Serverless Computing Market Estimated to Grow Significantly 58.95 Bn by 2031 - Persistence Market Research

The serverless computing market has emerged as a transformative force in the cloud ecosystem, allowing organizations to focus purely on application development without the burden of managing underlying infrastructure. In 2024, the global serverless computing market is anticipated to reach a valuation of US$ 21.3 billion. With the proliferation of cloud-native application architectures and the accelerating need for real-time and event-driven solutions, the market is expected to grow at a CAGR of 15.7%, reaching approximately US$ 58.95 billion by 2031.

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The primary growth drivers of this market include the increasing demand for scalable, cost-efficient computing solutions, widespread digital transformation, and the adoption of microservices architecture. As organizations prioritize agility and faster time-to-market, serverless platforms-especially Function-as-a-Service (FaaS) models-have become essential in enabling rapid application deployment. The compute services segment is projected to account for 40.5% of the market in 2024, and North America remains the dominant region, expected to hold a 38.5% market share due to a robust technological landscape and strong presence of key vendors.

The FaaS segment is anticipated to lead the service model category, representing 53.2% of the market in 2024. North America will maintain dominance due to advanced infrastructure and innovation from companies like AWS and Microsoft, while Asia Pacific is witnessing swift expansion, driven by increasing cloud adoption in India, China, and Southeast Asia.

Key Highlights from the Report

➤ Serverless computing market projected to rise from US$ 21.3 Bn in 2024 to US$ 58.95 Bn by 2031 at a CAGR of 15.7%.
➤ Compute services to hold 40.5% share in 2024, driven by microservices and event-driven applications.
➤ FaaS segment projected to lead the market with 53.2% share due to its simplicity and scalability.
➤ North America to dominate with a 38.5% share in 2024, supported by major cloud players and tech innovation.
➤ Asia Pacific emerging rapidly with a 27.4% share, driven by public cloud adoption and startup ecosystem.
➤ Enterprises continue to dominate demand, contributing 65% of the revenue in 2024 for scalability and innovation.

Market Segmentation

The serverless computing market is segmented by service type, service model, deployment type, organization size, verticals, and regions.

By service type, compute services dominate the landscape due to their critical role in real-time analytics, stream processing, and scalable backend operations. Other segments include serverless storage, serverless databases, application integration, and monitoring & security.

By service model, Function-as-a-Service (FaaS) and Backend-as-a-Service (BaaS) offer different operational flexibility. FaaS enables event-driven application development, while BaaS facilitates backend service management.

By deployment, the public cloud is the most adopted model, offering flexibility and cost efficiency, followed by private and hybrid cloud solutions.

In terms of organization size, large enterprises dominate due to higher budgets and operational complexity, but SMEs are rapidly adopting serverless to scale applications economically.

The market is also segmented by industry verticals: IT & telecom, BFSI, retail & consumer goods, healthcare, government, logistics, manufacturing, and others, with IT and finance leading adoption.

Regional Insights

North America

North America remains the epicenter of serverless computing, with a projected 38.5% market share in 2024 and a 12.7% CAGR through 2031. The region is home to global cloud leaders such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud. These companies continue to innovate and expand serverless offerings. Real-time application demands, digital transformation mandates, and cloud-native development are driving adoption across sectors like finance, e-commerce, and healthcare.

Asia Pacific

Asia Pacific is projected to hold 27.4% of the global serverless market in 2024. Growth is spurred by increasing cloud adoption across India, China, and ASEAN countries. The region's governments are actively encouraging digital transformation, as seen in India's 2023 national cloud strategy. Major players like Alibaba Cloud and Tencent are investing heavily in local serverless offerings, while startup ecosystems fuel innovation and demand.

Market Drivers

One of the major forces behind market growth is the increasing adoption of cloud computing, which offers scalable, flexible, and cost-effective IT infrastructure. Serverless computing allows businesses to focus on core application development without managing infrastructure, leading to improved agility and faster innovation.

Cloud providers such as AWS Lambda, Google Cloud Functions, and Azure Functions provide scalable platforms for microservices and real-time applications. These platforms enable dynamic scaling and reduce idle server costs, helping businesses save up to 70% on infrastructure expenses.

Additionally, rising cybersecurity requirements have made serverless architectures more appealing. Serverless platforms now incorporate advanced security protocols, such as IAM policies and VPC integrations, to ensure compliance with international standards like GDPR. AWS's support for VPC Traffic Mirroring in Lambda (2024) has further strengthened security transparency and monitoring capabilities.

Market Restraints

Despite its advantages, serverless computing has limitations that may slow adoption. One major concern is the lack of control over backend infrastructure. As CSPs (cloud service providers) manage the runtime environment, users may face security risks related to multitenancy and execution visibility.

Also, not all workloads are ideal for serverless deployment. Long-running applications, complex workflows, or applications requiring persistent connections may encounter performance bottlenecks or cost inefficiencies. Developers also face challenges like cold start delays and limited language/runtime support.

Market Opportunities

Serverless computing is primed to capitalize on multiple emerging opportunities. The integration of edge computing allows processing closer to the source, reducing latency for IoT and autonomous systems. Platforms like Cloudflare Workers are pioneering edge-based serverless applications.

The rollout of 5G networks is another key enabler, offering ultra-low latency and faster connectivity for serverless functions, especially in AI and real-time data processing. By 2025, 5G connections are projected to reach 1.9 billion, boosting serverless applications across industries.

Furthermore, AI/ML integration with serverless architectures is opening new avenues for real-time predictive analytics and intelligent automation. Google Cloud's AI Functions, launched in March 2024, is a key example of this synergy, enabling real-time data insights for healthcare, logistics, and financial services.

Frequently Asked Questions (FAQs)

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Company Insights

• Amazon Web Services (AWS)
• Microsoft Azure
• Google Cloud
• Alibaba Cloud
• Tencent Cloud
• Pinecone Systems
• Vultr
• Gcore
• Elastic
• OVHcloud
• Baidu Cloud
• Huawei Cloud
• Hetzner
• UpCloud
• Linode
• Yandex Cloud

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