Global Serverless Computing Market Size, Share, Industry Analysis Report By Service (Professional, Managed), By Deployment (Public Cloud, Private Cloud), By End-User Industry (BFSI, IT & Telecom, Retail & E-commerce, Healthcare, Manufacturing, Government, Other End-User Industries), Region and Companies – Industry Segment Outlook, Market Assessment, Competition Scenario, Trends and Forecast 2024-2033

Report Overview

The Global Serverless Computing Market size is expected to be worth around USD 81.1 Billion by 2033, from USD 12.16 Billion in 2023, growing at a CAGR of 20.9% during the forecast period from 2024 to 2033. In 2023, North America held a dominant market position, capturing more than a 38.0% share, holding USD 4.6 Billion revenue.

Serverless computing is a cloud computing execution model where the cloud provider fully manages the servers. Users simply run their code on these servers without worrying about the infrastructure. This approach automatically manages the allocation of machine resources. Pricing is based on the actual amount of resources consumed by an application, rather than on pre-purchased units of capacity.

The serverless computing market has been growing as more businesses opt for cost efficiency and scalability. This market includes services that allow developers to build applications without managing server infrastructure. It’s popular among companies that need to deploy software without the complexity of handling server operations, enabling them to focus on product development instead of server management.

The growth of the serverless computing market is driven by several factors. One major factor is the reduction in IT overhead costs, as companies do not need to invest in hardware or manage servers. Another growth driver is the increased agility and scalability that serverless computing offers, allowing businesses to easily adjust their resources to match demand without worrying about capacity limits.

Market demand in serverless computing is driven by the rising need for budget-friendly computing frameworks that also provide speed and efficiency. Companies are looking to innovate rapidly without being hindered by hardware limitations or high upfront costs, making serverless computing an attractive option.

Market opportunities for serverless computing are vast, especially in integrating artificial intelligence and machine learning capabilities into serverless platforms. These integrations can provide enhanced data processing services without the complexity of managing the underlying infrastructure. Additionally, as more companies move towards digital operations, the demand for serverless solutions that support IoT applications and real-time data processing is increasing.

For instance, According to a recent survey conducted by SaltStack, an IT automation software provider based in Utah, a notable portion of organizations are integrating containerized applications into their IT infrastructures. Despite the adoption, where two-thirds of organizations have more than 10% of their applications containerized, there remains a significant gap in security investments. Alarmingly, 40% of these organizations acknowledge that their container strategies are not adequately fortified in terms of security.

Market expansion in serverless computing continues as technology evolves and becomes more integrated into mainstream IT environments. The global spread of serverless computing is helping businesses from small startups to large enterprises to achieve greater operational efficiency and innovation potential. This expansion is further supported by the increasing number of services and solutions offered by major cloud providers, enhancing accessibility and adoption worldwide.

Based on research findings from Datadog, serverless technology adoption has shown notable growth over the past year among major cloud platforms. Azure and Google Cloud experienced growth in serverless adoption by 6% and 7% respectively, while AWS recorded a growth of 3%. Currently, over 70% of AWS customers utilize one or more serverless solutions. Google Cloud follows closely with 60% of its customers adopting serverless technologies, and Azure users are also embracing this trend, with 49% using serverless solutions.

Key Takeaways

• The Global Serverless Computing Market is projected to reach an impressive USD 81.1 billion by 2033, up from USD 12.16 billion in 2023. This substantial growth reflects a CAGR of 20.9% over the forecast period, demonstrating the rising demand for serverless architectures.
• In 2023, the professional services segment led the market, securing over 61% share. This dominance is driven by the increasing need for expert guidance and support as businesses transition to serverless models.
• The public cloud segment also captured a significant portion of the market in 2023, accounting for more than 75% share. Public cloud’s scalability and flexibility make it the preferred option for companies moving toward serverless technologies.
• The BFSI sector (Banking, Financial Services, and Insurance) emerged as a key player in the market, holding over 23% share in 2023. This sector is adopting serverless computing to enhance customer experiences and optimize operations.
• Regionally, North America maintained a strong position in 2023, claiming more than 38% share of the global serverless computing market. The region’s early adoption of advanced technologies and well-established cloud infrastructure contributed to its leadership.

