API MANAGEMENT MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024-2031)

API Management Market Size and Trends

Global API management market is estimated to be valued at USD 5.48 Bn in 2024 and is expected to reach USD 25.67 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 24.7% from 2024 to 2031.

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Organizations are increasingly adopting API technologies to integrate disparate applications and share data and services with partners and customers. This has improved collaboration between internal departments and with external developers. Furthermore, growing usage of mobile applications and demand for digital transformation prompt numerous organizations to embrace the API-led approach. API management platforms allow companies to securely publish APIs and simplify access for app developers. It also helps companies to monetize their APIs and gain better visibility into API performance and usage. Increasing API provisions by enterprises across industries for improved customer engagement and experience can drive the market growth.

Digital Transformation and Cloud Adoption

Global API management market growth is driven by accelerated digital transformation in organizations. With increasing usage of cloud, mobile and IoT technologies, businesses have realized the importance of adopting newer technical approaches to engage with their customers seamlessly and provide improved customer experiences. Transitioning business applications and processes to the cloud has delivered significant agility and cost benefits to companies. It has allowed them to scale their operations on demand, reduce upfront infrastructure investments and focus more on innovation. However, this digital shift has also introduced several integration challenges for companies since their newer cloud systems and legacy on-premise platforms needed to interact with each other as well as with partner and vendor systems securely.

APIs have emerged as an ideal integration strategy to address this requirement of businesses. APIs help establish inter- and intra-organizational connectivity across different systems, applications, internal teams and third parties in a simple and standardized way. These essentially act as an interface that allows disparate platforms to communicate and exchange data with each other. While APIs themselves are not new, but their strategic usage has grown significantly in the recent times as part of companies’ digital innovation journeys. Organizations want to leverage APIs to break the IT silos, connect customers, partners and employees on any device and provide seamless digital experiences across touchpoints. API management tools have gained prominence as these help publishers develop, secure, publish and monitor APIs throughout their lifecycles for complex integration needs. These ensure proper governance, security controls and performance monitoring of APIs as businesses increasingly expose them externally through public channels.

As businesses continue to embrace modern technical architectures and make ongoing transitions to cloud-native infrastructure, API management will remain a vital component of their digital ecosystems. Its ability to enable integration across hybrid estate setups, support microservices development and provide real-time access to resources on cloud platforms positions it strongly as a key enabler of digital transformation journeys.

Market Concentration and Competitive Landscape

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Increasing Demand for Real-time Data Access

The growing demand for real-time data access is a key driver of the global API management market. As digitization accelerates across industries, the need to integrate services, apps, and databases has increased API usage. Consumers now expect a seamless experience across touchpoints and instant access to any service or information. This has compelled organizations to develop user-friendly APIs that can fetch and share data with each other and third-party services instantly. The ability of APIs to enable real-time data exchange has become crucial for businesses to meet evolving customer expectations in the digital age.

For instance, In November 2020, the IT team at the Chicago Department of Public Health (CDPH) partnered with MuleSoft Inc., a prominent provider of integration software, to accelerate the deployment of the COVID-19 vaccine. By leveraging MuleSoft's Anypoint Platform, this collaboration facilitated real-time data collection, contact tracing, and support for vaccine call centers, among other critical services.

Key Takeaways from Analyst:

Global API management market growth is driven by increasing adoption of cloud and microservices as well as rapid digital transformation activities across industries. Rising need for organizations to expose their data, applications, and business services through APIs to partners, developers, and internal user teams can also drive the market growth. Robust API security and access management features boosts adoption of API management platforms. North America currently dominates the market due to strong focus on innovation and early adoption of emerging technologies by organizations in the region.

Budget constraints for small and medium enterprises to invest in additional tools can hamper the market growth. Integration challenges of API management platforms with legacy applications can also hamper the market growth. Asia Pacific region is expected to be the fastest growing region, owing to rapid digitalization and growth of startups in countries like China, India, and Singapore. Increasing adoption of API economy approach by communication service providers can offer new avenues for API platform providers.

Asia Pacific also present healthy growth potential for API management vendors, especially as businesses across verticals acknowledge the need for APIs for engaging with customers and partners through digital channels. Furthermore, emerging technologies such as IoT, AI, and blockchain can integrate with APIs and boost adoption of management platforms in the near future.

