Identity As A Service Market Report Scope & Overview:

The Identity As A Service Market size was valued at USD 9.0 billion in 2024 and is expected to reach USD 52.4 billion by 2032, growing at a CAGR of 24.69% during 2025-2032.

Cloud-based authentication and identity management solutions that assist in secure user access control are termed the Identity as a Service Market. IDaaS provides SSO, MFA, provisioning, and compliance across cloud and on-prem environments. Identity as a service market growth is driven by the rapid increase in cyber threats, Cloud adoption among organizations, the remote work trend, and stringent regulatory compliance. Confidence is rising to adopt IDaaS among the organizations of BFSI, healthcare, government, and IT, transforming Security and Identity management. The identity as a Service Market analysis shows a high growth trajectory, as spending on global plans to expand is expected to see a major rise by 2032. Biometric authentication, AI-powered identity analytics, and zero-trust security models are among the key trends. The identity as a service market trends indicate innovation in the Id as a Service domain is expected to give rise to several use case applications, contributing to demand for scalable and flexible identity solutions across all industries.

The U.S. Identity as a Service (IDaaS) market was valued at USD 1.3 billion in 2024, and will reach USD 8.0 billion by 2032, growing at a CAGR of 26.08% The growth is fueled by stringent data protection regulations, including HIPAA and CCPA, rising cloud adoption, and growing need for secure remote access. Meanwhile, the trend within the customer base is also changing as a result of increasing demand for hybrid cloud models and the use of AI and machine learning, which further improve identity and access management.

Identity As A Service Market Dynamics

Drivers:

• Cybersecurity Threats and the Need for Strong Authentication Push Businesses to Adopt Idaas Solutions, Increasing Market Demand

As the number of cyberattacks and data breaches is increasing, organizations have to pay more attention to their safety. With the increasing need and usage of IDaaS due to multi-factor authentication, Single Sign-On, and other such identity management solutions, IDaaS is a must-have service for businesses. Rising need for strong authentication methods to protect sensitive data in different digital platforms is one of the major contributing drivers for the market by allowing secure access to cloud and on-premise resources, which is further fueling the need for IDaaS.

In 2024, the global average cost of a data breach surged to USD 4.88 million, marking a 10% increase from the previous year, underscoring the financial ramifications of cyber incidents.

Restraints:

• Data Privacy Concerns and Regulatory Challenges Hinder Idaas Adoption, Slowing Market Growth

Even though IDaaS solutions offer better security, data privacy and compliance with regulations like GDPR, HIPAA, and CCPA still pose challenges. Although the cloud offers a lot of benefits, storing and managing sensitive user data in the cloud can be risky, especially for industries that are sensitive to fully trusted information. One such challenge that could restrain the growth of this market is that in many regulated environments, organizations shun the adoption of IDaaS solutions, unless they are certain of compliance.

In a 2024 survey by ISACA, only 34% of organizations say their privacy obligations are easy to understand, and only 43% have confidence in their privacy team to ensure data privacy and compliance with new regulations. Moreover, 51% of privacy professionals are anticipating budget decreases in 2024, which further complicates compliance given the constant state of change with data privacy regulations.

Opportunities:

• AI and Machine Learning Integration in Idaas Offers Enhanced Security and Innovation, Driving Market Expansion

Artificial intelligence and machine learning technologies are rapidly changing the world of identity management when embedded in IDaaS. The use of AI-based authentication, behavioral biometrics, and predictive analytics is growing, enabling tighter security and smoother customer experience, which creates new opportunities for IDaaS providers to deliver more intelligent and adaptable solutions. By leveraging this technology-driven transformation, adoption rates may soar, which provides tremendous room for innovations and growth in the IDaaS market.

For Instance, AI-driven Identity and Access Management (IAM) systems have improved average incident detection speed from 45 seconds in 2023 to 12 seconds in 2024, marking a 73% increase in responsiveness.

Challenges:

• Complex Integration with Legacy Systems Delays Idaas Deployment, Limiting Market Growth

Exiting legacy systems integration with IDaaS solutions can be complex and time-consuming. A lot of organizations are stuck using legacy on-premise systems that, by their very nature, may not neatly fit into new modern cloud-based identity services. Organizations pursuing the adoption of IDaaS solutions face the challenge of the need for seamless integration across a fairly diverse ecosystem of platforms & technologies. It can restrict rapid scaling of the market by slowing down the deployment process, especially for large enterprises with complicated IT environments.

Identity As A Service Market Segmentation Analysis:

By Type

The Single Sign-On segment dominated the market and accounted for 29% of the identity as a service market share in 2024. As consumers globally are moving towards user-friendly login solutions to allow for seamless access between enterprise applications, and the reduction of password fatigue. The accelerated expansion of cloud services (including remote work) and the move toward centralized access controls all contribute to this trend. We expect this to be the leading segment, as organizations seek to enable seamless and secure online user experiences across devices and platforms.

