Serverless Computing Market Size, Share, and Growth Forecast for 2024 - 2031

Serverless Computing Market Size and Share Analysis

The global serverless computing market is estimated to reach a size of US$ 21.3 Bn in 2024. It is predicted to rise at a CAGR of 15.7% to reach a value of US$ 58.95 Bn by 2031.

The global serverless processing market is expanding due to the growing demand for cost-effective, scalable cloud solutions, with significant growth projected in 2024 as businesses focus on core development. The adoption of microservices architecture, enabling fast and modular application development, and digital transformation initiatives across industries remain key aspects of the market growth.

• Leading players like AWS Lambda, Google Cloud Functions, and Microsoft Azure Functions are at the forefront, with AWS holding over 33% of the serverless market share in 2023, according to industry reportss.

• The pay-per-use model, which eliminates the need for maintaining idle infrastructure, continues to attract startups and enterprises alike, offering cost savings of up to 70%.

In response to the increasing need for real-time, event-driven applications in the IoT, finance, and e-commerce sectors, Microsoft's 2023 release of Distributed Application Runtime (Dapr) highlights the significance of developing adaptable and secure frameworks.

Key Highlights of the Market

• Increasing demand for cost-efficient cloud computing solutions that optimize resource utilization and reduce operational infrastructure expenses.
• Growing adoption of microservices architectures and cloud-native application development methodologies across enterprise technology ecosystems.
• Demand for scalable and flexible computing solutions is increasing, allowing for rapid deployment and automatic infrastructure management.
• Businesses are adopting more flexible and agile cloud computing solutions as a result of the growing number of digital transformation activities.
• Compute services account for 40.5% of global usage in 2024 due to rising usage in businesses.
• Based on service model, the FaaS segment is projected to account for a market share of 53.2% in 2024 due to ease in utilization.
• North America is predicted accumulate a 38.5% market share in 2024 due to the presence of key market players in the region. 
• Asia Pacific is anticipated to hold a market share of 27.4% in 2024 with developments in tech startups.

Market Attributes	Key Insights
Serverless Computing Market Size (2024E)	US$ 21.3 Bn
Projected Market Value (2031F)	US$ 58.95 Bn
Global Market Growth Rate (CAGR 2024 to 2031)	15.7%
Historical Market Growth Rate (CAGR 2019 to 2023)	13%

Dominance of North America Prevails in the Serverless Computing Market

The serverless computing market in North America is anticipated to lead the global market with a 38.5% market share and a CAGR of 12.7% by 2031. This is because of the region's well-established technological ecosystem and broad usage of cloud computing.

Leading players of North America in serverless technologies, including AWS, Microsoft Azure, and Google Cloud, maintain their global headquarters and advanced data centers. The market benefits from significant funding, government initiatives, and private sector investment in cloud infrastructure, with AWS expanding serverless offerings in November 2023.

Businesses are drawn to the region's emphasis on innovation because of its real-time apps, micro services, and event-driven architectures, and Microsoft's distributed systems integration.

Rise of Tech Research and Development Boost the Revenue in Asia Pacific

Asia Pacific serverless computing market is projected to experience rapid growth, accounting for 27.4% of the global market share in 2024, driven by rising cloud computing adoption and a thriving startup ecosystem. As seen by India's July 2023 national cloud strategy, which encourages adoption across the public and private sectors, regional governments are investing in digital transformation to spur economic growth.

The rapid development of China's digital infrastructure has sped up the use of serverless computing in industries including manufacturing and e-commerce. Serverless products are being expanded in local markets by Alibaba Cloud and Tencent, while automation in South Korea and Japan speeds up adoption and draws in foreign IT firms.

FaaS Models Streamline Computing Operations in Wide Cloud Architect

FaaS is a key component of serverless computing, enabling developers to deploy event-triggered functions without managing server infrastructure, particularly in real-time analytics, stream processing, and automation industries. This service model is predicted to dominate 53.2% of the global serverless computing market in 2024, highlighting its significant role in modern application development.

Free as a Service streamlines operations and expedites time-to-market for microservices-based architectures, with leading cloud providers like AWS, Azure, and Google Cloud continuously improving their offerings.

• In August 2023, AWS introduced enhancements to Lambda, allowing for great processing power and memory allocation, boosting its appeal for high-performance applications.

FaaS is extensively utilized in the finance and e-commerce industries for real-time event processing and integration ensuring smooth customer experiences and market expansion.

