Digital Transformation Market Size, Share & COVID-19 Impact Analysis, By Technology (Cloud Computing, Big Data and Analytics, Cybersecurity, Artificial Intelligence, Internet of Things, and Others (Blockchain & Business Intelligence)), By Enterprise Type (Large Enterprises and Small and Medium-sized Enterprises (SMEs)), By Deployment Model (On-Premises and Cloud), By Industry (Banking, Financial Services and Insurance (BFSI), Manufacturing, IT and Telecommunications, Retail and Consumer Goods, Healthcare, Transportation and Logistics, Government, and Others), and Regional Forecast, 2022-2029

The global digital transformation market size was valued at USD 1.51 trillion in 2021. The market is projected to grow from USD 1.79 trillion in 2022 to USD 6.78 trillion by 2029, exhibiting a CAGR of 20.9% during the forecast period. Based on our analysis, the global market exhibited an average growth of 28.1% in 2020 as compared to 2019. 

In the scope, digital transformation players, such as Alphabet LLC, Oracle Corporation, SAP SE, Salesforce, Inc., and among others, are considered. These key players offer several solutions and services in the market such as a wide range of technologies and software such as AI, cloud computing, machine learning, the Internet of Things, and others. Digital transformation refers to the integration of advanced digital technologies, such as AI and cloud computing, into business processes that deliver value to their customers.

The global market growth is driven by rapid adoption of advanced technologies such as AI, IoT, cloud computing, and others. Enterprises are shifting from traditional businesses to adopt technologically advanced solutions that aid the market growth. The leading digital transformation players are launching AI and IoT-based solutions for digitalization. For instance:

• In June 2022, Siemens launched Xcelerator digital transformation business platform for accelerating digital technology. The digital business platform helps to manage scalable business operations easily. Siemens Xcelerator consists of the Internet of Things-based hardware, software, and digital technology services.


• In May 2021, IBM Corporation launched cloud and AI as a service for modernizing the business. The services helped to automate the businesses tasks with AI chatbots and virtual assistants amid the pandemic.

COVID-19 IMPACT

COVID-19 Pandemic Accelerated the Global Market Growth

Organizations around the globe were facing budget constraints, owing to lockdown situations amid COVID-19 pandemic for a specific period of time. During this pandemic, organizations provided work from home to their employees. Therefore, to manage the remote workforce, several IT enterprises planned to adopt infrastructure as a service and software as a service to manage their remote workforce. The global market exhibited an increase in demand by growth of 7.6% in 2020 as compared to 2019. In 2020, according to the Deloitte Survey in the U.S., around 75% of IT organizations adopted more than one service to fulfill their remote working demand. These remote working employees were utilizing these system solutions to manage several tasks. It involves various advanced technologies, such as AI, cloud computing, big data tools, products, and capabilities, that optimize the business operations.

Post pandemic, several organizations planned to invest in advanced technologies to meet the growing demand for digitization.

• In January 2022, Alphabet LLC’s subsidiary Google invested around USD 1 billion by entering into a partnership with Airtel. The partnership aimed to offer affordable access to smartphones and speeding up the usage to cloud-based computing for businesses. The investment helped in the digitalization of India’s small businesses to adopt digital tools.


• In December 2021, Adobe Inc. launched an advanced product, Creative Cloud Express, a task-based mobile and web product that enables the users to share and create content from posts, stories, and logos. Creative Cloud Express provides 175 million licensed Adobe Systems Stock images and 20,000 Adobe fonts. This new product increases the versatility and efficiency of Adobe Creative Cloud

LATEST TRENDS

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Rising Adoption of Industrial Robots to Propel the Market Growth

Industrial robots are expected to play an essential role in these systems as robots operate several critical functions in industries. Manufacturers are implementing various robots to execute repetitive actions, thus escalating the market size. For instance,

• The International Federation of Robotics (IFR) declared that around 2.7 million stand-alone automotive and industrial robots had been installed in 2020, with 373,000 robot units shipped worldwide.

The latest innovation in the market is the adoption of emerging developments, including industrial robots, SCARA robots, and AI-based robots. They have helped the robotic industry to streamline a variety of processes, improve efficiencies, and reduce errors. Increased safety at the workplace and rising manufacturing capability have led companies to invest more in robotic systems. Thus, industrial robotic technology will be a key market trend in the global market.

