Serverless Computing Market

Market Definition

The serverless computing market is a segment of the the cloud computing industry that offers infrastructure and platform services for developers to build, deploy and operate applications without managing the physical or virtual servers.

This market includes a range of services, tools, and solutions that allow organizations to utilize cloud providers' computing resources on-demand, with automated scaling, provisioning, and maintenance managed entirely by the service provider. Serverless computing facilitates faster development cycles, cost efficiency, and operational agility by abstracting server management responsibilities from end users.

Serverless Computing Market Overview

The global serverless computing market size was valued at USD 23.16 billion in 2023 and is projected to grow from USD 25.99 billion in 2024 to USD 65.21 billion by 2031, exhibiting a CAGR of 14.05% during the forecast period. This growth is driven by the increasing adoption of cloud-native applications, the rise of micro services architectures and the growing demand for cost-effective and scalable computing solutions.

As organizations increasingly seek to optimize operational efficiency, reduce infrastructure management costs, and scale their applications dynamically, serverless computing presents a viable and strategic solution.

Major companies operating in the global serverless computing inustry are Amazon Web Services, Inc., Microsoft, Google Cloud EMEA Ltd, Alibaba Cloud, IBM, Dynatrace LLC, NTT DATA Group Corporation, Oracle, Red Hat, Inc., Cloudflare, Inc., Tencent Cloud, Fiorano Software and Affiliates., SAP SE, Twilio Inc., and MongoDB, Inc.

The market expansion is further fueled by the adoption of AI and machine learning, which rely on the flexibility and scalability of serverless platforms to deliver real-time insights and advanced analytics. The transition of enterprises toward digital-first strategies and cloud-based environments is expected to sustain market momentum over the forecast period.

• In July 2024, Databricks announced the general availability of serverless computing for notebooks, workflows, and Delta Live Tables on AWS and Azure. This development simplifies the deployment and scaling data workflows, allowing users to prioritize application development while reducing the burden of infrastructure management.

Key Highlights

1. The global serverless computing market size was recorded at USD 23.16 billion in 2023.
2. The market is projected to grow at a CAGR of 14.05% from 2024 to 2031.
3. North America held a market share of 36.25% in 2023, with a valuation of USD 8.40 billion.
4. The public cloud segment garnered USD 10.96 billion in revenue in 2023.
5. The function-as-a-service segment is expected to reach USD 38.99 billion by 2031.
6. The small & medium size enterprises segment is anticipated to witness the fastest CAGR of 14.45% during the forecast period.
7. The IT & telecom segment garnered USD 7.33 billion in revenue in 2023.
8. The market in Asia-Pacific is anticipated to grow at a CAGR of 14.38% during the forecast period.

Market Driver

"Scalability and Cost Efficiency Drive Adoption"

 Scalability and flexibility are key factors contributing to the growth of the serverless computing market. Unlike traditional infrastructure modelsthat require manual configuration to adjust resources, serverless platforms scale automatically based on real-time workload demands.

This dynamic scalability ensures that applications can handle varying levels of traffic without the need for pre-planning or over-provisioning resources, thus making it particularly useful for unpredictable workloads.

With serverless computing, businesses only pay for the actual compute resources used during function execution eliminating the cost of idle servers. This pay-as-you-go model dramatically reduces operational expenses making it a cost-effective solution for businesses that require fluctuating levels of computing power.

As a result, organizations can allocate their budget more efficiently, scaling resources up or down based on real-time demand without the financial burden of maintaining idle or underutilized infrastructure.

• In December 2024, Elasticsearch B.V. announced the general availability of Elastic Cloud Serverless powered by a re-architectured Elasticsearch and built on an industry-first Search AI Lake optimized for real-time applications. This new serverless offering combines vast storage with low-latency querying, leveraging the strengths of Elasticsearch’s AI and search capabilities.

Market Challenge

"Complexity in Debugging and Monitoring"

A significant challenge in serverless computing is the complexity of debugging and monitoring applications. Serverless workloads are executed through stateless, short-lived functions that often run in different containers or environments. This non-persistent execution model makes it difficult to trace the complete flow of transactions or identify the root causes of errors and performance issues..

