The U.S. Mainframe Modernization Market is Projected to Grow from $1.86 Billion in 2025 to $4.35 Billion by 2035, While Europe is Expected to Expand from $1.92 Billion to $4.20 Billion by 2035.
Austin, United States, Aug. 27, 2026 (GLOBE NEWSWIRE) -- The Mainframe Modernization Market was valued at USD 6.85 Billion in 2025 and is expected to reach USD 16.95 Billion by 2035, expanding at a CAGR of 9.39% from 2026 to 2035.
The market for mainframe modernization is growing consistently because of the clash between technical debt that has been built up for decades in legacy computing systems and the digital transformation that requires cloud-native capabilities, integration of generative AI capabilities, and a shortage of skilled labor owing to the retirement of the COBOL-savvy workforce.
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Key Market Highlights:
- North America was the biggest regional share in 2025, while the fastest-growing region is Asia Pacific throughout the forecast period.
- According to offer, Software accounted for approximately 59% share in 2025, whereas Services is expected to be the fastest-growing segment with a CAGR of 10.64%.
- According to modernization type, Rehosting accounted for approximately 30% share in 2025, whereas Rearchitecting is expected to be the fastest-growing segment with a CAGR of 11.15%.
- According to organization size, Large Enterprises accounted for approximately 70% share in 2025, whereas SMEs is expected to be the fastest-growing segment with a CAGR of 11.50%.
- According to vertical, BFSI accounted for approximately 32% share in 2025, whereas Healthcare is expected to be the fastest-growing segment with a CAGR of 12.09%.
Mainframe Modernization Market Segmentation Analysis
By Offering
Software emerged as the leading category with a market share of around 59% in 2025, owing to the importance placed on automation of migrations, code analyses, and applications reengineering tools which make it technically possible to transform legacy systems into modernized versions. The services category has become the fastest growing one with a CAGR of 10.64% from 2025 till 2035 due to the mainframe expertise needed for the same.
By Modernization Type
The top spot belonged to rehosting with roughly 30% market share in 2025 as the solution provides the highest level of security and the quickest method of modernization that helps lower costs associated with hardware and licensing of mainframes. Rearchitecting is the most rapidly growing category with the CAGR of 11.15% till 2035 driven by companies' ambitions to make deep architectural changes.
By Organization Size
The market share held by Large Enterprises was close to 70% in 2025 owing to their high dependence on mission critical mainframes used in banking, insurance, and governmental activities. The SMEs organization size category holds the highest growth rate at CAGR of 11.50% owing to modernization platforms offered via cloud computing.
By Vertical
BFSI continued its reign in the vertical market with a share of about 32% in 2025 due to the significant investments in the mainframe system by the finance industry in history for banking and payments processing. The healthcare industry is the fastest growing with a CAGR of 12.09%, driven by the dire need to update their systems for EHR and telehealth systems.
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Regional Insights
In 2025, North America will dominate the global market of mainframe modernization; U.S. contributed about 87.4% of the revenue in the region. The growth is fueled by heavy dependency of the mainframe in financial, government, and healthcare sectors, along with a well-developed modernization services ecosystem. Canada is estimated to contribute 12.6%, mainly from banks’ desire to migrate to cloud and overall digital transformation.
U.S. market of mainframe modernization is estimated to be worth USD 1.86 billion in 2025 and further forecast to grow to USD 4.35 billion by 2035, exhibiting a CAGR of 8.89%. This growth is attributed to heavy dependency of mainframes in finance, government, and healthcare sectors, as well as high demand for modernization solutions/services.
The market size of Europe Mainframe Modernization Market stood at USD 1.92 Billion in 2025 and is expected to reach USD 4.20 Billion by 2035, at a CAGR of 8.6%. Europe is the second-largest market in the world and it is marked by a technologically sophisticated and conservative financial services and government sector. In 2025, the share contributed by Germany to Europe market is 22.3%.
Asia Pacific is the fastest-growing region in the market due to increasing demand for financial services, increasing volume of transactions, competition from digital banking and adoption of the cloud. Among the regions, China holds the largest share with around 61.7% in terms of regional revenue, owing to the ongoing mainframe modernization efforts in the country's leading banks.
Escalating Maintenance Costs and Talent Scarcity are Driving the Market Expansion Globally
The mainframe modernization market is getting a push from the combination of factors like rising total cost of ownership, growing shortage of COBOL skills, and the increasing competitive threat due to inability to leverage modern cloud-native capabilities. BFSI, healthcare, and government organizations are increasingly leveraging AI-based code translation to mitigate risks and costs associated with migrations.
Key Players:
- IBM Corporation
- Kyndryl Holdings Inc.
- Broadcom Inc.
- Micro Focus International plc (OpenText)
- Accenture plc
- Cognizant Technology Solutions
- Capgemini SE
- DXC Technology
- Infosys Limited
- Tata Consultancy Services
- Wipro Limited
- HCL Technologies
- Amazon Web Services (AWS)
- Microsoft Azure
- Rocket Software Inc.
- Fujitsu Limited
- CloudFrame Inc.
- TSRI Inc.
- TmaxSoft Co., Ltd.
- Mechanical Orchard
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Competitive Landscape:
The mainframe modernization market is very competitive since market players concentrate on making attempts at AI-driven code migration, migration factory delivery approach and hybrid cloud integration. The competitive approach is getting increasingly oriented towards risk reduction and acceleration of modernization program completion period.
- 2025: IBM announced its watsonx Code Assistant for Z with enhanced generative AI capabilities that automate COBOL-to-Java code conversion at scale, reducing manual developer review requirements.
- 2025: Kyndryl expanded its mainframe modernization practice with new AI-enhanced migration factory capabilities combining proprietary code analysis tooling with structured delivery methodology.
Frequently Asked Questions (FAQs):
Q: Which region dominated the mainframe modernization market in 2025?
A: North America dominated the market in 2025, led by the United States with approximately 87.4% of regional revenue.
Q: Which by offering segment dominated the mainframe modernization market in 2025?
A: The Software segment dominated the market with approximately 59% share in 2025.
Q: What is the major growth factor driving the mainframe modernization market?
A: Major growth factors include escalating mainframe maintenance costs, COBOL talent scarcity, AI-powered code translation reducing migration risk, and cloud architecture requirements that legacy systems cannot meet.
Q: What was the size of the mainframe modernization market in 2025?
A: The Mainframe Modernization Market was valued at USD 6.85 Billion in 2025.
Q: What is the expected CAGR of the mainframe modernization market from 2026 to 2035?
A: The market is expected to register a CAGR of 9.39% from 2026 to 2035.
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