Serverless Computing Market Report Scope & Overview:

The Serverless Computing Market was valued at USD 19.30 billion in 2023 and is expected to reach USD 70.52 billion by 2032, growing at a CAGR of 15.54% from 2024-2032.

To get more information on Serverless Computing Market - Request Free Sample Report

The serverless computing market is experiencing robust growth as businesses increasingly adopt cloud-based services to enhance efficiency and reduce operational complexity. This shift toward serverless solutions allows developers to focus on writing code while the cloud provider manages the infrastructure, offering cost-effective computing without the overhead of traditional server management. According to research, IT services spending is projected to reach USD 1.6 trillion in 2024, further accelerating the demand for such technologies. As organizations embrace this flexible model, the serverless computing market is expanding rapidly, driven by the need for scalable, dynamic, and efficient computing solutions that cater to modern business requirements. This trend highlights a broader move toward digital transformation and optimized resource management.

This growing demand is propelled by several key factors, such as the rise of microservices architectures and the need for real-time applications that can scale on demand. According to research, 77% of businesses report that they have now adopted a microservice architecture, and 85% of modern enterprise companies are managing complex applications with microservices, indicating a significant move away from monolithic architectures. With serverless computing, companies can automatically adjust resources to meet fluctuating demands, reducing both latency and costs by paying only for actual usage. This capability is particularly appealing to industries like e-commerce, healthcare, and finance, where performance, cost-efficiency, and seamless scalability are essential for delivering superior services to customers. As businesses continue to adopt serverless computing, its demand will only intensify, further cementing its role as a core technology.

The future of serverless computing is bright, with numerous opportunities on the horizon as the market matures and evolves. In November 2024, Kinesis Network launched a serverless feature for its Compute-as-a-Service platform to tackle AI infrastructure's computing power shortage, streamlining workloads and reducing costs across multi-cloud environments. The integration of AI and machine learning with serverless platforms is set to unlock new potential for real-time data processing, predictive analytics, and personalized services, driving even greater innovation. As cloud providers continue to enhance serverless offerings with improved performance, security, and ease of use, businesses of all sizes will increasingly turn to serverless computing to maintain competitive advantages and streamline their operations in an increasingly digital landscape.

Serverless Computing Market Dynamics

Drivers

• Seamless Cloud Integration Driving the Adoption of Serverless Computing

The increasing adoption of cloud platforms such as AWS Lambda, Google Cloud Functions, and Azure Functions is significantly driving the growth of serverless computing. These cloud services enhance the serverless model by providing seamless integration with a wide range of cloud-based tools, including storage solutions, databases, and APIs. This deep integration enables businesses to build highly efficient and scalable applications without worrying about complex infrastructure management. By leveraging cloud-native services, developers can quickly access powerful resources, ensuring their applications can scale with ease. Additionally, cloud platforms offer reliability, security, and flexibility, which are critical factors for businesses seeking to stay competitive. The ease of combining serverless computing with other cloud services accelerates innovation and simplifies the development process, making it a compelling option for businesses across various industries.

• Enhancing IoT and Microservices with the Flexibility of Serverless Computing

The rise of Internet of Things devices and microservices architectures is significantly benefiting from the flexibility and scalability offered by serverless computing. Serverless models are particularly suited to handle the large volumes of data generated by IoT devices, as they can automatically scale to accommodate fluctuating workloads. This scalability ensures that applications built on IoT networks can process real-time data without worrying about infrastructure limitations. Additionally, the event-driven nature of serverless computing aligns perfectly with microservices architectures, enabling independent and loosely coupled services to work seamlessly together. This flexibility allows businesses to rapidly deploy and manage applications while reducing operational complexity. As a result, serverless computing accelerates the development and deployment of IoT and microservices-based solutions, offering businesses enhanced efficiency and the ability to quickly adapt to changing demands in the marketplace.

Restraints

• Impact of Execution Time Limits in Serverless Computing on Long Running Processes and Their Viability

Serverless functions often have strict execution time limits, typically ranging from a few seconds to a few minutes, which can severely impact long running processes. Applications that require prolonged computations, such as data processing, machine learning tasks, or complex financial modeling, may not perform well under these constraints. As a result, organizations may struggle to fully leverage serverless architectures for these types of workloads. To address this challenge, businesses might need to break tasks into smaller chunks or opt for hybrid solutions combining serverless with traditional computing resources. This limitation makes serverless computing less suitable for use cases demanding extended execution times, thus hindering its adoption in certain industries and scenarios.

Serverless Computing Market Segment Analysis

By Enterprise Size

In 2023, the Large Enterprise segment dominated the serverless computing market, capturing the highest revenue share of approximately 68%. This dominance is driven by the increasing demand for scalability, cost efficiency, and the ability to manage complex workloads that large enterprises typically handle. These organizations are leveraging serverless platforms to optimize their infrastructure, reduce operational costs, and improve application performance, making serverless computing an essential tool for their digital transformation initiatives.

The SME segment is projected to grow at the fastest CAGR of about 17.14% from 2024 to 2032. This rapid growth is largely attributed to the affordability and flexibility of serverless computing, which allows SMEs to access enterprise-grade technology without significant upfront investment. As small and medium businesses continue to embrace cloud-based solutions to scale their operations and remain competitive, the cost-effectiveness and ease of deployment offered by serverless architectures are driving their adoption and fueling market expansion.

