The Open Source Service Market is expected to reach a CAGR of 24.2% during the forecast period (2021-2026). Factors such as a reduction in the total cost of ownership and the increased return on investments are expected to drive the market's growth. On the contrary, the low security of open source software and the high cost of integrating services are major growth restraints.
- Open source solutions provide client businesses with flexibility and empower vendors with innovation by providing them the opportunity and ability to adjust the product to bring the best functionalities out of it as demanded by the customer. With the growth of open source, technology providers are delivering new solutions through partnerships. For instance, in 2019, Red Hat and Infosys announced a partnership for developing an end-to-end open-source reference architecture and solution for IoT for industry verticals, including financial services, oil and gas, retail, and consumer packaged goods (CPG) and manufacturing.
- By standardizing open-source platforms such as Kubernetes, developers would be able to implement better ways of using software such as shorter release cycles and incremental changes to the application. By eliminating smaller operations processes such as configurations, the developer would spend less time on unseen plumbing, which has a less direct effect on the business. Also, the operators would be able to leverage new scalable ways to manage the infrastructure while ensuring compliance.
- Moreover, with the increasing rate of technology adoption, organizations are using open source services for IT infrastructure modernization, digital transformation, application development, and integration. According to Redhat's State of Enterprise Open Source Report, 2019, 53% of the enterprises use open source IT infrastructure modernization, followed by 42% for digital transformation, and 43% for application integration.
- The open-source codes are offered through a range of licenses that focus on the availability of the source code and the ability to modify and share it. Thus, it increases the applicability of various software. According to WhiteSource Softwares, the MIT license remains at the top of the popular open-source license list at 27%.
- During the ongoing COVID-19 pandemic, the demand for open-source service companies sees an upward trend. Vendors in the market are using and expanding open source repositories containing datasets, models, visualizations, web and mobile applications, and more to innovate and build new solutions to combat the spread of the virus through generating awareness. For instance, Locale.ai created an open-source, interactive visualization of all known cases of COVID-19. The map provides live updates with new data as it becomes available.
- However, the inherently community-driven open-source platform with no central authority been responsible for quality and maintenance often have complex dependencies. Further, being vulnerable to attacks due to the lack of security practices and attackers becoming maintainers of projects and introducing malware hampers the reliance of the end-users and thereby restrains the market's growth.
Key Market Trends
Emphasis on Reduced Cost of Ownership and Time to Market is Expected to Drive the Market Growth
- Companies can save on operational and implementation costs by using open source solutions. For revenue generation, vendors in the open-source market are charging for add-ons. Still, even after paying for add-ons and services for security hardening, and help to manage interoperability, these products are usually much cheaper than closed source alternatives. Moreover, they offer 24*7 support from vendors to provide services right from consulting to training, implementation, and maintenance. This fulfills the need to solve issues quickly, ensuring optimum efficiency to the customers.
- Moreover, The use of permissive open-source licenses has continued to rise, while usage of copyleft licenses, and the GPL-family in particular, continues to decrease. Permissible licenses impend minimal restrictions on software users. Software under these licenses can be incorporated into the other proprietary software without disclosing the source code. This newly created software may be distributed, which saves a lot of cost and time and contributes to the growth of the open-source service market.
- According to WhiteSource Software, a provider of security, compliance, and reporting solutions for managing open source components, 67% of open source components have permissive licenses. That’s a 3% rise from last year’s 64%. Only 33% of the top 10 most popular open-source licenses are copyleft, compared to 36% last year and 59% in 2012. The numbers show that developers and organizations continue to prefer permissive licenses.
- Moreover, companies are adopting partnerships to accelerate technology evolution and reduce time to market. For instance, in March 2020, Hewlett Packard Enterprise (HPE) in partnership with intel and support from key industry leaders including AMI, Apstra, Red Hat, Tech Mahindra, and World Wide Technology announced the Open Distributed Infrastructure Management initiative. This new open-source program will simplify the management of large-scale geographically distributed physical infrastructure deployments. Besides, HPE will introduce an enterprise offering, the HPE Open Distributed Infrastructure Management Resource Aggregator aligned with the initiative.
- It helps resolve the complexity that telecommunications vendors face in rolling out 5G networks across thousands of sites equipped with IT infrastructure from multiple vendors and different generations of technology. All these factors are contributing to the increased growth of the open-source services market.
- Additionally, with the growing concerns about the security aspects of the open-source platforms, vendors in the market are forming alliances to address the issues. For instance, In August 2020, Microsoft Corporation announced that it is collaborating with industry partners, including Google, GitHub, IBM, NCC Group, OWASP, to help create an open-source security foundation (OpenSSF). The OpenSSF brings work together from GitHub-initiated Open Source Security Coalition (OSSC), Linux Foundation-initiated Core Infrastructure Initiative (CII), and other open-source security efforts to help improve the security of open-source software.