Additionally, serverless architectures typically consist of multiple microservices that communicate asynchronously. This further complicates real-time monitoring and the correlation of logs and metrics across various components. The lack of centralized control and persistent state increases the difficulty in capturing comprehensive visibility into application behavior.

To address these challenges, organizations are deploying observability tools designed specifically for serverless environments. Solutions such as distributed tracing, log aggregation, and real-time performance monitoring help track requests across services.

Standardized and context-rich logging, along with automated alerting systems, enables quicker detection of anomalies and facilitates faster incident resolution. These tools are becoming critical in managing the operational complexity of serverless architectures effectively.

Market Trend

"Increased Adoption of Multi-Cloud and Hybrid Cloud Environments"

The adoption of multi-cloud and hybrid cloud environments is one of the prominent trends driving the serverless computing market. Organizations are increasingly moving away from reliance on a single cloud provider opting instead for multi-cloud strategies that involve using multiple cloud platforms simultaneously. 

This approach offers greater flexibility, reduces vendor lock-in risk, and enables organizations to select tailored services to meet specific workload requirements.

Aditionally, many organizations are adopting hybrid cloud models that integrate on-premises infrastructure with public and private cloud services. This enables themorganizations to maintain control over sensitive data while benefiting from the scalability and cost-efficiency of cloud computing for less critical workloads.

As cloud services evolve, serverless platforms are increasingly designed to be interoperable across multiple clouds offering businesses the ability to leverage the strengths of each provider and optimize performance, security, and costs.

• In November 2024, AWS launched Application Signals, a new feature designed to help users track the performance of serverless applications built with AWS Lambda. This tool provides insights into the health and performance of serverless applications, making it easier to monitor, diagnose, and optimize Lambda-based workloads.

Serverless Computing Market Report Snapshot

Segmentation	Details
By Deployment Model	Public Cloud, Private Cloud, Hybrid Cloud
By Service Model	Function-as-a-Service (FaaS), Backend-as-a-service (BaaS)
By Enterprise Size	Large Enterprises, Small & Medium Sized Enterprises
By End-use	IT & Telecom, BFSI, Healthcare & Life Sciences, Retail & Consumer Goods, Government & Defense, Others (Transportation & Logistics, Manufacturing)
By Region	North America: U.S., Canada, Mexico
	Europe: France, UK, Spain, Germany, Italy, Russia, Rest of Europe
	Asia-Pacific: China, Japan, India, Australia, ASEAN, South Korea, Rest of Asia-Pacific
	Middle East & Africa: Turkey, UAE, Saudi Arabia, South Africa, Rest of Middle East & Africa
	South America: Brazil, Argentina, Rest of South America

 Market Segmentation

• By Deployment Model (Public Cloud, Private Cloud, Hybrid Cloud): The public cloud segment earned USD 10.96 billion in 2023 due to its widespread adoption for cost-efficiency, scalability, and ease of deployment, making it the preferred choice for serverless computing.
• By Service Model (Function-as-a-Service (FaaS), Backend-as-a-service (BaaS)): The function-as-a-service segment held 57.53% of the market in 2023, due to its ability to enable developers to run code in response to events without managing infrastructure, offering flexibility, scalability, and cost-efficiency for building serverless applications.
• By Enterprise Size (Large Enterprises, Small & Medium Sized Enterprises): The large enterprise segment is projected to reach USD 36.16 billion by 2031, owing to the increasing need for scalable, flexible, and cost-effective computing solutions to support complex, high-volume applications and digital transformation initiatives across large-scale operations.
• By End-use (IT & Telecom, BFSI, Healthcare & Life Sciences, Retail & Consumer Goods, Government & Defense, Others (Transportation & Logistics, Manufacturing)): The IT & telecom segment is anticipated to grow at a CAGR of 15.08% during the forecast period, driven by the increasing demand for scalable, cost-effective serverless solutions to support high-performance applications and enhance network infrastructure.

Serverless Computing Market Regional Analysis

Based on region, the global market has been classified into North America, Europe, Asia Pacific, Middle East & Africa, and Latin America.

The North America serverless computing market share stood at around 36.25% in 2023 in the global market, with a valuation of USD 8.40 billion. This dominance can be attributed to the region’s well-established cloud infrastructure, the presence of major cloud service providers, and the widespread adoption of cloud-based solutions across industries.