Compute Services to Lead the Market

Compute services are expected to dominate the global serverless computing market in 2024, accounting for 40.5% of the total market share, highlighting the importance of FaaS offerings. The demand for real-time, scalable solutions continues to rise, as businesses prioritize agility and cost-efficiency in modern application development.

• Innovation in the computing sector is being propelled by AWS Lambda's November 2022 introduction of Lambda SnapStart, a startup latency reduction tool.

The increasing use of compute services for stream processing, IoT applications, and backend operations aligns with the trends in cloud-native development.

As organizations transition to microservices and event-driven architectures, compute services remain crucial in the serverless ecosystem, enhancing scalability and accelerating global market.

Market Introduction and Trend Analysis

The extensive use of AI and machine learning technologies is anticipated to propel the serverless computing market growth. This expansion is expected in industries including IT, banking, and healthcare, where applications need to be more scalable, cost-effective, and operationally efficient.

Real-time data processing, better application management, and more income are anticipated outcomes of investments in analytics and automation technology. Such advances will facilitate creative cooperation, resource alignment, and decision-making.

The demand for serverless systems is dominated by large enterprises, which will generate 65% of revenue in 2024. This is because of their adoption for cost reduction, innovation, and operational efficiency. Serverless computing is predicted to grow as it becomes more widely available outside of conventional commercial systems.

Historical Growth and Course Ahead

The global serverless architecture market recorded a CAGR of 13% in the historical period from 2019 to 2023. As more IT giants and other IT businesses adopt serverless architecture, the market for this technology is expanding.

Demand is fueled by its lower operating costs and improved process agility. A great understanding of this technology aids in the management of extra expenses and laborious procedures.

The need for serverless architecture is further fueled by the technical integration of IoT, AI, and machine learning into organizational processes. To innovate in these technologies, major firms are also spending money on research and development. Demand for serverless structural design is estimated to record a considerable CAGR of 15.7% during the forecast period between 2024 and 2031.

Market Growth Drivers

Adoption of Cloud Computing Improves Remote Computing Industry

The demand for serverless technology is growing due to cloud usage, which provides enterprises with scalable, adaptable, and affordable options. Growth in the market is anticipated in 2024, which will lower operating expenses and speed up development cycles. Serverless computing enables companies to shift their focus from server management to application development, thereby boosting productivity and innovation.

Cloud providers like AWS, Google Cloud, and Microsoft Azure are focusing on serverless technologies, offering scalable platforms like AWS Lambda and Google Cloud Functions. These support various services like event-driven applications and microservices, thereby reducing infrastructure maintenance and enabling dynamic application scaling.

The global adoption of cloud-native architectures has positioned serverless computing as a key component of digital transformation across various industries.

Growing Cybersecurity Requirements Boost Serverless Architectures with Enhanced Security

Interest in serverless architectures, particularly those with improved security and compliance capabilities, is being driven by cybersecurity concerns. In 2024, companies will place a higher priority on data security and GDPR compliance, which will force cloud service providers to include strong security measures in their serverless solutions.

Advanced security features like IAM controls, encryption, and VPC integration are being implemented by serverless platforms like AWS Lambda and Google Cloud Functions to reduce security risks and adhere to international cybersecurity requirements.

• In February 2024, AWS launched Lambda's support for VPC Traffic Mirroring, improving network monitoring and security. It is anticipated that cybersecurity will expand along with the use of serverless computing, bolstering confidence in these systems.

Market Restraining Factors

Lack of Command Over Framework Limit the Adaption  

Serverless computing, managed by CSPs, provides scalability and convenience, but also introduces security challenges due to shared, multi-tenant architecture, increasing data exposure and potential breaches. CSPs are implementing serverless solutions within Virtual Private Networks (VPNs) to enhance security by isolating customers' resources.

• For instance, AWS PrivateLink, launched in February 2023, enables private and secure access to serverless applications without exposing traffic to the public internet.

Azure Private Endpoint enhances data security in finance and healthcare industries by providing isolation for sensitive workloads, enhancing trust in serverless platforms. Organizations must incorporate comprehensive security measures into their development lifecycle to mitigate potential risks like function execution leaks and improper configurations when deploying applications on serverless platforms.

Key Market Opportunities

Improvements with Emerging Technologies Drives Innovation

Serverless computing presents numerous growth opportunities by integrating emerging technologies like edge computing, 5G networks, and AI/ML frameworks, transforming industries and driving innovation.