Market Challenges: High Costs Associated with API Management Solutions

Global API management market growth can be hampered due to high costs associated with API management solutions. Establishing robust API management infrastructure requires significant investment in procuring software tools, hiring dedicated experts, and implementing security protocols. Organizations need to allocate resources for ongoing maintenance, upgrades, and support. These costs contribute significantly to the total cost of ownership. For many small and medium enterprises with tight budgets, the steep price tag of API management platforms can pose barrier to its adoption. Even large enterprises also hesitate from making large capital expenditures upfront. Moreover, customizing API management solutions as per business requirements often incurs additional development charges. The substantial financial commitment without any guarantee of positive ROI deters businesses, especially in uncertain market conditions. Unless API management vendors offer more affordable and flexible pricing models, high solution costs will hamper the market growth.

Market Opportunities: Expansion of API Marketplaces and Monetization

Expansion of API marketplaces and platforms that enable monetization of APIs can offer market growth opportunities. As more companies develop internal and public APIs to share functionality and data, there has been a huge scope for marketplace platforms that brings together API providers and consumers. These marketplaces offer a single platform to browse, try-out, purchase/subscribe to APIs developing an ecosystem. It empowers businesses to monetize unused APIs and data assets by listing them on marketplaces. It provides an easy one-stop-shop for developers to integrate third party services into their applications. The successful monetization models of marketplaces like AWS and Google Cloud Platform indicate lucrative prospects. As these API-driven business models gain popularity, API marketplace platforms can play a pivotal role in facilitating API transactions and commercialization.

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Insights, By Component - API Management: Enabling business agility through scalable API integration

In terms of component, API gateway segment is estimated to contribute the highest market share of 36.7% in 2024, owing to growing need for better communication between APIs and external applications. API gateway acts as a central point of management for APIs and helps enterprises easily connect many internal and third-party services through a unified interface. It enables scalable API implementations by providing functionalities like authentication, authorization, caching, throttling, analytics, and others. API gateway simplifies API management and facilitates agile application development by allowing easy integration of new APIs and services into existing infrastructure. As businesses look to modernize legacy systems and improve connectivity across devices/channels to gain market share through enhanced customer experience, there will be huge adoption of API gateway architecture. Its ability to securely expose APIs from different sources and provide a single point of control for API operations makes it a critical component.

Insights, By Organization Size - Organizational Transformation: Leveraging APIs for scalability and productivity

In terms of organization size, large enterprises segment is estimated to contribute the highest market share of 64.5% in 2024, owing to their ongoing digital transformation initiatives. Large enterprises are increasingly embracing API-led connectivity to gain a competitive edge through new business models, products and services. APIs help break organizational silos and facilitate collaboration across business units by enabling seamless data exchange. This allows enterprises to scale business operations efficiently and drive productivity gains. APIs also play a major role in supporting large scale digital services such as IoT solutions, cloud applications and mobile-first experiences. Central to these transformation agendas is establishing scalable API Management platforms that allow enterprises to launch APIs rapidly while ensuring effective governance. A robust API management strategy provides enterprises the flexibility to monetize APIs and engage external developer communities. With successful API programs emerging as catalysts for innovation and growth, API management investments are gaining strategic importance in large enterprises.

Insights, By End-use Industry - Blurred Industry Boundaries: Unlocking new growth opportunities through APIs

In terms of end-use industry, banking, financial services, and insurance (BFSI) segment is estimated to contribute the highest market share of 28.3% in 2024, owing to increased adoption of open banking models driven by APIs. Rapid digitization in the BFSI space has led to blurring of industry boundaries with customers demanding unified experiences across domains. APIs play a critical role in enabling such cross-industry partnerships and dissolving traditional vertical siloes. For example, banking APIs allow integration of financial services into other industries like retail, healthcare, transportation, and others. Insurers leverage APIs to provide on-demand coverage across IoT devices and digital assets. As customer expectations evolve in real-time, APIs have become the backbone for BFSI organizations to innovate at speed, form new alliances and unlock additional revenue streams. Regulatory pushes like PSD2 and open banking mandates have further accelerated API-led collaborations. Comprehensive API strategy will be essential for BFSI firms to capitalize on emerging opportunities, build ecosystems and differentiate in a technology-driven landscape.