Service Analysis

In 2023, the Professional Services segment held a dominant market position in the serverless computing market, capturing more than a 61% share. This prominence is largely attributed to the complex nature of serverless computing deployments that often require specialized expertise.

Professional services provide critical support including deployment, integration, and consulting, which are essential for companies looking to maximize the benefits of serverless technology. This expertise helps organizations tailor serverless solutions to their specific needs, ensuring they are both efficient and scalable.

The leadership of the Professional Services segment is also reinforced by the continuous need for customized solutions within the IT infrastructure. As businesses increasingly rely on cloud-based solutions to drive innovation and efficiency, professional services have become pivotal in facilitating smooth transitions from traditional servers to serverless architectures.

This transition requires careful planning and execution that professional service providers are well-equipped to handle, making them invaluable to businesses undertaking digital transformation initiatives. Moreover, the growth of this segment is bolstered by the ongoing advancements in serverless technology. As new features and capabilities are developed, businesses frequently turn to professional service providers to help integrate these innovations effectively into their existing systems.

This ensures that companies not only keep up with technological advancements but also leverage them to gain a competitive edge in their respective industries. The reliance on professional services within the serverless computing market is expected to remain strong as more businesses recognize the benefits of serverless technology but also understand the complexities involved in its implementation.

Professional service providers are crucial in bridging the gap between the potential of serverless computing and its successful application in everyday business operations, thereby driving the segment’s dominance in the market.

Deployment Analysis

In 2023, the Public Cloud segment held a dominant market position in the serverless computing market, capturing more than a 75% share. This substantial market share can be attributed to the Public Cloud’s scalability and cost-efficiency, which are highly valued in serverless computing.

Public clouds provide a platform where resources are shared among multiple users, allowing for efficient scaling as demands increase or decrease. This flexibility is particularly beneficial for businesses with fluctuating workloads, as it allows them to pay only for the resources they use without the need for significant upfront investments in infrastructure.

The leadership of the Public Cloud segment is also supported by its ease of integration with various technologies and platforms. Companies looking to innovate rapidly find public clouds to be exceptionally accommodating due to their compatibility with a wide range of applications and services. This ease of integration helps organizations accelerate their development cycles and bring products to market faster, making public cloud solutions especially attractive for dynamic and competitive industries.

Furthermore, the robust security measures and comprehensive compliance protocols offered by major public cloud providers contribute to the trust and reliability perceived by enterprises. With stringent security standards and regular updates, public cloud platforms ensure that enterprises can rely on them for critical operations, enhancing the segment’s appeal to industries that handle sensitive data, such as finance and healthcare.

Overall, the Public Cloud segment’s predominance in the serverless computing market is likely to continue as more businesses prioritize agility, cost savings, and technological adaptability. These factors make the public cloud a compelling choice for companies aiming to leverage the full potential of serverless computing to drive growth and innovation.

End User Industry Analysis

In 2023, the BFSI segment held a dominant market position in the serverless computing market, capturing more than a 23% share. This leadership can largely be attributed to the growing need within the BFSI sector for highly scalable and secure computing solutions that can adjust rapidly to changing market conditions and customer needs.

Serverless computing offers financial institutions the ability to deploy applications that can scale automatically without the need for managing server infrastructure, reducing operational overhead and improving cost efficiency. The prominence of the BFSI segment is further bolstered by the sector’s stringent regulatory and compliance requirements.

Serverless architectures help BFSI institutions achieve better compliance through improved data handling and security features that are managed at the cloud provider’s level. This compliance is critical in an industry where data breaches can result in severe penalties and loss of customer trust. Serverless computing provides a framework that supports enhanced security measures, including automatic updates and patch management, thereby reducing the risk of security vulnerabilities.

