U.S. Identity as a Service (IDaaS) Market Size, Share, and Trends Analysis Report – Industry Overview and Forecast to 2032

Identity as a Service (IDaaS) Market Size

• The U.S. Identity as a Service (IDaaS) market size was valued at USD 2.94 billion in 2024 and is expected to reach USD 14.27 billion by 2032, at a CAGR of 21.80% during the forecast period
• The market growth is largely fueled by the rising demand for secure and scalable identity management solutions across cloud environments, driven by increasing digital transformation and remote work adoption across enterprises globally
• Furthermore, growing concerns over data breaches and compliance requirements are encouraging organizations to adopt integrated IDaaS platforms offering real-time access control, multi-factor authentication, and identity governance. These converging factors are accelerating the shift from traditional identity management to cloud-based identity services, thereby significantly boosting the industry's growth

Identity as a Service (IDaaS) Market Analysis

• Identity as a Service (IDaaS) refers to cloud-based identity and access management solutions that authenticate and authorize users, providing secure access to applications, systems, and data. These services include single sign-on (SSO), multi-factor authentication (MFA), directory services, and identity governance
• The escalating demand for IDaaS is primarily fueled by the need to manage identities across diverse platforms, the growing adoption of SaaS applications, and the need for centralized control over user access. Enterprises are increasingly turning to IDaaS to enhance security posture, ensure regulatory compliance, and improve operational efficiency in hybrid and remote working environments
• Single sign-on segment dominated the market with a market share of 28.5% in 2024, due to the growing enterprise focus on reducing password fatigue and enhancing user experience. SSO solutions streamline access across multiple applications with a single login, significantly improving operational efficiency and security posture in complex IT environments. Its scalability and compatibility with diverse SaaS applications further reinforce its dominance in large U.S. enterprises

Report Scope and Identity as a Service (IDaaS) Market Segmentation

Identity as a Service (IDaaS) Market Trends

“Growing Adoption of Cloud Services”

• The IDaaS market in the U.S. is witnessing rapid growth driven by widespread corporate and governmental migration to cloud platforms, which demands scalable and secure identity management solutions
  • For instance, major players such as Okta, Microsoft Azure Active Directory, and Ping Identity have expanded their cloud-based authentication and identity management offerings, accommodating the surge in remote work and hybrid cloud infrastructure across industries
• Increased reliance on cloud applications and Software-as-a-Service (SaaS) amplifies the need for centralized, cloud-native identity management that ensures seamless user access across multiple platforms
• Heightened regulatory compliance demands including GDPR, CCPA, and HIPAA incentivize organizations to adopt IDaaS for automated audit reporting, data privacy, and enhanced security controls
• Emerging technologies such as AI-driven dynamic threat detection, biometric and passwordless authentication, and blockchain-based decentralized identity management are becoming mainstream, further boosting cloud IDaaS adoption
• The COVID-19 pandemic accelerated digital transformation and remote workforce setups, making cloud-deployed IDaaS solutions critical to maintaining secure, user-friendly access management in a distributed IT environment

Identity as a Service (IDaaS) Market Dynamics

Driver

“Rising Cyber-Attacks and Frauds in Public and Private Sectors”

• The sharp increase in sophisticated cyberattacks, data breaches, and identity-related fraud across both public and private sectors has made robust identity verification and access control indispensable
  • For instance, the escalating frequency of data breaches—reported to increase by over 15% year-on-year—has pushed organizations to invest heavily in IDaaS platforms featuring multi-factor authentication (MFA), continuous authentication, and AI-based anomaly detection
• Government agencies and large enterprises require stringent identity management to protect critical infrastructure, customer data, and comply with cybersecurity frameworks such as NIST and zero-trust architectures
• The rise of remote workforces and BYOD policies further complicates identity security, driving demand for cloud-based IDaaS solutions that offer secure, ubiquitous access without compromising on usability
• Increasing fraud sophistication, including credential stuffing and identity theft, propels the adoption of adaptive authentication models that can dynamically adjust security levels based on risk

