Global Mainframe Modernization Market Size, Share and Trends Analysis Report – Industry Overview and Forecast to 2033

Mainframe Modernization Market Size

• The global mainframe modernization market size was valued at USD 8.50 billion in 2025 and is expected to reach USD 17.39 billion by 2033, at a CAGR of 9.35% during the forecast period
• The market growth is largely fuelled by the increasing need for digital transformation and modernization of legacy IT systems across enterprises
• Rising adoption of cloud computing, DevOps practices, and scalable infrastructure is driving organizations to modernize mainframes for improved agility, efficiency, and reduced operational costs

Mainframe Modernization Market Analysis

• Enterprises are increasingly investing in modernizing legacy mainframe systems to integrate with contemporary technologies such as AI, machine learning, and cloud-native architectures
• The shift toward digital-first business models and the need for seamless customer experiences are driving the adoption of mainframe modernization solutions
• North America dominated the mainframe modernization market with the largest revenue share of 35.47% in 2025, driven by the growing need for digital transformation, legacy system upgrades, and increased adoption of cloud and hybrid IT solutions
• Asia-Pacific region is expected to witness the highest growth rate in the global mainframe modernization market, driven by expanding enterprise IT budgets, government initiatives for digital transformation, and rising demand for cloud-based modernization solutions
• The software segment held the largest market revenue share in 2025, driven by the increasing adoption of cloud-based modernization tools, automated migration platforms, and legacy application replatforming solutions. Software solutions enable enterprises to modernize legacy mainframes efficiently while minimizing downtime and operational risks, making them a preferred choice for organizations undergoing digital transformation

Report Scope and Mainframe Modernization Market Segmentation    

Mainframe Modernization Market Trends

“Rise of Cloud-Based And Legacy System Modernization”

•  The growing shift toward cloud-based and hybrid modernization solutions is transforming the enterprise IT landscape by enabling real-time system updates, improved scalability, and cost optimization. The ability to modernize legacy mainframes without disrupting business operations allows organizations to maintain continuity while enhancing performance and agility. In addition, cloud adoption facilitates easier integration with emerging technologies, providing enterprises with a future-ready IT infrastructure
•  The high demand for faster application deployment and integration with modern technologies such as AI, machine learning, and analytics is accelerating the adoption of mainframe modernization platforms. These solutions are particularly effective in industries where legacy systems are mission-critical, helping reduce operational bottlenecks and improve decision-making. Organizations can also achieve greater operational flexibility and faster response times to market changes
•  The affordability and efficiency of modern migration tools and automation frameworks are making mainframe modernization accessible to enterprises of various sizes. Organizations benefit from faster project completion, reduced downtime, and lower operational risks, which ultimately enhances overall IT performance. These tools also minimize manual errors, streamline code refactoring, and simplify testing during migration
•  For instance, in 2023, several financial institutions in North America reported reduced transaction processing times and improved system reliability after implementing cloud-based mainframe modernization solutions. These initiatives allowed seamless integration with digital channels and advanced analytics, improving customer satisfaction and operational efficiency. The modernization also enhanced data security, compliance, and reporting capabilities across business units
•  While mainframe modernization is driving enhanced IT capabilities, its impact depends on continued innovation, skilled workforce availability, and cost-effectiveness. Vendors must focus on scalable solutions, automation, and seamless integration with existing enterprise systems to fully capitalize on this growing demand. Enterprises also need to adopt strategic change management practices to ensure smooth adoption and user acceptance

Mainframe Modernization Market Dynamics

Driver

“Rising Need For Digital Transformation And Legacy System Modernization”

•  The increasing demand for digital transformation is pushing enterprises across banking, insurance, healthcare, and government sectors to modernize legacy mainframes. Modernization enables real-time data access, improved system performance, and alignment with current business models. It also allows organizations to support multi-channel operations and meet customer expectations for digital services
•  Organizations are becoming aware of the risks associated with maintaining outdated systems, including high maintenance costs, limited scalability, and cybersecurity vulnerabilities. This awareness is prompting the regular adoption of modernization tools and strategies. Modernized systems also enhance business continuity, reduce operational downtime, and improve overall IT resilience
•  Government regulations, industry compliance requirements, and pressure to support omnichannel operations are reinforcing the need for modernization. Enterprises are leveraging modernization to ensure regulatory adherence while enhancing customer experience and operational efficiency. The modernization also facilitates auditability, reporting transparency, and faster regulatory compliance
•  For instance, in 2022, several European banks initiated large-scale modernization programs to replace legacy COBOL systems with cloud-native architectures, improving processing speed and reducing operational risks. These initiatives enabled more agile IT operations, faster product rollouts, and integration with emerging fintech platforms
•  While the drive for digital transformation is strong, enterprises still need to address challenges such as workforce skill gaps, integration complexity, and cost management to sustain modernization initiatives. Strategic partnerships with technology providers and continuous employee training are critical to maximizing modernization benefits