Edge computing uses serverless platforms to process data closer to devices, reducing latency and improving real-time performance, a crucial aspect for IoT and autonomous vehicles. For example,

• Cloudflare Workers, updated in July 2023, allows developers to execute serverless code at the edge, improving efficiency for applications requiring immediate responses.

Serverless architectures will benefit from quick, dependable connectivity for dynamic workloads thanks to 5G networks, which are predicted to accommodate 1.9 billion connections by 2025.

• In March 2024, Google Cloud AI Functions was introduced, integrating machine learning capabilities into serverless processes to drive improvements in logistics, healthcare, and finance while emphasizing the value of intelligent, scalable solutions.

Enhancing Deployment via Microservices Architecture is a Continuous Trend

Application development is being revolutionized by containers and serverless computing, which enable microservice architectures. This allows developers to divide programs into separate services, making them flexible, fast to deploy, and simpler to scale.

AWS Lambda, a well-established FaaS solution, is spearheading the microservices revolution. It is perfect for event-driven applications as it streamlined integrations, and increased IT efficiency, enabling developers to quickly deploy and change functions.

Amazon ECS, when combined with AWS Lambda, offers robust orchestration capabilities, enabling organizations to build scalable applications with minimal infrastructure management, promoting fast time-to-market and cost reductinon.  

Competitive Landscape for the Serverless Computing Market

Prominent companies within the global serverless computing market are actively implementing a variety of strategic initiatives to strengthen their market position. These strategies include fostering innovation to develop cutting-edge solutions, forming collaborative partnerships to enhance service offerings, investing in research and development to drive advancements in technology.

Recent Industry Developments

• In November 2024, Kinesis Network provided a serverless function to alleviate the power bottleneck in AI infrastructure. This feature will enable workloads across several cloud environments while lowering complexity and costs.
• In May 2024, Pinecone Systems launched its Pinecone serverless vector database, designed for accurate, fast, and scalable generative AI. Over 20,000 organizations use it for mission-critical workloads and improved AI performance.
• In May 2024, Elastic introduced scalable Search AI Lake technology for generative AI, observability, and security, decoupling storage and computing for massive data volumes and fast query performance.
• In April 2024, AWS introduced a new Data API for Aurora Serverless v2 and Aurora provisioned database instances, enabling SQL execution via HTTPS without connection management, and plans to expand compatibility to MySQL clusters.
• In March 2024, Vultr introduced Vultr Cloud Inference, a serverless inference-as-a-service platform that streamlines AI reach and scalability. It provides low-latency inference and worldwide deployment of AI models while assuring adherence to regional privacy, residency, and data sovereignty laws.
• In February 2024, Gcore launched FastEdge, a serverless edge computing product for cloud-native development, enabling quick, efficient application creation and deployment, utilizing Gcore's robust content delivery network.

Serverless Computing Market Report Scope

Attributes	Details
Forecast Period	2024 to 2031
Historical Data Available for	2019 to 2023
Market Analysis	US$ Billion for Value
Key Regions Covered	North America Europe East Asia South Asia and Oceania The Middle East and Africa Latin America
Key Market Segments Covered	Service Type  Service Model  Deployment  Organization Size  Vertical  Region
Key Companies Profiled in the Report	OVHcloud Hetzner Linode Yandex Cloud Huawei Cloud UCloud Baidu Cloud Kingsoft Cloud UpCloud Zoho Hostinger Kinsta Render Fly.io Tigera Wasabi MinIO
Report Coverage	Market Forecast and Trends Company Share Analysis Competitive Intelligence DROT Analysis Market Dynamics and Challenges Strategic Growth Initiatives
Customization and Pricing	Available upon request

Serverless Computing Market Segmentation

By Service Type 

• Compute
• Serverless Storage
• Serverless Database
• Application Integration
• Monitoring & Security
• Other Service Types

By Service Model  

• Function-as-a-service (FaaS)
• Backend-as-a-service (BaaS)

By Deployment   

• Public Cloud
• Private Cloud
• Hybrid Cloud

By Organization Size

• Small Enterprises
• Medium Enterprises
• Large Enterprises

By Vertical

• IT & Telecom
• BFSI
• Retail & Consumer Goods
• Healthcare & Life Sciences
• Government & Defense
• Transportation & Logistics
• Manufacturing
• Other Verticals

By Region

• North America
• Europe
• East Asia
• South Asia and Oceania
• Latin America
• The Middle East and Africa

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