrastructure-as-a-Service). It completely eliminates the traditional underlying infrastructure from developers and virtualizes runtime and operational management as well as the components. A serverless architecture can also be referred to as FaaS (Function-as-a-Service) that allows executing a given task with the advantages of scalability, upgrading, and adding compute resources. Hardware and software infrastructure in a serverless architecture is no longer reliant on the DevOps team. Applications can quickly, seamlessly, and automatically scale up to regulate data traffic and automatically scale down when there are fewer concurrent users as per their convenience.  

Market Dynamics

No Requirement for Server Management to Drive the Market Growth

In a serverless architecture, developers don't have to deal with the servers and their management. It is managed by the vendors, which eliminates the additional expenses in DevOps, and facilitates developers to expand their applications without facing server constraints

Expansion of Hybrid IT to Boost the Market Growth

A hybrid serverless architecture means that some apps will run on AWS, others will run in the enterprise's on-premises data center, and still others across public clouds. Hybrid serverless models can expand through the data center and multi-cloud environments, giving more flexibility to the operators. The technology is anticipated to become mainstream in enterprise applications and integrate with micro-services and traditional application architectures in the near future.

Serverless architecture also facilitates easy monitoring of applications, thereby propelling market growth. Monitoring support varies across providers and often has to be supplemented with external services. Serverless systems visibility will channel the demand into building more complex applications during the forecast period

Complexities in Testing and Debugging, Cyber Threats, and High-Cost to Hamper the Market Growth

Replicating the serverless environment to see how code will perform once deployed and debugging errors post-deployment is a complicated task. Lack of visibility into backend processes is a prime market restraint. Cyber threats and security hacks can be a problem for applications that handle personal or sensitive data. In a serverless architecture, companies are not assigned their own discrete physical servers, rather providers run codes from several of their customers on a single server, also known as sharing machinery or 'multitenancy.' Multitenancy can expose sensitive data to hackers if the multi-tenant servers are not configured properly.   

Serverless architecture charges for the amount of time code is running and may cost more depending upon the time for which it is used. Therefore there are limited applications that can run in a serverless architecture cost-effectively, which makes it difficult to procure

High-End Applications of Serverless Architecture to Increase Its Adoption by the End-Users

Apart from being a cutting-edge solution for tech organizations, serverless architecture is transforming the way developers manage complex software. An increase in IoT applications will pave the way to develop billions of end-devices using serverless architectures. Benefits such as cost savings and scaling efficiencies are driving the mass adoption of serverless architecture around the world.

Tech giants such as Amazon, Google, Microsoft, and IBM are already offering serverless platforms, along with numerous cloud-related capabilities. For instance, in 2014, Amazon launched its AWS Lambda and witnessed an increasing trend of enterprises adopting AWS Lambda services. Jason McGee, VP & CTO of IBM Cloud, predicted that the FaaS market would grow seven times by 2021. The overall serverless architecture market will grow from a USD 1.88 billion market in 2016 to USD 7.72 billion by 2021.

GitOps to Be the Next Big Thing

GitOps is a set of practices that empowers developers to perform tasks under the purview of IT operations. The version-controlled system of DevOps, GitOps, is anticipated to grow significantly during the forecast period, especially in FaaS. Benefits such as improved operational workflows and implementation of technologies, such as Kubernetes and other cloud solutions, will attract more customers in the near future. This will enable cloud vendors to provide greater ecosystem support and tooling capabilities to the serverless architecture users

Regional Analysis

Serverless Architecture Market in Asia-Pacific  

Countries such as China, India, Japan, Australia, and New Zealand are technologically advanced and are gaining rapid traction in the serverless architecture market on account of the advantages offered, including the involvement of physical infrastructure, which significantly reduces maintenance costs. Emerging players in the BFSI, retail, and eCommerce, healthcare, and life sciences industry verticals are projected to adopt serverless architecture solutions because of growing demands in the future.

Segmental Analysis

Maintaining Stability Factor of Monitoring Services to Drive the Segment Growth

Maintaining stability and protection of operation is a crucial factor driving the monitoring segment's growth. Monitoring operations at different stages alert the clients of the failures, helping them to rectify the potential impact and retain a high degree of service. Performance monitoring of applications enables companies to troubleshoot and debug errors instantly while optimizing the performance of serverless functions. It breaks down the application into micro components to be effectively monitored and managed. Monitoring further helps reduce blind spots by detecting issues with load balancers, disconnected hosts, and third-party providers

Public Cloud Segment to Boost Market Revenue in the Upcoming Years

Public cloud offers storage and application accessibility to multiple users through the internet. It is a standard model that offers free-of-cost or on a pay-per-use model, depending upon the requirements of end-users. The public cloud deployment model offers various benefits to the enterprises, such as scalability, reliability, flexibility, and remote location access, and is often preferred by the enterprises with less regulatory hurdles. Data security concerns with public cloud are compelling enterprises to shift to private and hybrid cloud storage solutions, creating the foundation for the growth of the private cloud segment.s

Impact of covid-19

Since the outbreak of the novel coronavirus, the tech industry is looking for ways of adapting to the new normal. Companies are stepping up to fight the pandemic with technological innovations. Cloud infrastructures are becoming the prime choice of businesses in all industry verticals due to the social distancing norms and shortage of laborers. Companies are rethinking their IT infrastructure.

Five years ago, public cloud computing accounted for less than 5% of IT infrastructure spending, and 15% of the expenditure on software. Industry experts believe that in the next few years, the growth is expected to be further accelerated, with large organizations venturing into cloud-first strategies and many small and medium businesses getting the full value of moving the bulk of their systems to the cloud. However, confusing the migration of IT infrastructure from on-premise to serverless architecture may prove to be even more complex, cumbersome, and costly than before. Therefore, companies need to make informed decisions and plan accordingly, keeping in mind the adverse effects of corona like crisis.

Recent Developments

• In April 2020, Amazon Web Services launched Fargate 1.4, an update to its serverless compute engine for containers platform that also supports shared Elastic File System storage and removes the use of Docker Engine
• In November 2019, Google released Cloud Run serverless containers, including new metrics that allows developers to run containers on Kubernetes (K8s) using a serverless model