Additionally, the need for rapid deployment and continuous updating of banking applications to incorporate new features and respond to security threats makes serverless computing an attractive option for the BFSI sector. The ability to deploy code quickly and efficiently without worrying about underlying infrastructure allows banks and financial services to stay competitive and responsive to customer demands.

Thus, the BFSI segment’s dominance in the serverless computing market is driven by the critical need for dynamic scalability, stringent security protocols, and compliance with regulatory standards, all of which are facilitated effectively by serverless architectures. This trend is expected to continue as more BFSI companies look to innovate and enhance their services while maintaining high standards of security and regulatory compliance.

Key Market Segments

By Service

• Professional
• Managed

By Deployment

• Public Cloud
• Private Cloud

By End-User Industry

• BFSI
• IT & Telecom
• Retail & E-commerce
• Healthcare
• Manufacturing
• Government
• Other End-User Industries

Drivers

Rising Demand for Operational Efficiency and Cost Reduction

The serverless computing market is significantly driven by the escalating demand for operational efficiency and cost reduction across various industries. The architecture allows organizations to scale their operations seamlessly without worrying about the underlying infrastructure, leading to reduced operational costs and minimized setup time.

Furthermore, the adoption of cloud-based microservices enhances the capability of serverless computing platforms to handle applications dynamically, contributing to faster deployment and flexibility in operations. This inherent efficiency of serverless computing is crucial for organizations aiming to streamline their software development processes and reduce time-to-market, providing a substantial competitive advantage.

Restraint

Security Concerns

A major restraint in the serverless computing market is the ongoing concern regarding security. The nature of serverless computing – where the management of servers is handled by third-party providers – can lead to vulnerabilities, particularly if the security protocols of the service provider are not robust. The fear of potential breaches and the perceived loss of control over the security environment make businesses cautious.

This is particularly significant in industries where data sensitivity is paramount, such as financial services and healthcare. The challenge for the market is to enhance security measures and build trust with potential users by demonstrating rigorous compliance with international security standards​.

Opportunities

Integration with Advanced Technologies

Serverless computing presents numerous opportunities, especially with the integration of advanced technologies like AI and machine learning. The use of AI can automate resource allocation, optimize performance, and streamline application monitoring within serverless environments.

This can lead to more efficient data processing and significantly reduce the effort and complexity involved in managing serverless architectures. The continual advancements in AI technologies are expected to drive further innovations in serverless platforms, making them more attractive for developing complex, data-intensive applications across various sectors.

Challenges

Managing Complexity in Large-Scale Deployments

A challenge facing the serverless computing market is managing the complexity that comes with large-scale deployments. While serverless architecture simplifies certain aspects of IT infrastructure, it can also introduce complexities in integration and system management, especially when dealing with legacy systems and intricate enterprise applications.

As businesses grow and their needs evolve, maintaining efficiency while scaling up serverless solutions can become increasingly complicated. The market needs to address these complexities with better management tools and clearer strategies for integrating serverless computing with existing IT resources to ensure smooth operations​.

Growth Factors

The serverless computing market is experiencing robust growth, driven by several key factors. Firstly, the increasing adoption of cloud-based solutions across various industries provides a foundational platform for the expansion of serverless computing. This trend is complemented by a growing demand for scalable and cost-effective computing solutions that serverless technology offers.

Organizations are shifting towards serverless architectures because they allow for dynamic scaling and reduce the need for extensive infrastructure management, which in turn lowers operational costs significantly. Additionally, the need for agility in application development and deployment is propelling the growth of the serverless market, as businesses seek technologies that can improve their time to market and operational efficiency​.

Latest Trends

Recent trends in serverless computing include the integration of advanced technologies such as artificial intelligence (AI) and machine learning (ML) with serverless platforms. These integrations are enhancing the automation capabilities of serverless computing, enabling more sophisticated data processing and real-time analytics.