Regional Insights

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North America dominates the global API management market with an estimated market share of 38.7% in 2024, owing to strong industry presence and technology adoption in the region. The region is home to many leading API management vendors and tech companies that are constantly investing in R&D to come up with new and innovative API management solutions. Most companies in domains like banking and finance, IT and telecom have well-established API strategies and are among early adopters of API-led connected solutions.

North American companies have expanded globally through Web and mobile applications that rely on robust APIs, thus, boosting need for API management platforms to navigate shifting requirements. Given the large number of enterprises with complex API portfolios, API management has become a strategic priority for organizations in North America looking to streamline operations and support growing customer demands through digital services.

Asia Pacific has emerged as the fastest growing regional market for API management. Countries like China, India, and Japan are rapidly digitizing their economies and witnessing significant growth in the adoption of digitally-enabled business models. As e-commerce and mobile-based business models gain widespread popularity in Asia, there has been rising emphasis on harnessing the power of open platforms and APIs.

The burgeoning startup culture and increasing technology investments from both private and public sector organizations in Asia Pacific are fueling experimentation with new digital capabilities. Organizations recognize the need for API management platforms to publish APIs secured and consistently in order to support innovation. Furthermore, small and medium enterprises are leveraging APIs to expand their digital presence and addressable markets.

While established API management vendors have a prominent presence in mature markets, these also witness immense growth prospects in Asia Pacific by assisting both large enterprises and SMBs with their API strategies. Growing digitalization drives across industries and nations makes Asia Pacific an attractive and rapidly growing regional market for API management platform providers and technologies.

Market Report Scope

Key Developments

• In February 2024, Microsoft Azure API Management, a part of Microsoft Corporation, a global leader in technology solutions, announced the introduction of TLS 1.3 support in its V1 and V2 tiers. TLS 1.3 is the latest version of the widely used security protocol that enhances internet security by encrypting data and securing communication channels between endpoints.
• In March 2023, OpenAI, a leading artificial intelligence research company that is known for developing advanced language models like GPT-4, introduced an application programming interface (API) for businesses to implement ChatGPT, its popular conversational AI, into their websites, apps, and emails. The ChatGPT API, powered by the GPT-3.5 Turbo model, enables enterprises to meet the growing demand for conversational AI and scale their applications efficiently using OpenAI's state-of-the-art text-generating technology.
• In February 2023, IBM Corporation, a global leader in technology and consulting that is known for its innovations in cloud computing and artificial intelligence, announced its acquisition of StepZen Inc., a developer of GraphQL server technology. This acquisition aims to enhance API management design with less code, facilitating digital transformation for businesses through the use of GraphQL APIs.
• In November 2020, IT team of the Chicago Department of Public Health (CDPH) collaborated with MuleSoft Inc., a leading provider of integration software, to expedite the rollout of the COVID-19 vaccine. Utilizing MuleSoft's Anypoint Platform, the collaboration enabled real-time data collection, contact tracing, and support for vaccine call centers, among other essential services.

*Definition: Global API Management Market refers to software solutions and related services that help organizations publish, secure, manage and monitor application programming interfaces (APIs) that allow disparate software applications to communicate and share data and functions with each other. API management platforms help enterprises enforce governance on APIs, provide analytics on API usage, handle authentication and authorization of API clients and developers, control access to APIs and monitor the performance of APIs.

Market Segmentation

• By Component Insights (Revenue, USD Bn, 2019 - 2031)
• • API Gateway
  • API Analytics and Monitoring
  • API Security
  • API Portal
  • Other Components (API Life Cycle Management, API Developer Portal, etc.)
• By Organization Size Insights (Revenue, USD Bn, 2019 - 2031)
• • Large Enterprises
  • Small and Medium-sized Enterprises (SMEs)
• By End-use Industry Insights (Revenue, USD Bn, 2019 - 2031)
• • Banking, Financial Services, and Insurance (BFSI)
  • IT and Telecommunications
  • Retail and E-commerce
  • Healthcare
  • Manufacturing
  • Others
• By Regional Insights (Revenue, USD Bn 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East
    • GCC Countries
    • Israel
    • Rest of Middle East
  • Africa
    • South Africa
    • North Africa
    • Central Africa
• Key Players Insights
  • API Gateway
  • Apigee
  • Axway
  • Dell Boomi
  • Microsoft
  • Mulesoft
  • Oracle
  • Postman
  • Red Hat
  • SAP
  • Software AG
  • WSO2
  • TIBCO Software Inc.
  • IBM
  • Kong Inc.