Digital Transformation Market Size, Share & Industry Analysis, By Technology (Cloud Computing, Big Data and Analytics, Cybersecurity, Artificial Intelligence (AI), Internet of Things (IoT), Business Intelligence, and Blockchain), By Deployment (On-premises and Cloud), By Enterprise Type (Large Enterprises and Small and Medium-sized Enterprises), By Industry (BFSI, Manufacturing, IT and Telecommunications, Retail and Consumer Goods, Healthcare, Transportation and Logistics, Government, Others), and Regional Forecast, 2024 – 2032

The global digital transformation market size was valued at USD 1,961.30 billion in 2023. The market is projected to grow from USD 2,226.0 billion in 2024 to USD 10,944.65 billion by 2032, exhibiting a CAGR of 22% during the forecast period. Additionally, the U.S. digital transformation market is predicted to grow significantly, reaching an estimated value of USD 2.39 trillion by 2032.

The global digital transformation market is driven by increasing investments by various countries' governments to adopt digital technologies such as cloud computing, artificial intelligence, machine learning and others. For instance,

• The Indian government leveraged the digital ecosystem with the announcement of a USD 300 billion fund under the Direct Benefit Transfer schemes. The government has planned to adopt the digital payment systems and other advanced technologies such as artificial intelligence and cloud computing.

The increase in automation adoption reflects the wider shift of companies toward digital solutions to boost operational efficiency and retain a competitive edge. The incorporation of intelligent manufacturing systems and Industry 4.0 concepts is becoming more common across various sectors, as organizations adopt advanced digital technologies to optimize their operations and enhance productivity.

The policy and operational structure of most industries were majorly affected by the COVID-19 pandemic. Globally, businesses had to follow stringent regulations of social distancing and lockdown measures imposed by governments due to the rapid spread of the virus. Therefore, companies implemented work-from-home policies to continue their business operations. As a result, adoption of remote work solutions may create growth opportunities in the future.

IMPACT OF GENERATIVE AI

Implementation of Generative AI Capabilities in Digital Transformation Technologies to Fuel Market Growth

Generative AI is becoming a transformative force, driving innovation and effectiveness in numerous sectors. By automating routine tasks, enhancing workflows, and producing predictive insights, AI-driven digital transformation enables organizations to refine their operations and lower operational expenses.

• According to industry experts, by 2025, around 75% of businesses will move from simply testing AI to completely implementing it, underscoring the importance of AI in fostering enterprise growth and innovation.

Digital transformation refers to the shift from conventional, often manual business operations to digitally enhanced, fully agile strategies. The inventive potential of generative AI models, such as their ability to analyze input data patterns and structures to create new data with comparable traits, is particularly beneficial for facilitating digital transformation initiatives.

DIGITAL TRANSFORMATION MARKET TRENDS

Rising Adoption of Industrial Robots to Propel Market Growth

Industrial robots are anticipated to be vital in digital transformation since they perform numerous key operations across various industries. Producers are adopting a range of robots to carry out repetitive tasks, thereby increasing the market’s size. For instance,

• The International Federation of Robotics (IFR) reported that there were approximately 553,052 industrial robot installations in factories across the world in 2022, showing a 5% growth compared to the previous year. Asia accounted for 73% of the newly deployed robots, while Europe and the Americas had 15% and 10% deployments, respectively. It is projected that the global annual installation of robots will reach 600,000 units by 2024.

MARKET DYNAMICS

Market Drivers

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

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

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

• In February 2022, the National Narrowband Network Company (NNNCo), an Australian telecommunications provider, collaborated with Wellness Techgroup, a European technology firm, to establish an IoT network for 70,000 smart street lights in Montevideo, Uruguay. The goal of this collaboration was to enhance community service, improve road safety, and decrease carbon emissions, benefiting 1.3 million residents and encompassing an area of 200 square kilometers.

Market Restraints

Data Privacy and Security Concerns Associated With Digital Technologies to Hinder Market Growth

Concerns regarding the security of enterprise data are significant during the implementation of digital technologies. The rapid proliferation of IoT, cloud, AI, and blockchain technologies necessitates enhanced protection and privacy measures to reduce the risk of cyber-attacks and data breaches. As reported in the Trustwave Global Security Report 2022, the number of Common Vulnerabilities and Exposures (CVEs) was just 36% of the total from 2021, with a 5% increase in critical vulnerabilities compared to 13% in 2021.

According to a Forbes report in 2021, the spending of cybersecurity venture capital firms exceeded USD 1 trillion between 2017 and 2021. Furthermore, the total cost of cybercrimes globally increased to USD 6 trillion on an annual basis by 2021. Rising concerns regarding data security, data breaches, and cyber-attacks on advanced technologies can hamper the global market’s growth.

Market Opportunities

Deployment of Digital Twin Applications in Various Industrial Sectors to Fuel Market Growth

Digital twins are virtual models of physical systems that can simulate, analyze, monitor, and continually optimize the physical world. They replicate the dynamics and key elements that affect the physical object as they develop and operate a virtual representation of the physical form, whether an asset, a process, a person, a place, a system, or a device.