Moreover, there’s a notable shift towards multi-cloud and hybrid cloud environments, where serverless computing plays a crucial role in facilitating seamless application deployment and management across various cloud platforms. This trend is driven by the need for greater flexibility and enhanced performance optimization, which serverless computing can provide.

Additionally, the emphasis on improved security protocols and user-friendly interfaces in serverless platforms is making these solutions more attractive to enterprises looking to protect sensitive data and streamline operations​.

Regional Analysis

In 2023, North America held a dominant market position in the serverless computing market, capturing more than a 38.0% share and generating revenue of USD 4.6 billion. This leading position is primarily driven by the region’s rapid adoption of cloud technologies and the strong presence of major tech companies that are continually innovating in the cloud computing space.

North American companies, particularly in the U.S. and Canada, are pioneers in adopting new technologies that enhance operational efficiencies and reduce costs, which has propelled the growth of serverless computing. The dominance of North America in this market is further reinforced by the region’s advanced IT infrastructure, which is capable of supporting the high demands of serverless computing in terms of bandwidth, speed, and reliability.

Additionally, North American businesses are heavily focused on digital transformation strategies to maintain competitive advantages in global markets, which often include the integration of serverless architectures to streamline processes and foster innovation.

Moreover, the region benefits from a highly skilled workforce in the technology sector, equipped to manage and implement complex serverless solutions. This skilled labor pool, combined with a culture of technological advancement and substantial investments in R&D activities related to cloud technologies, has facilitated widespread adoption of serverless computing across multiple industries in North America.

Key Regions and Countries

• North America
  • US
  • Canada
• Europe
  • Germany
  • France
  • The UK
  • Spain
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • South Korea
  • India
  • Australia
  • Singapore
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • South Africa
  • Saudi Arabia
  • UAE
  • Rest of MEA

Key Players Analysis

The serverless computing market is strongly influenced by major tech giants like Amazon Web Services Inc., Microsoft Corp., and Google LLC, each contributing significantly to the industry through innovation and strategic market movements.

Amazon Web Services Inc. (AWS) continues to lead the market with its AWS Lambda service, which has consistently expanded its capabilities. In August 2023, AWS announced the acquisition of a cybersecurity startup, enhancing their serverless offerings by integrating advanced security features. This move not only broadens AWS’s service spectrum but also fortifies its commitment to providing secure serverless solutions.

Microsoft Corp. stands out with its Azure Functions, a key component of its serverless computing offerings. In September 2023, Microsoft launched a new series of AI tools designed to integrate seamlessly with Azure Functions, aiming to simplify the deployment of AI applications in serverless environments. Furthermore, Microsoft strengthened its serverless platform by merging with a prominent IoT company in early 2024, aiming to enhance real-time data processing capabilities in Azure.

Google LLC has been proactive in enhancing its serverless computing platform, Google Cloud Functions. In July 2023, Google introduced significant upgrades to its serverless environment, including support for additional programming languages and improved integration with machine learning and analytics tools.

Top Key Players in the Market

• Amazon Web Services Inc.
• Microsoft Corp.
• Google LLC
• Alibaba
• SAP SE
• IBM Corp.
• Iron.io
• Oracle Corp.
• Dynatrace LLC
• Fiorano Software
• Platform9
• Rackspace Technology
• Other Key Players

Recent Developments

• In April 2024, Cloudflare strategically acquired Baseline to bolster its observability functions within the serverless computing market. This acquisition is part of Cloudflare’s ongoing strategy to strengthen its offerings in cloud-native technologies, aiming to deliver a more robust serverless solution to its users.
• Alibaba Cloud introduced a new serverless solution in January 2024, capitalizing on generative AI technologies. This innovation, a serverless adaptation of their Platform for AI (PAI)-Elastic Algorithm Service (EAS), is designed to enhance model deployment and inference with a focus on performance and cost efficiency. The service allows for on-demand resource utilization, potentially reducing costs by up to 50% compared to traditional models.

Report Scope