Restraint/Challenge

“High Implementation and Maintenance Cost”

• The significant investment required for deploying, integrating, and continuously maintaining IDaaS infrastructure—especially for large enterprises with complex legacy IT environments—poses a major adoption barrier
  • For instance, organizations face expenses from licensing fees of premium IDaaS platforms such as IBM Security Verify and Okta and also from costs related to legacy system integration, employee training, and ongoing cybersecurity updates
• Complexities in migrating existing identity and access management (IAM) systems to cloud-based IDaaS platforms, often involving hybrid architectures, slow down adoption and increase total cost of ownership
• Small to medium-sized businesses may find the upfront cost and operational overhead prohibitive, limiting IDaaS market penetration beyond large enterprises and public institutions
• The requirement for highly specialized personnel to manage IDaaS solutions and respond to evolving cyber threats adds to operational expenses and complicates scalability

Identity as a Service (IDaaS) Market Scope

The market is segmented on the basis of access type, deployment, service type, enterprise size, function, and end-use.

• By Access Type

On the basis of access type, the U.S. IDaaS market is segmented into Single Sign-On (SSO), Multi-Factor Authentication (MFA), Directory Services, Compliance Management, Provisioning, Password Management, and Others. The Single Sign-On (SSO) segment accounted for the largest market share of 28.5% in 2024, supported by the growing enterprise focus on reducing password fatigue and enhancing user experience. SSO solutions streamline access across multiple applications with a single login, significantly improving operational efficiency and security posture in complex IT environments. Its scalability and compatibility with diverse SaaS applications further reinforce its dominance in large U.S. enterprises.

The Multi-Factor Authentication (MFA) segment is projected to record the fastest growth from 2025 to 2032, driven by increasing security threats, regulatory mandates, and data privacy concerns. MFA enhances identity verification by combining multiple credentials such as biometrics, OTPs, and smart cards, making it a preferred choice for businesses looking to fortify access security. The growing integration of MFA with mobile devices and cloud platforms further accelerates its adoption across industry verticals.

• By Deployment

On the basis of deployment, the market is categorized into Hybrid, Public, and Private. The Hybrid segment led the U.S. market in 2024 due to its ability to balance flexibility and control. Enterprises prefer hybrid IDaaS models as they allow sensitive data to remain on-premise while leveraging cloud services for broader identity management, ensuring compliance without compromising scalability.

The Public deployment segment is anticipated to witness the highest CAGR through 2032, propelled by the surge in cloud-native startups and the increasing affordability and ease of deployment offered by public cloud models. Its suitability for small and medium enterprises (SMEs) and minimal infrastructure demands support this rapid growth.

• By Service Type

On the basis of service type, the market is segmented into On-Site and In-House. The In-House segment held the dominant market share in 2024, attributed to enterprises' preference for maintaining internal control over user identity data and integrating IDaaS capabilities with their proprietary systems. It also aligns with industries that have strict data governance requirements.

The On-Site segment is projected to grow faster during the forecast period, driven by demand for outsourced expertise, 24/7 support, and cost-effectiveness. Organizations looking to reduce internal IT overhead while ensuring secure and compliant identity management are increasingly turning to managed service providers.

• By Enterprise Size

On the basis of enterprise size, the market is segmented into Large Enterprises and Small and Medium Enterprises (SMEs). Large enterprises dominated the market in 2024 due to their higher security budgets, complex IT architectures, and the need to manage large volumes of user identities across distributed environments.

The SME segment is expected to exhibit faster growth through 2032, spurred by the growing adoption of cloud services, the rising frequency of cyber threats, and the availability of scalable IDaaS platforms tailored for small business needs. The ability to implement enterprise-grade security at a lower cost makes IDaaS an attractive option for SMEs.