By Deployment

In 2023, the Public Cloud segment led the serverless computing market, capturing approximately 60% of the revenue share. This dominance is driven by the widespread adoption of public cloud platforms, offering businesses enhanced scalability, flexibility, and cost-efficiency. Public cloud providers deliver robust serverless solutions that allow organizations to offload infrastructure management while focusing on core applications, making them an attractive choice for enterprises seeking simplified IT operations and quick scalability.

The Hybrid Cloud segment is expected to grow at the fastest CAGR of about 18.09% from 2024 to 2032. This growth can be attributed to the increasing need for organizations to combine the benefits of both public and private clouds, allowing them to optimize workloads based on security, compliance, and performance requirements. As businesses pursue greater flexibility, the hybrid approach offers an ideal solution, enabling seamless integration between on-premises infrastructure and public cloud services, thereby driving its rapid expansion in the serverless computing market.

By End-user Industry

In 2023, the IT & Telecommunication segment dominated the serverless computing market, accounting for approximately 35% of the revenue share. This dominance is driven by the industry's heavy reliance on scalable, flexible, and cost-efficient cloud infrastructure to support the growing demand for digital services, data processing, and network management. Serverless computing enables IT and telecommunications companies to rapidly scale their operations, reduce overhead costs, and improve service delivery, making it a pivotal technology for innovation and operational efficiency in this sector.

The BFSI segment is projected to grow at the fastest CAGR of about 17.83% from 2024 to 2032. This rapid growth is fueled by the increasing need for secure, agile, and cost-effective solutions in the financial sector. Serverless computing offers BFSI organizations the ability to enhance customer experiences, streamline operations, and comply with stringent regulatory requirements, while reducing infrastructure complexity. As the industry embraces digital transformation, the scalability and flexibility of serverless technologies are expected to drive significant market expansion in the BFSI sector.

By Service Model

The Function-as-a-Service segment dominated the serverless computing market with the highest revenue share of about 64% in 2023 and is expected to grow at the fastest CAGR of about 16.15% from 2024 to 2032. This dominance stems from the ability of FaaS to offer event-driven architectures, allowing businesses to execute code in response to specific events without managing infrastructure. FaaS enables enhanced scalability, reduced operational costs, and improved agility, making it a preferred choice for applications like microservices, real-time data processing, and automation. As companies continue to seek flexible, scalable, and cost-effective solutions to meet dynamic demands, the adoption of FaaS is expected to increase. With its ability to deliver pay-per-use models and rapid deployment, FaaS is well-positioned to be the fastest-growing segment in the serverless computing market, expanding its influence in various industries.

Regional Analysis

In 2023, North America led the serverless computing market, accounted 40% of the revenue share. This dominance is largely attributed to the region’s advanced technological infrastructure, high adoption rate of cloud solutions, and the presence of major players in the IT and software industries. North American companies are early adopters of serverless computing, using it to streamline operations, improve scalability, and reduce costs, which has propelled the region’s strong position in the global market.

The Asia Pacific region is expected to grow at the fastest CAGR of about 18.24% from 2024 to 2032. This rapid growth is driven by the region’s increasing digital transformation, rising demand for cloud-based services, and rapid urbanization. As businesses in Asia Pacific embrace innovation and adopt more scalable solutions, the cost-effectiveness and flexibility of serverless computing are helping to fuel its rapid expansion, positioning the region as the fastest-growing market in the sector.

Get Customized Report as per Your Business Requirement - Enquiry Now

Key Players

• AWS (AWS Lambda, Amazon S3)

• Microsoft (Azure Functions, Azure Logic Apps)

• Google Cloud (Google Cloud Functions, Firebase)

• IBM (IBM Cloud Functions, IBM Watson AI)

• Oracle (Oracle Functions, Oracle Cloud Infrastructure)

• Alibaba Cloud (Function Compute, API Gateway)

• Tencent Cloud (Cloud Functions, Serverless MySQL)

• Twilio (Twilio Functions, Twilio Studio)

• Cloudflare (Cloudflare Workers, Durable Objects)

• MongoDB (MongoDB Realm, MongoDB Atlas)

• Netlify (Netlify Functions, Netlify Edge Functions)

• Fastly (Compute@Edge, Signal Sciences)

• Akamai (Akamai EdgeWorkers, Akamai Edge Functions)

• DigitalOcean (App Platform, Functions)

• Datadog (Serverless Monitoring, Real User Monitoring)

• Vercel (Serverless Functions, Edge Middleware)

• Spot by NetApp (Ocean for Serverless, Elastigroup)

• Elastic (Elastic Cloud, Elastic Observability)

• Backendless (Backendless Cloud, Cloud Code)

• Faundb (Serverless Database, Faundb Functions)

• Scaleway (Serverless Functions, Object Storage)

• 8Base (GraphQL API, Serverless Back-End)

• Supabase (Edge Functions, Supabase Realtime)

• Appwrite (Cloud Functions, Appwrite Database)

• Canonical (Juju, MicroK8s)

Recent Developments:

• In 2024, Microsoft launched Neon Serverless Postgres as a native Azure integration in preview, offering auto-scaling, seamless provisioning, and easier management directly through the Azure portal for efficient database solutions.

• In 2024, IBM expanded its Qiskit quantum computing platform to include middleware, serverless functions, and AI coding assistance, aiming to provide a comprehensive development environment for quantum applications.

• In January 2024, Alibaba Cloud introduced a serverless version of its Platform for AI -Elastic Algorithm Service, designed to help enterprises deploy and run generative AI models cost-effectively.