 For Instance, in 2024, Dashlane reported a 400% increase in passkey authentications, with 1 in 5 active users having at least one passkey in their vault. 

The multifactor authentication segment is expected to register the fastest CAGR during 2025-2032, as such login barriers become necessary to mitigate ongoing cybersecurity threats and ever-increasing regulatory mandates for stronger identity verification. Adoption is being driven by the increasing demand for layered security to support finance and healthcare, as well as a rise in integration of biometrics and AI-based authentication. Traditional as MFA may be, with zero-trust security models becoming the standard across industries, MFA is going to grow like a weed.

A 2024 survey found that 80% of U.S. adults use some form of MFA, an increase from 76% the previous year.

By Deployment

The Public Cloud segment dominated the identity as a service market and represented 49% of revenue share in 2024, owing to its scalability, cost-effectiveness, and ease of deployment, which makes it suitable for businesses of any size. Public cloud environments are gaining popularity with organizations looking for almost immediate access to identity services with a marginal investment in infrastructure. And that growth is poised to continue apace, fueled by digital transformation and increasing need for flexible identity governance.

Hybrid Cloud is expected to register the fastest CAGR during the forecast period, due to gaining traction with organizations that need both maximum security and maximum scalability. This model helps to keep sensitive data on-premises also uses comparatively same cloud-based identity services for wider access. Hybrid cloud adoption in the financial, government, and healthcare sectors is being accelerated due to the increasing need for multi-cloud compliance, control, and flexibility.

In 2024, 82% of enterprises have adopted a hybrid cloud strategy, with 67% planning to expand their use of hybrid cloud.

By End-Use

In 2024, the BFSI segment dominated the identity as a service market and accounted for a significant revenue share in 2024, along with factors such as the demand for seamless customer onboarding with the need for regulatory compliance, and high cybersecurity risks. As such, banks and financial institutions are quickly shifting to identity solutions for fraud prevention and secure digital banking. And this trend will only further be cemented as financial services continue to spend on AI-enabled authentication and zero-trust security frameworks.

A 2024 survey shows that 97% of financial services organizations view Generative AI as crucial for their success in the next three years, emphasizing its increasing role in identity management and customer service.

The healthcare segment is anticipated to grow at the fastest CAGR due to rising adoption of telemedicine, coupled with increasing data breaches, as well as stringent compliance standards such as HIPAA. IDaas Addresses Secure Patient Identity Management Over Digital Platforms. The requirement for managing secure patient identities across digital platforms is driving hospitals and health systems to adopt IDaaS. Introduction of AI-based access-control and identity-verification is acting as a catalyst to help accelerate, secure, and efficiently manage patient data.

Regional Analysis:

North America dominated the identity as a service market and accounted for 39% of revenue share in 2024, due to the presence of some of the biggest technology corporations, strict data protection regulations, and the growing cyberattacks & breaches experienced in the region. The key drivers include new services adopting cloud, integration of AI, and exchange of zero-trust security models. This custom is anticipated to remain in the region upon growth as companies update their gold in secure, scalable identity solutions to meet the world's growing regulatory and security requirements.

The Asia Pacific is expected to grow at the fastest CAGR due to the widening digital transformation, increased adoption of cloud technology, as well as rising cybersecurity threats across the region. Growing demand for secure, scalable identity solutions due to a rising emphasis on financial services, healthcare, and government sectors within the region.

For instance, in 2023, organizations in the Asia Pacific region faced an average of 1,963 cyberattacks per week, with around 25% driven by espionage, highlighting the urgent need for advanced identity solutions.

The Asia Pacific identity as a service market was dominated by China on account of the swift pace of digital transformation in sectors such as BFSI, retail, and IT. The rise of cyberattacks in the region and growing concerns about cybersecurity are driving demand for such solutions related to identity, the company said. Moreover,  the rapid adoption of IDaaS solutions is also supported by several government initiatives aimed at digital infrastructures in China.

For instance, in October 2024, Zhipu AI launched GLM-4.0, an open-source speech-based large language model that mimics human interactions, adjusting tone, emotion, and dialect, enhancing voice-based identity verification methods.

Europe's identity as a service market is driven by the rise of cybercrime and extensive adoption of cloud, along with stringent data security regulations. Solid growth for the market leader in Germany, reaching Germany is driven largely by the benefits available from digital transformation, a hybrid way of working, and alignment with EU regulations. The focus on secure identity management is expected to further drive demand for IDaaS solutions across verticals in the country over the forecast period.

Key Players

The major identity as service market companies are Okta, Microsoft, IBM, Oracle, Ping Identity, OneLogin, ForgeRock, CyberArk, Auth0, RSA Security, and others.

Recent Developments

• In February 2025, Auth0 introduced Credential Guard for Private Cloud on Azure customers, enhancing security by enabling proactive threat hunting and faster detection of compromised credentials. 

• In February 2025, Auth0 released the Next.js SDK v4, offering improved security features, better session management, and compatibility with Next.js 15 and React 19.