DRIVING FACTORS

Rising Adoption and Investment in the Cloud Infrastructure, IoT, and 5G to Drive Growth

The combination of 5G, IoT, and cloud technologies will enrich several industries' capacity, functionality, and flexibility, especially for cloud businesses. Many companies are computing 5G with cloud services to provide faster speed, low latency, and more capacity. For instance, Ericsson has more than 230 cloud infrastructure customers worldwide. Some of the leading service providers of the company include Swisscom, Telkomse, Telefonica, Far EasTone, XL Axiata, and many others.

The company has its telco-grade cloud platform, Ericsson NFVI, which has 5G and cloud functionality. It runs telecom, operations support systems, and many IT and IoT applications on cloud computing platforms such as SaaS, PaaS, IaaS, and many more with fast 5G core deployment. The companies are investing in the adoption of 5G and cloud infrastructure development by making partnerships, acquisitions, and collaborations. For instance,

• In November 2021, Google cloud LLC, a provider of cloud infrastructure for artificial intelligence related services, partnered with Cohere, an advanced natural language processing technology provider. Due to this partnership agreement, Cohere procured services of Google Cloud such as ML and AI infrastructure. This service helped both companies to seamlessly deploy the NLP applications on Google Cloud platform. 


• In October 2021, U.S.-based software provider Microsoft Corporation partnered with Nvidia Inc., an artificial intelligence service provider. With this strategic move, both the companies partnered to build the most capable and largest language model, Megatron-Turing Natural Language Generation (MT-NLG). This model will provide more efficient service to the customers of both organizations.

RESTRAINING FACTORS

Data Privacy and Security Concerns Associated with Digital Technologies Hinder the Market Growth

Security concerns for the enterprise data is a major concern during the adoption of digital technologies. Cloud, AI, IoT, and blockchain technologies are spreading at a rapid pace, which requires the need for better protection and privacy to minimize cyber-attacks and data breaches. According to the Trustwave Global Security Report in 2020, cyberattacks and data breaches on cloud services were increased in 2019 and accounted for 20% of registered incidents.

According to the Forbes Report in 2021, cybersecurity venture capital firms spending steadily exceeded USD 1 trillion between 2017 to 2021. Further, the total cost of cybercrimes globally increased to USD 6 trillion on an annual basis by 2021. Such rising concerns regarding data breaches, data security, and cyber-attacks on advanced technologies hinder the global market growth.

SEGMENTATION

By Technology Analysis

Increasing Number of IoT Device Connections to Expand the Global Market Share

Based on technology, the market is segmented into cloud computing, Big Data and analytics, cybersecurity, Artificial Intelligence (AI), Internet of Things (IoT), and others (blockchain, business intelligence). Rising adoption of IoT devices and surge in data volume generation are expected to drive the cloud-based digital transformation market growth. IoT devices generate huge amounts of data, which requires additional space for storage. According to the International Energy Agency (IEA), in 2020, IoT connected devices sold over USD 20 billion by 2020 and are expected to reach 41.6 billion by 2025.

The others (blockchain, business intelligence) segment is growing with the highest CAGR during the forecast period. This is primarily attributed to the rising demand from the banking, financial, to carry out transactions. Additionally, surging investments in this technology in several countries such as the U.S., Singapore, and Argentina, Switzerland, and others are expected to flourish the market growth.

Cloud computing, Artificial Intelligence, and Big Data and analytics segments are projected to grow at a fast pace during the forecast period. The growth is primarily owing to the rising adoption of e-commerce platforms among consumers in the U.S., Germany, India, China, Japan, France, and others.

By Enterprise Type Analysis

Large Enterprises Segment to Lead Stoked by Need for Digitization

Based on enterprise type, the market is bifurcated into large enterprises and Small & Medium-sized Enterprises (SMEs). The large enterprises segment is expected to have the largest share in the global market. This is primarily owing to rising digitization and implementation of advanced technologies such as cloud computing AI and IoT by large-scale enterprises. According to the European Communication Organization, 43% of the enterprises have adopted cloud computing services by digitizing their business. Large organizations have the capability to invest in advanced technologies.