Restraint/Challenge

“High Implementation Costs And Complexity Of Legacy Modernization”

•  The high cost of mainframe modernization projects, including licensing, consulting, and migration services, limits adoption among small and mid-sized enterprises. Complex legacy environments require extensive planning and skilled resources, making initial investments significant. Organizations also face ongoing operational costs during and after modernization, which can impact ROI
•  Many organizations lack in-house expertise to manage modernization projects, resulting in dependence on third-party vendors. This skill gap can slow down deployments and increase the risk of errors during migration. In addition, inadequate change management or insufficient knowledge transfer can lead to delays and post-migration performance issues
•  Integration challenges with existing enterprise applications, databases, and security protocols can restrict the speed and effectiveness of modernization initiatives. Without proper planning, organizations risk operational disruptions or downtime. Enterprises may also encounter compatibility issues, requiring additional customization and testing efforts
•  For instance, in 2023, several insurance companies in Asia-Pacific experienced delays in mainframe modernization due to complex legacy code and insufficient IT staff, impacting project timelines and cost projections. These delays also affected service delivery, customer support, and the ability to implement digital transformation initiatives effectively
•  While modernization technologies are advancing, addressing cost, complexity, and workforce skill challenges remains crucial. Vendors and enterprises must focus on automation, cloud-native tools, and comprehensive training programs to unlock the full potential of mainframe modernization. Effective project governance, risk management, and strategic planning are essential to ensure successful modernization outcomes

Mainframe Modernization Market Scope

The mainframe modernization market is segmented on the basis of component, organization size, and vertical.

• By Component

On the basis of component, the market is segmented into software and services. The software segment held the largest market revenue share in 2025, driven by the increasing adoption of cloud-based modernization tools, automated migration platforms, and legacy application replatforming solutions. Software solutions enable enterprises to modernize legacy mainframes efficiently while minimizing downtime and operational risks, making them a preferred choice for organizations undergoing digital transformation.

The services segment is expected to witness the fastest growth rate from 2026 to 2033, driven by the growing need for consulting, integration, and managed services to support complex modernization projects. Services help organizations plan, execute, and maintain modernization initiatives effectively, ensuring seamless integration with existing IT infrastructure and compliance with industry standards.

• By Organization Size

On the basis of organization size, the market is segmented into large enterprises and SMEs. Large enterprises held the largest market share in 2025, fueled by their substantial IT budgets, complex legacy systems, and urgency to adopt scalable and secure modernization solutions. These organizations often pursue full-scale modernization projects to enhance operational efficiency, agility, and competitiveness.

The SME segment is expected to witness the fastest growth rate from 2026 to 2033, driven by the increasing availability of cost-effective and scalable modernization tools. SMEs are increasingly adopting cloud-based solutions and automation frameworks to modernize legacy mainframes without significant capital expenditure, enabling digital transformation across smaller businesses.

• By Vertical

On the basis of vertical, the market is segmented into BFSI, IT & Healthcare, Retail, Media & Entertainment, Education, Manufacturing, and Others. The BFSI segment held the largest market share in 2025, driven by the critical need to modernize mission-critical legacy systems, enhance transaction processing, and ensure regulatory compliance. Modernization initiatives in BFSI improve operational resilience, customer experience, and data analytics capabilities.

The IT & Healthcare segment is expected to witness the fastest growth rate from 2026 to 2033, fueled by the increasing demand for real-time data access, interoperability, and integration with emerging technologies such as AI and analytics. Healthcare providers and IT service companies are rapidly adopting modernization strategies to improve service delivery, reduce operational risks, and support digital innovation initiatives.

Mainframe Modernization Market Regional Analysis

•  North America dominated the mainframe modernization market with the largest revenue share of 35.47% in 2025, driven by the growing need for digital transformation, legacy system upgrades, and increased adoption of cloud and hybrid IT solutions
•  Enterprises in the region highly value improved system performance, faster application deployment, and integration with modern technologies such as AI, analytics, and automation
•  This widespread adoption is further supported by high IT spending, a skilled workforce, and the growing emphasis on regulatory compliance and operational efficiency, establishing mainframe modernization as a strategic priority across industries

U.S. Mainframe Modernization Market Insight

The U.S. mainframe modernization market captured the largest revenue share in 2025 within North America, fueled by the rapid adoption of cloud-based modernization solutions and digital transformation initiatives. Enterprises are increasingly prioritizing legacy system upgrades to improve processing speed, reduce operational risks, and enable seamless integration with modern applications. The growing demand for automation, analytics, and real-time monitoring further propels the mainframe modernization market. Moreover, U.S. organizations are leveraging modernization to comply with industry regulations, enhance customer experience, and maintain competitive advantage.