Digital twins, an emerging technology, require value and integration driven by step-wise digital transformation, where objects in the physical world are given virtual replicas with the help of artificial intelligence and real-time data.

• In February 2024, Capgemini and Unity, a platform dedicated to the creation and expansion of Real-Time 3D (RT3D) content, announced the enhancement of their strategic partnership that resulted in Capgemini taking over Unity's Digital Twin Professional Services division.

SEGMENTATION ANALYSIS

By Technology

Increasing Number of IoT Device Connections to Expand IoT Segment Share

The market is segmented into cloud computing, big data and analytics, cybersecurity, Artificial Intelligence (AI), Internet of Things (IoT), business intelligence, and blockchain based on technology.

The increasing use of IoT devices, along with a rise in data generation, is anticipated to propel the cloud-based digital transformation market growth. By connecting a vast number of devices and collecting enormous amounts of data, IoT is revolutionizing various industries, such as healthcare, manufacturing, and transportation, by improving efficiency, reducing costs, and creating new business models.

• As reported by the International Energy Agency (IEA), the number of IoT devices, sensors, and actuators in operation reached 42.62 billion in 2022. This marked a notable increase from 35.82 billion in 2021 and 30.73 billion in 2020, and is projected to rise to 75.44 billion by 2025.

The blockchain and business intelligence segments are expected to record the highest CAGR during the forecast period. This is attributed to the rising demand from banking and finance sectors to carry out transactions. Additionally, increasing investments in these technologies in the U.S., Singapore, Argentina, Switzerland, and other countries, is expected to accelerate the segment’s growth.

By Deployment

Rising Adoption of Cloud Services among Businesses Globally to Drive Cloud Segment Growth

Based on deployment, the market is divided into on-premises and cloud.

The cloud segment is projected to register the highest CAGR during the forecast period. This growth can be attributed to the increasing use of mobile devices and advancements in information-sharing technologies. Cloud-based digital transformation solutions offer end-use industries effective and efficient ways to adapt to evolving market conditions. Rising cloud infrastructure investment and rapid shift of business workloads from on-premises to the cloud will drive the segment’s growth. For instance,

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

The on-premises segment dominated the global market in 2023. Earlier, enterprises around the globe opted for on-premises deployment owing to its security and customization facilities.

By Enterprise Type

Focus On Increasing their Spending for Better Productivity to Drive Large Businesses Segment Growth

Based on enterprise type, the market is bifurcated into large enterprises and Small and Medium Enterprises (SMEs).

The large enterprises segment is expected to have the largest share of the global market. This is owing to rising digitization and implementation of advanced technologies, such as cloud computing, Artificial Intelligence, and IoT by large-scale enterprises. According to the European Communication Organization, 43% of enterprises have adopted cloud computing services by digitizing their business. Large organizations have the capability to invest in advanced technologies, which will further accelerate digital transformation.

The SMEs segment is expected to record a moderate CAGR during the forecast period. Several SMEs and start-ups have begun to realize the importance of implementing digital technologies in their business operations. The rapid pace of digitization is driving the adoption of digital transformation solutions in SMEs, thereby increasing company scalability and improving customer experience. Moreover, there is a rising demand for cloud-based solutions as they are more accessible and affordable. These factors are expected to contribute to the growth of the segment in the coming years.

By Industry

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BFSI Witnessed Strong Adoption of Digital Technologies Due to Growing Use of Smart Devices

Based on industry, the market is categorized into BFSI, manufacturing, IT and telecommunications, retail and consumer goods, healthcare, transportation and logistics, government, others (oil & gas, media & entertainment, etc.).

The BFSI segment accounted for the largest market share due to increased adoption of smart devices by this industry. For instance, in January 2022, Bank of America launched AI and Machine Learning (ML)-based CashPro, a forecasting software to accurately predict the future cash positions of its clients. The AI-based solution was developed in collaboration with fintech firm Cashpro Online that specializes in AI and ML technologies.

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

• In April 2022, the Government of India’s Ministry of Commerce 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 grocery, mobility, booking & travel, food order & delivery, and hotel, among others. The platform aims to curb digital monopolies, create new opportunities, and support micro, small and medium enterprises to help them get online.

DIGITAL TRANSFORMATION MARKET REGIONAL OUTLOOK

Regionally, the market is studied across Asia Pacific, South America, Europe, North America, and the Middle East & Africa.

North America

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North America dominated the global digital transformation market share 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 were aimed at coordinating the adoption of digital technologies, such as AI and cloud computing for modernizing its IT systems. For instance,

• In June 2023, the U.S. federal government planned an investment of nearly USD 42 billion in new federal aid to expand high-speed internet to American households.