The SMEs segment is growing with moderate CAGR during the forecast period. Several SMEs and start-ups began to realize the importance of implementation of digital technologies in their business.

By Deployment Model Analysis

Rising Adoption of Cloud Services among Businesses Globally Drives the Market Growth

The market is divided into on-premises and cloud based on deployment model.

The on-premises segment dominated the global market in 2021. Initially, the enterprises around the globe have opted for on-premises deployment as digital solutions, owing to its security and customization facilities.

The cloud segment is projected to grow with the highest CAGR during the forecast period. Rising cloud infrastructure investment with rapid shifting of the business workloads from on-premises to the cloud drives the market growth. For instance,

• In October 2022, Amazon.com Inc.’s cloud computing group invested around USD 5 billion for strengthening cloud infrastructure development in Thailand. The company planned to invest and build the data centers and cloud infrastructure in Bangkok to help its customers to securely store data.

By Industry Analysis

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BFSI Witnesses Strong Adoption of Digital Technologies, which Drives the Market Growth

Based on industry, the market is categorized into Banking, Financial Services and Insurance (BFSI), manufacturing, IT and telecommunications, retail and consumer goods, healthcare, transportation and logistics, government, and others (oil and gas, media and entertainment). The BFSI segment accounted for the largest market share due to increased adoption of smart devices by BFSI. For instance, in January 2022, Bank of America launched AI and Machine Learning (ML) technology-based CashPro Forecasting software to accurately predict the future cash positions of its clients. The AI-based solution developed in collaboration with fintech firm Cashpro Online specializes in AI and ML technology.

Retail and consumer goods segment is growing with moderate CAGR during the forecast period. This is owing to the surge in e-commerce platforms adoption and is expected to remain strong in the near future. This is owing to the global lockdown and adoption of AI-based technology in the e-commerce industry. This trend has helped vendors to enhance their customer base and increase their revenue. According to Accenture survey in 2020, 91% of online shoppers are interested to shop with the brands that can provide them personalized shopping experience. By using natural language processing, companies can enhance their customer base.

The healthcare segment is projected to grow with the highest CAGR during the forecast period. Increase in adoption of digital technology platforms and government initiatives for digitalization amid COVID-19 pandemic have slightly increased the natural language processing demand. For instance,

• In April 2022, the Ministry of Commerce, Government of India launched its online open platform, Open Network for Digital Commerce (ONDC) for small and medium scale businesses. ONDC is an open source platform that helps local businesses across various segments such as mobility, grocery, food order and delivery, hotel booking and travel, among others. The platform aims to create new opportunities, curb digital monopolies, and support micro, small and medium enterprises, to help them get online.

REGIONAL INSIGHTS

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By region, the market has been analyzed across five major regions, North America, Europe, Asia Pacific, the Middle East & Africa, and South America.

North America is expected to dominate the global market of digital transformation, owing to increasing government initiatives and investments in digital technologies such as cloud computing, IoT, AI, and others. In 2021, the Canadian government launched digital government strategies, which aimed at coordinating to adopt digital technologies such as AI and cloud computing for modernizing IT systems. For instance,

• In 2021, the U.S. federal government planned an investment of over USD 100 billion for bringing advanced technology and high-speed internet access in American households.

Europe is expected to capture significant market share during the forecast period. Governments in countries such as the U.K. and France are taking key initiatives to adopt digital technologies and bolster regional growth. Societies and economies of this region have undergone a radical digital transition, driven by digitalization and growth of many kinds of communications by the surging number of connected devices and data flows.

Asia Pacific is expected to grow with the highest CAGR of during the forecast period, owing to rising foreign direct investment for digital transformation and growing government investment for the adoption of advanced technologies. According to a report published by the United Nations Conference on Trade and Development (UNCTAD), despite the worldwide COVID-19 pandemic, foreign investment grew tremendously in APAC for the third consecutive year with a record of USD 619 billion in 2021, which is 40% of global foreign investment inflows.

Similarly, the Middle East & African counties, such as the UAE and Saudi Arabia, are growing with moderate CAGR with rising digitalization and government initiatives. For instance, in February, 2022, Saudi Arabia’s government planned to invest over USD 6.4 billion in future technologies to accelerate digitalization and for boosting its digital economy.