Europe Mainframe Modernization Market Insight

The Europe mainframe modernization market is expected to witness the fastest growth rate from 2026 to 2033, primarily driven by stringent data protection regulations, increased IT budgets, and the need to modernize legacy systems in banking, healthcare, and government sectors. Enterprises are also adopting modernization solutions to enhance operational agility, scalability, and cloud integration. The region is experiencing significant growth across large enterprises and SMEs, with modernization projects focused on both mission-critical applications and legacy infrastructure optimization.

U.K. Mainframe Modernization Market Insight

The U.K. mainframe modernization market is expected to witness the fastest growth rate from 2026 to 2033, driven by the accelerating trend of digital transformation and the need to optimize legacy IT systems. Increased adoption of hybrid cloud solutions and automation tools is enabling organizations to improve efficiency while maintaining system reliability. The U.K.’s strong IT infrastructure, coupled with government initiatives supporting technology modernization, is further stimulating market growth.

Germany Mainframe Modernization Market Insight

The Germany mainframe modernization market is expected to witness the fastest growth rate from 2026 to 2033, fueled by the demand for advanced, secure, and compliant IT systems. Enterprises in Germany are focusing on modernizing legacy platforms to enhance operational performance, integrate emerging technologies, and reduce maintenance costs. The emphasis on Industry 4.0, digitalization, and cloud adoption is driving modernization initiatives across manufacturing, BFSI, and public sectors.

Asia-Pacific Mainframe Modernization Market Insight

The Asia-Pacific mainframe modernization market is expected to witness the fastest growth rate from 2026 to 2033, driven by rapid digital adoption, urbanization, and increased IT investments in countries such as China, Japan, and India. Enterprises in the region are modernizing legacy systems to improve agility, scalability, and integration with cloud and analytics platforms. Furthermore, as APAC emerges as a hub for IT services and software development, affordable modernization solutions are becoming accessible to a wider range of businesses.

Japan Mainframe Modernization Market Insight

The Japan mainframe modernization market is expected to witness the fastest growth rate from 2026 to 2033 due to the country’s high-tech IT ecosystem, aging legacy infrastructure, and strong focus on operational efficiency. Japanese enterprises are adopting modernization strategies to integrate AI, analytics, and cloud capabilities into their mainframes, improving transaction speed and system reliability. Moreover, workforce digitization initiatives and government support for enterprise modernization are fueling demand across sectors.

China Mainframe Modernization Market Insight

The China mainframe modernization market accounted for the largest market revenue share in Asia-Pacific in 2025, attributed to the country’s rapidly growing IT infrastructure, expanding enterprise sector, and high rates of digital adoption. Chinese organizations are increasingly implementing modernization solutions to enhance system performance, reduce operational risks, and enable real-time analytics. The push towards smart cities, cloud adoption, and domestic IT services providers offering cost-effective modernization solutions are key factors propelling the market in China.

Mainframe Modernization Market Share

The Mainframe Modernization industry is primarily led by well-established companies, including:

• IBM Corporation (U.S.)
• Accenture (Ireland)
• Amazon Web Services, Inc. (U.S.)
• TATA Consultancy Services Limited (India)
• Capgemini (France)
• Infosys Limited (India)
• HCL Technologies Limited (India)
• Wipro (India)
• DXC Technology Company (U.S.)
• Open Text Corporation (Canada)

Latest Developments in Global Mainframe Modernization Market

• In July 2025, Kyndryl Inc., an IT infrastructure services provider, launched advisory and implementation services leveraging Amazon Web Services, Inc.’s agentic AI capabilities to accelerate mainframe application modernization and migration. The services streamline the software development lifecycle and enable faster integration, provisioning, and deployment of applications, reducing project timelines and operational risks, thereby enhancing enterprise adoption of cloud-based mainframe solutions
• In April 2025, IBM introduced its z17 system designed for AI-driven mainframe environments. Featuring the Telum II processor and tools such as watsonx Code Assistant for Z and Test Accelerator for Z, the system boosts developer productivity, simplifies modernization workflows, and supports generative AI integration, driving innovation and efficiency in enterprise mainframe operations
• In March 2025, Kyndryl Inc. partnered with Google LLC to launch the “Mainframe Modernization with Gen AI Accelerator Program.” The initiative combines Kyndryl’s mainframe expertise with Google’s Gemini AI models to assist enterprises in assessing, modernizing, and migrating mainframe applications and data to cloud-native architectures, accelerating transformation and reducing modernization risks while expanding the market for AI-powered mainframe solutions

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