• By Function

On the basis of function, the U.S. IDaaS market is segmented into Authentication/Identification, Document Verification, and Screening. Authentication/Identification was the leading segment in 2024, supported by the fundamental role it plays in securing access to enterprise applications, systems, and data. The adoption of biometric authentication, passwordless access, and behavioral analytics are strengthening this segment's appeal.

The Document Verification segment is forecasted to register the fastest growth rate, driven by increasing regulatory scrutiny and Know Your Customer (KYC) requirements in sectors such as BFSI, healthcare, and government. Automated document scanning and AI-based verification are enabling quicker onboarding and fraud detection.

• By End-Use

On the basis of end-use, the market is segmented into BFSI, Government, Healthcare, IT and Telecom, Manufacturing, Retail, Aerospace and Defense, Energy and Utilities, and Others. The BFSI segment held the largest market share in 2024, owing to its high vulnerability to cyber threats and the need for strong identity governance and compliance with stringent regulatory frameworks such as GLBA and FFIEC.

The Healthcare segment is expected to grow at the fastest pace, fueled by the digitization of patient records, HIPAA compliance mandates, and the increasing demand for secure access to telehealth platforms. The integration of IDaaS solutions in healthcare supports both patient privacy and operational efficiency.

Identity as a Service (IDaaS) Market Share

The Identity as a Service (IDaaS) industry is primarily led by well-established companies, including:

• Broadcom (U.S.)
• Delinea (U.S.)
• Ilantus Services (India)
• Exostar (U.S.)
• iWelcome (Netherlands)
• JumpCloud, Inc. (U.S.)
• Okta (U.S.)
• OneLogin (U.S.)
• Oracle (U.S.)
• Ping Identity. (U.S.)
• Microsoft (U.S.)
• Connectis (U.S.)
• Thales (France)
• Capgemini (France)
• One Identity LLC (U.S.)

Latest Developments in U.S. Identity as a Service (IDaaS) Market

• In October 2023, Okta introduced Identity Threat Protection, an AI-powered solution designed to provide real-time detection and automated response to identity-based threats such as phishing and session hijacking. By continuously assessing user risk throughout active sessions and integrating seamlessly with security platforms such as CrowdStrike and Palo Alto Networks, this launch significantly enhanced Okta’s value proposition. It strengthened the company’s foothold in the IDaaS market by addressing the rising demand for intelligent, adaptive identity security in increasingly complex enterprise environments
• In June 2021, IBM Corporation launched IBM Security Identity Governance and Intelligence (IGI), targeting critical security gaps in identity lifecycle management and compliance. This solution provided centralized visibility, role-based access control, and policy enforcement, aligning well with growing regulatory requirements. The launch allowed IBM to reinforce its competitive position in the IDaaS market by catering to enterprises seeking scalable, governance-driven identity solutions amid increasing cybersecurity concerns
• In April 2021, Okta launched Okta Identity Governance, a comprehensive cloud-first solution aimed at streamlining identity governance and administration. Featuring self-service capabilities and policy-based automation, the product addressed enterprises’ need for efficient user access management across cloud environments. This development further extended Okta’s market influence by enabling organizations to enhance security while reducing administrative overhead, meeting the accelerating demand for integrated governance within modern identity ecosystems
• In February 2021, Ping Identity introduced PingOne Verify, a cloud-based identity verification service leveraging facial recognition technology. Designed to support secure and efficient customer onboarding, this solution addressed growing market demand for digital identity proofing in sectors such as financial services and healthcare. The launch strengthened Ping Identity’s position in the IDaaS landscape by combining biometric security with user-centric design, thereby supporting fraud prevention and regulatory compliance
• In March 2021, Microsoft expanded its Azure Active Directory (AD) offering with the rollout of “My App” and new identity risk detection features. These enhancements streamlined user access management and improved the detection of potential identity threats, offering enterprises more granular control and risk visibility. This advancement bolstered Microsoft’s leadership in the IDaaS market by delivering a more personalized and secure identity experience, in line with rising expectations for cloud-based access management and zero-trust architectures

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