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The digital transformation industry in the U.S. is expected to experience a strong growth rate during the forecast period. Organizations are increasingly utilizing predictive analytics in talent management to enhance decision-making and bolster their workforce by retaining human resources. This is anticipated to fuel the digital transformation market growth in the U.S.

• In April 2024, the HR Path Group announced the acquisition of GroupeX Solutions (GroupeX) based in Toronto, Canada. This strategic move was intended to not only increase HR Path's footprint in North America, but also enhance and diversify its robust HRIS consulting practice.

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Asia Pacific

The Asia Pacific digital transformation market is expected to register the highest CAGR during the forecast period owing to rising foreign direct investment for digital transformation and growing government investment for the adoption of advanced technologies. China's digital transformation is expected to gain momentum with the implementation of smart manufacturing technologies and government initiatives in the region.

• By 2025, China aims to achieve significant industrial transformation through the development of its smart manufacturing system, as outlined in its 13th Five-Year Plan. The country has already made significant progress in the electric vehicle market, with 3.4 million registered electric vehicles representing over half of the global market share. Additionally, China has set its sights on becoming a global leader in robotics by 2025, as reported by CGTN.

Thus, the above-mentioned scenarios are likely to further propel the demand for digital transformation in the years to come.

Europe

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

Middle East & Africa

The Middle East & African countries, such as the UAE and Saudi Arabia are recording a 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 futuristic technologies to accelerate digital transformation and boost its digital economy.

South America

The South American market is likely to register a modest CAGR over the forecast period. This is primarily owing to the rising investments in cloud infrastructure. For instance, in July 2022, Amazon Web Services (AWS) planned to invest in Chile and Argentina to develop data center infrastructures.

COMPETITIVE LANDSCAPE

KEY INDUSTRY PLAYERS

Rising New Product Launches and Business Expansions for Digital Technology Adoption to Aid Market Growth

Key market 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 technology-based solutions. They plan to expand their product portfolios owing to rising consumer demands. They are also adopting several business strategies, such as partnerships, mergers, and collaborations for expanding their businesses across the globe. For instance,

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

List of Digital Transformation Companies Studied

• Alphabet LLC (U.S.)


• Amazon.com, Inc. (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)


• Feuji Inc. (U.S.)


• Dell Inc. (U.S.)


• Hewlett Packard Enterprise Development LP (U.S.)


• Nvidia Corporation (U.S.)


• Intel Corporation (U.S.)


• Microstrategy Inc. (U.S.)


• Applied Blockchain Ltd. (U.K.)


• QlikTech International AB (U.S.)


• ..and more

KEY INDUSTRY DEVELOPMENTS

• November 2024: SAP Fioneer and Fujitsu partnered to accelerate digital transformation within Japan's insurance industry. As part of this collaboration, Fujitsu and SAP Fioneer will join forces on product strategy, development, and marketing, which entails developing the SAP Fioneer Cloud for Insurance in Japan Edition. This is an all-inclusive cloud platform that combines localized business content and global industry-best practices with core insurance services.


• August 2024: Capgemini entered an agreement to acquire Syniti, which offers enterprise data management software and services, including platform and migration solutions, on a global scale. This acquisition is intended to enhance the Group's data-driven offerings for clients worldwide, especially in extensive SAP transformations such as transitioning to SAP S/4HANA.


• January 2024: Google LLC partnered with Worldline to expedite its digital transformation strategies and improve its operational efficiency. Worldline intends to utilize Google's cloud technologies to boost its digital payment solutions for clients across Europe.


• January 2024: Microsoft and Vodafone announced a 10-year partnership to improve customer experience services using Microsoft's generative AI technologies. Together, they will create financial and digital services specifically designed for Small and Medium-Sized Enterprises (SMEs) in Africa and Europe.


• August 2023: HCLTech entered a partnership with TIBCO Solutions. As part of this agreement, HCL will upgrade, implement, and offer services for TIBCO products. This collaboration will enhance HCL's professional services portfolio.

INVESTMENT ANALYSIS AND OPPORTUNITIES

The major companies in digital transformation market are focusing on Research and Development (R&D) activities to develop a wide range of product offerings to meet the needs of companies. Investing in new products and enhancing their existing products to expand their business is one of the key business strategies of these firms. For instance,

• Salesforce Inc. invested USD 4,465 million, USD 3,598 million, and USD 2,766 million in the fiscal years 2022, 2021, and 2020 respectively, in research and development to enrich their existing portfolio offering and improve new technologies and services.


• IBM Corporation’s consulting segment generated a revenue of USD 19,107 million in 2022, an increase of 7.1% compared to 2021. Strong growth was seen across three business areas by leveraging IBM’s hybrid cloud and industry expertise to direct the complexity of the digital transformation journey.

REPORT COVERAGE

The report provides a detailed market analysis. It focuses on key points, such as leading companies, offerings, and applications. Besides this, it offers an understanding of the latest market trends and highlights key industry developments. In addition to the above-mentioned factors, the report contains several factors that have contributed to the growth of the market in recent years.

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