The Serverless Computing Market is growing at higher CAGR of 23% during forecast period.
In serverless computing methodology, the management of the server is handled by the cloud provider and provides dynamic allocation of machine resources. Therefore, serverless architecture eliminates the requirement for server software and hardware management by the developer. In recent years, some major innovations in the IT industry enabled business agility and enhanced resilience. In such a scenario, serverless computing was introduced as an element for the deployment of cloud services and applications. For instance, the utilization of conventional cloud infrastructure to develop an application that checks credit score using mobile phones for mobile banking could take days and weeks for development and testing of the application. With the utilization of serverless computing such as AWS Lambda, similar applications can be developed in hours.
Owing to the reduced operational cost and increased process agility provided by the technology, the serverless computing market is anticipated to grow at a CAGR of 26% during the forecast period 2020–2029. Companies are pressurized to release innovative products and features that meet the growing consumer expectations due to the rapid evolution of Artificial Intelligence, the Internet of Things, and machine learning. The serverless architecture provides benefits such as easier operational management, faster set up, and zero system administration. The adoption of serverless computing technology by business organizations eliminates expensive conventional and time-consuming approaches, including the purchase of new hardware components, their installation, configuration, and troubleshooting.
Serverless computing reduces the responsibility of server management, databases, and application logic, which eliminates set-up and maintenance costs and, in turn, enables productivity enhancement and faster product delivery. Serverless computing exploits cloud-based computing to its full potential and allows companies to concentrate on their core products and services instead of handling the traffic load on their IT infrastructure, thus enabling the user to run the application on a third-party server, which reduces deployment time. However, as the organization lacks control over the infrastructure, the addition of multiple customers to the same platform causes security threats, and it is estimated to pose a threat to market progression.
The rapid rise of the application development market also significantly contributes to market growth. The rise in demand for several applications, including Android and iOS, has created business opportunities for application developers. Increasing smartphone usage, coupled with the rise in BYOD (Bring Your Own Device) adoption, has led to the rise in demand for app development technologies. According to a research study by the U.S Bureau of Labor Statistics, the number of app developers is expected to increase from 17% to 24% by the end of 2024. Serverless computing is projected as the ideal solution to build, test, and release applications with improved efficiency and productivity. Moreover, this serverless architecture enables organizations to focus on IT related work without underlying infrastructure issues such as server management, storage system management, and network management. This allows companies to concentrate on IT labor and invest their time in building products and solutions that address core business issues. Owing to the factors mentioned above, IT companies are adopting serverless computing, thereby driving the market growth.
Based on services, the global serverless computing market is divided into automation and integration, Application Programming Interface (API) management, monitoring, security, support and maintenance, and training and consulting. In the service segment, automation and integration dominate the market with a revenue share of 26% as they establish persistent serverless architecture. Automation services enable the efficient management of microservices utilized in hybrid platforms to acquire steady response time and optimal resource utilization. Furthermore, integration services allow the collection of data and functions of multiple microservices.
Monitoring service is the fastest-growing segment and is anticipated to grow at a CAGR of 28% during the forecast timeline. In this service, vendors manage and maintain the underlying servers, thereby allowing users to concentrate on application code, which in turn reduces the time and effort of the developer.
Support and maintenance services are gaining traction, as they reduce maintenance costs and time. In serverless computing, all maintenance activities such as patching, backup, scaling, and replication are handled by the provider, thereby enabling organizations to invest their time in product development.
Based on the enterprise, the market is categorized into Small and Medium Enterprises and large enterprises. The Small and Medium Enterprises segment dominates the market and is projected to retain this supremacy in the coming years. The SME segment is estimated to grow with a CAGR of 29% as serverless computing offers flexibility to Small and Medium Enterprises, thereby reducing infrastructure costs. Additionally, startups are envisaged to grow rapidly and deliver improved products and features to customers to increase business value. Therefore, to gain minimum lead time, many startups are adopting the serverless methodology, further leading to market growth.
Based on the end-user industry, the market is segmented into telecom and IT, BFSI (Banking Financial Services and Insurance), government and public, health care and life science, media and entertainment, manufacturing, retail, and e-commerce, and others. The banking, financial services, and insurance sectors hold a significant share in this segment. Owing to the large user base of this sector, the utilization of serverless architecture provides auto-scaling and facilitates the handling of a variety of functions. The benefits provided by serverless computing improve bank workflow and offer quick response, thereby increasing customer satisfaction. Therefore, the BFSI segment holds the major share and is projected to grow at a rapid pace during the forecast period.
The IT and telecom segment is the fastest-growing sector attributed to the high adoption rate of serverless computing among app developers. In addition to this, several benefits offered by the technology, including high scalability, and cost-efficiency, among others, also propel the segment growth.
The media and entertainment segment also is also growing at a fast pace due to the rise in demand for the management of large volumes of data and workflow and also to assure efficient broadcasting and enhanced business outcomes. Moreover, various companies are shifting towards the adoption of this technology to improve and transform raw data with high speed, high scalability, and high abilities to capture, estimate, and deliver a large quantity of data to their viewers.
North America is the dominating region in the serverless computing market, with a CAGR of 42% and the U.S. as the major revenue contributor. The presence of key players such as Amazon Web Services, Google LLC, IBM Corporation, and Microsoft Corporation, coupled with the BFSI, government, and healthcare industries in the U.S., resulting in North America dominates the market. Amazon Web Services, located in the United States, dominated the market in 2018. Furthermore, to sustain the increasing competition, companies are adopting new and innovative technologies to deliver products with new features in a short period of time.
Asia-Pacific is termed the fastest-growing region in the market, with a CAGR of 29.5% during the forecast period. Increasing digitalization, modernization of the IT sector, and technologically advancing telecommunication industries in countries such as China, India, and Japan are contributing to market growth. Moreover, serverless computing reduces operational and infrastructure costs, enhances management efficiency and flexibility, further attracting companies in Asia-Pacific toward the serverless computing market. An increase in the number of internet users, adoption of cloud services, and the booming IT sector, coupled with favorable government regulations, in emerging countries such as India and China are positively influencing the market growth in Asia-Pacific.
Europe is projected to grow at a CAGR of 24.9% during the forecast period 2020–2029. European countries are focusing on several ways to enhance business agility in order to increase the deployment of applications. Companies in Europe are attracted to serverless computing technology as it reduces infrastructure maintenance, which, in turn, reduces time. Countries such as the United Kingdom, Germany, and France contribute to the European serverless computing market. The rise in the adoption rate of cloud services, coupled with the advanced IT sector, provides immense opportunities for the serverless computing market. Moreover, banking, healthcare, and government sectors in this region are increasing the investment in cloud services, which further propels the market growth.
In Latin America, Brazil dominates due to increased awareness among the various sectors regarding the benefits offered by serverless computing architecture. Small and Medium Enterprises in the country adopt serverless computing to cut down the cost and time required for maintenance.
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