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South America is growing with a moderate CAGR during the forecast period. This is primarily owing to rising development of digital investments for the cloud infrastructure. For instance, in July 2022, Amazon.com Inc.’s Amazon Web Services (AWS) planned to invest in Chile and Argentina for data center infrastructure developments.

KEY INDUSTRY PLAYERS

Rising New Product Launches & Expansions for Digital Technology Adoption Aid the Market Growth

Key digital transformation players, such as Amazon.com, Inc, Alphabet LLC, Hewlett Packard Enterprise Development LP, Oracle Corporation, Microsoft Corporation, and others, are focused on offering innovative digital technologies based solutions. These players plan to expand their product portfolios, owing to rising consumer demands. Major players in the market are adopting several business strategies, such as partnerships, mergers, and collaborations, for expanding their businesses across the globe. For instance,

• June 2022: Tanla, a CPaaS provider, and Kore.ai, an enterprise conversational AI software platform and solutions provider company, announced the partnership in five countries, including India, the UAE, Indonesia, Vietnam, and the Philippines. This partnership is an important step for offering best-in-class conversational (AI-based Natural Language Processing (NLP) system to various enterprises and brands.


• April 2022: Amazon Inc. launched an updated version, Amazon Aurora Serverless v2. It can support enterprises with numerous applications that have to manage capacity across their entire databases as well as Software as a Service (SaaS) vendors. It offers pay as you use services and has no additional costs.


• November 2021: AWS launched IoT ExpressLink to securely connect almost any device to the cloud and seamlessly integrate with AWS IoT services, including AWS IoT Core. Modules with AWS IoT ExpressLink would help the developers to overcome technical obstacles and for accelerating additional time to market.


• April 2020: Temenos, the U.S.-based banking software firm, launched an AI-based software model. The model enables banks to rapidly offer several loans for Small & Medium Enterprises (SMEs). This patented model allows banks to accelerate and adopt digital onboarding, conduct eligibility checks, and process loan applications for retail customers and SMEs.

List of Key Companies Profiled:

• Alphabet LLC (U.S.)


• Amazon.com, Inc. (U.S.)


• Oracle Corporation (U.S.)


• Microsoft Corporation (U.S.)


• IBM Corporation (U.S.)


• Apple Inc. (U.S.)


• Salesforce Inc. (U.S.)


• SAP SE (Germany)


• Cisco Systems, Inc. (U.S.)


• Alibaba Group Holding Limited (China)

KEY INDUSTRY DEVELOPMENTS:

• July 2022 – Net base Quid, a provider of AI-powered consumer and market intelligence, updated its NLP solution for TikTok Certified Topics. This updated version covers global language, key security patches, and UI enhancement. This product was launched by Net Base Quid has the capability to improve brand engagement of social media platforms.


• July 2022 – SAP SE acquired Askdata, a search driven analytics company. With this acquisition, the company will assist businesses make well informed choices with the support of AI driven natural language searches.


• July 2021 – SAP SE and Google Cloud declared a strategic collaboration to assist customers transfer critical business systems to the cloud, accomplish business transformations, and increase existing business systems with Google Cloud competency in machine learning and artificial intelligence.


• September 2022 – Apple Inc. launched new features in Siri. The upgraded Siri virtual assistant can hang up a FaceTime or phone call for users. Users can also add emojis to text messages via Siri.


• August 2021 – Apple Inc. launched Siri Speech Study, an iOS app designed to collect and improve Siri's speech data and recognition capabilities. The Siri Speech Study app is available in Canada, France, Germany, Hong Kong, the U.S., and India.


• October 2020 – Oracle Corporation introduced a multi cloud platform that helps enterprises to monitor critical loads on the cloud and on-premises deployment environments.

REPORT COVERAGE

An Infographic Representation of Digital Transformation Market

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The research report highlights leading regions across the world to offer a better understanding to the user. Furthermore, the report provides insights into the latest digital transformation industry growth, digital transformation market trends and analyzes technologies that are being deployed at a rapid pace at the global level. It further highlights some of the drivers and restraints, helping the reader to gain in-depth knowledge about the market.

REPORT SCOPE & SEGMENTATION