The increasing shift toward digital transformation coupled with the growing demand for cost-effective and scalable IT solutions, further accelerates the market growth in North America. The region benefits from a highly developed startup ecosystem, with numerous innovative companies leveraging serverless computing to drive efficiency and reduce operational costs.

• In January 2025, Databricks introduced egress control for serverless and Mosaic AI Model Serving workloads. This new feature allows organizations to gain greater control over their data and model outputs by managing the flow of data to external destinations, thereby enhancing security and compliance.

The serverless computing industry in Asia-Pacific is poised for significant growth at a robust CAGR of 14.38% over the forecast period, driven by rapid digital transformation across emerging economies, increasing cloud adoption, and the growing demand for scalable, cost-efficient computing solutions.

The region’s expanding IT infrastructure coupled with rising investments in cloud technologies is enabling businesses to leverage serverless computing for enhancing application development, operational efficiency, and reducing infrastructure costs.

The adoption of serverless solutions in sectors such as e-commerce, telecommunications, and financial services is expected to further fuel the market's growth in Asia-Pacific.

Regulatory Frameworks

• The German Federal Office for Information Security (BSI) regulates the Cloud Computing Compliance Controls Catalogue (C5), which sets forth a comprehensive set of security controls for cloud service providers.
• The International Organization for Standardization (ISO) regulates the ISO/IEC 27001 standard, which establishes requirements for an information security management system (ISMS).
• The European Union (EU) regulates the General Data Protection Regulation (GDPR), which is designed to protect the personal data of EU citizens. It mandates that organizations processing the data of EU residents, including those using serverless computing services, comply with stringent requirements on data consent, security, and breach notification.

Competitive Landscape

The competitive landscape of the serverless computing market is dynamic and rapidly evolving, fueled by growing demand for scalable, cost-efficient, and flexible cloud solutions. Major players in the market are focused on offering a variety of serverless computing services that cater to different application needs from event-driven functions to full-fledged application hosting.

The market is also witnessing an increasing trend towards multi-cloud and hybrid cloud capabilities, which are driving providers to offer more interoperable and flexible serverless platforms. As serverless computing becomes integral to modern software development there is a growing emphasis on supporting DevOps processes, micro services architectures, and AI/ML integration, which further intensifies competition among cloud service providers.

• In January 2024, Pinecone launched a serverless vector database architecture designed for AI-driven applications. The solution eliminates the need for infrastructure management by automatically scaling to handle varying workloads while maintaining low latency and high performance. This launch enhances Pinecone’s position in the vector database market, offering developers a more efficient, scalable option for deploying AI solutions and strengthening its role in the expanding AI infrastructure ecosystem.

List of Key Companies  In Serverless Computing Market:

• Amazon Web Services, Inc.
• Microsoft
• Google Cloud
• Alibaba Cloud
• IBM
• Dynatrace LLC
• NTT DATA Group Corporation
• Oracle
• Red Hat, Inc.
• Cloudflare, Inc.
• Tencent Cloud
• Fiorano Software and Affiliates.
• SAP SE
• Twilio Inc.
• MongoDB, Inc.

Recent Developments (M&A/Partnerships/Agreements/New Product Launch)

• In August 2024, Databricks announced the general availability of Databricks SQL Serverless on the Google Cloud Platform (GCP). This new offering brings the power of serverless SQL analytics to GCP users, enabling them to run SQL queries on large datasets without the need to manage or configure infrastructure.
• In April 2024, Cloudflare, Inc. acquired Baselime, a serverless observability platform. This acquisition broadens Cloudflare’s service portfolio in the developer tools and observability sector, strengthening its position in cloud infrastructure and enhancing its competitiveness against other cloud-native monitoring providers.
• In January 2024, Alibaba Cloud unveiled a serverless version of its Platform for AI (PAI)-Elastic Algorithm Service (EAS), designed to offer a cost-efficient solution for model deployment and inference to individuals and enterprises.
• In November 2023, AWS announced the general availability of Amazon ElastiCache Serverless for Redis and Memcached. This new serverless offering allows users to automatically scale them in-memory cache capacity based on application demands eliminating the need for manual capacity management.