- The services include Identifying security threats to open source projects, security tooling, and vulnerability disclosure. This instance is set to foster the adoption of open source platforms and thereby is expected to further drive the growth of open source services in the industry.
North America is Expected to Hold Major Share
- The region is witnessing growth in the open-source service market due to prominent market players such as IBM Corporation, Redhat, Oracle Corporation, and the high adoption rate of new technologies. Moreover, the increased investment in cloud technology is expected to drive the growth of the open-source service market.
- Open source is becoming increasingly interdependent, wherein North American developers have long played an essential part in fostering open source development. Developers living in the US remain the single largest group of contributors since 2014, the number of open source contributions, according to GitHub's State of the Octoverse 2019 report. This indicates the increased level of open source adoption across the region, hence its adoption across vendors in the area.
- Furthermore, the increased adoption of open source services by various end-user industries in the region boosts the growth of the market. For instance, Zymr is a full-stack cloud software development company headquartered in Silicon Valley that uses agile development practices and open source technologies to deliver fit-for-purpose software that scales with customers'' business needs. With integrated Cloud, Cybersecurity, DevOps, etc. competencies, Zymr operates as a one-stop technology partner for enterprises seeking to develop or leverage their existing core IP.
- Moreover, Royal Bank of Canada (RBC) and its AI research institute Borealis AI have partnered with Red Hat and NVIDIA to develop a new AI computing platform designed to transform the customer banking experience and help keep pace with rapid technology changes and evolving customer expectations. Red Hat OpenShift and NVIDIA's DGX AI computing systems power this private cloud system that delivers intelligent software applications and boosts operational efficiency for RBC and its customers.
- Additionally, the region is responsible for conduction global open source summits, including Linux Foundation Member Summit, Open Networking & Edge Summit, Open Source Summit North America, and KubeCon and CloudNativeCon, among others. It showcases the abundance of opensource developers and the development communities in the region. For instance, In April 2020, amidst the COVID-19 crisis, The Linux Foundation, a worldwide open source community, announced the virtual experience of Open Source Summit + Embedded Linux Conference North America 2020.
The market for open-source service is moderately fragmented owing to the presence of already established players in the market. However, open-source allows people to access various codes available; it is difficult for SMB's to compete with large players in the market in terms of flexibility, interoperability, and cost savings.
- August 2020: Kubermatic GmbH announced the release of KubeCarrier, a new open-source, cloud-native service management platform that aims to solve technical problems associated with the deployment of Kubernetes clusters such as service meshes, overlay networking, and authentication. The company aims to help its clients provision and manage workloads across multiple clusters. It further reported that it would incorporate the technology into its commercial offering by the end of 2020.
- July 2020: Adobe Inc, IBM Corp, and Red Hat Inc announced a strategic partnership to help accelerate digital transformation and strengthen real-time data security for enterprises, focusing on regulated industries. The partnership intends to enable companies to deliver more personalized experiences across the customer journey, driving improved engagement, profitability, and loyalty.
- April 2020: Hewlett Packard Enterprise launched its HPE Container Platform, a Kubernetes container system designed to run cloud and on-premises applications. HPE is pledging that its container platform will be 100% open-source Kubernetes compared to other systems that have altered Kubernetes. Besides, the HPE Container Platform will be able to run across multiple environments and provide one management layer.
- The market estimate (ME) sheet in Excel format
- 3 months of analyst support
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1.2 Scope of the Study
4.2 Industry Attractiveness - Porter's Five Forces Analysis
4.2.1 Bargaining Power of Suppliers
4.2.2 Bargaining Power of Buyers
4.2.3 Threat of New Entrants
4.2.4 Threat of Substitutes
4.2.5 Intensity of Competitive Rivalry
4.3 Assessment of Impact of COVID-19 on Open Source Services Market
4.4 Market Drivers
4.4.1 Reduced Cost of Ownership and Time to Market
4.4.2 Interoperability and Flexibility in Terms of Customization
4.5 Market Restraints
4.5.1 Security Issues
5.1.1 Consulting and Implementation Services
5.1.2 Support, Maintenance, and Management Services
5.1.3 Training Services
5.2 By End-user Industry
5.2.1 Banking, Financial Services, and Insurance
5.2.2 Telecom and IT
5.2.7 Others (Transportation and Logistics, Energy and Utilities)
5.3.1 North America
5.3.3 Asia Pacific
5.3.4 Latin America
5.3.5 Middle East and Africa
6.1.1 Accenture PLC
6.1.2 Oracle Corporation
6.1.3 Cisco Systems, Inc.
6.1.4 Open Source Services
6.1.5 HCL Technologies
6.1.6 Hewlett Packard Enterprise Company
6.1.7 IBM Corporation
6.1.8 Infosys Limited
6.1.9 Wipro Limited
6.1.10 ATOS SE
6.1.11 Red Hat Inc.
6.2 Vendors Providing Open Source
6.2.1 Google LLC
6.2.2 Microsoft Corporation
6.2.3 Amazon Web Services