Market Analysis – 81111611 – Programming for PL/1

Market Analysis: Programming for PL/1 (UNSPSC 81111611)

1. Executive Summary

The market for PL/1 programming is a legacy services category, driven entirely by the maintenance and modernization of mission-critical mainframe applications. While the underlying technology is obsolete, the associated services market, as a subset of the $13.8B mainframe modernization services industry, is projected to grow at a 17.9% CAGR as organizations migrate away from the platform [Source - MarketsandMarkets, Feb 2023]. The single greatest threat is acute talent scarcity, with a rapidly retiring workforce of experienced PL/1 programmers creating significant supply and price risk. The primary opportunity lies in leveraging automated code conversion tools to accelerate migration and de-risk dependency on this dwindling talent pool.

2. Market Size & Growth

The direct market for "PL/1 Programming" is not explicitly tracked; it is a niche segment within the broader Mainframe Modernization Services market. The Total Addressable Market (TAM) for mainframe modernization services is estimated at $13.8 billion in 2023, with PL/1-specific services comprising an estimated 5-8% of this total. Growth is driven not by new development, but by high-value, complex migration and modernization projects. The three largest geographic markets are 1. North America, 2. Europe, and 3. Asia-Pacific (primarily Japan & Australia), reflecting the historical install base of IBM mainframes.

3. Key Drivers & Constraints

1. Demand Driver (Inertia): Mission-critical systems in banking, insurance, and government sectors rely on billions of lines of PL/1 code. The high risk and cost of "rip-and-replace" projects ensure continued demand for maintenance services.
2. Demand Driver (Modernization): Digital transformation and cloud adoption initiatives are forcing enterprises to address legacy technical debt. This fuels demand for services to refactor, re-platform, or re-engineer PL/1 applications.
3. Constraint (Talent Scarcity): The pool of programmers with deep PL/1 and mainframe expertise is shrinking due to retirement, with few new entrants. This is the primary constraint, driving up labor costs and supply risk.
4. Constraint (Complexity): Decades of undocumented changes make many PL/1 codebases extremely complex and brittle, increasing the risk and duration of modernization projects.
5. Technology Shift: The emergence of AI-powered code analysis and automated conversion tools (e.g., PL/1 to Java/C#) is shifting demand from manual programming to higher-level migration strategy and oversight.

4. Competitive Landscape

Barriers to entry are High, predicated on access to a scarce talent pool, deep domain knowledge of mainframe environments (z/OS, CICS, Db2), and the established trust required to manage core business systems.

⮕ Tier 1 Leaders * IBM / Kyndryl: The originators of the technology and the dominant force in mainframe hardware and services; offer end-to-end solutions from hardware to application management. * Accenture / TCS / Infosys: Global System Integrators (GSIs) with large-scale mainframe modernization practices and access to global talent pools, particularly in India. * OpenText (via Micro Focus): Offers a leading suite of COBOL and PL/1 analysis, development, and modernization software tools, often used by other service providers.

⮕ Emerging/Niche Players * Astadia: Specialist firm focused exclusively on mainframe-to-cloud migration services. * TmaxSoft: Provides re-hosting solutions that allow mainframe applications to run on open systems with minimal code changes. * Advanced: UK-based firm with a strong application modernization practice, including for PL/1.

5. Pricing Mechanics

Pricing is overwhelmingly labor-driven, typically structured as Time & Materials (T&M) for ongoing support or Fixed Price for well-defined modernization projects. The core of the price build-up is the fully loaded daily or hourly rate for PL/1 developers, which includes salary, benefits, overhead, and supplier margin (typically 15-25%). Rates are tiered based on experience, with architects and senior developers commanding a significant premium.

The most volatile cost elements are labor-related, reflecting the severe talent shortage. * Senior PL/1 Developer Rates: est. +15-20% (YoY change) * Mainframe Architect Rates: est. +20-25% (YoY change) * Project Management (Mainframe Speciality): est. +10-15% (YoY change)

6. Recent Trends & Innovation

• AI-Powered Code Conversion (2022-Present): Suppliers are increasingly integrating AI/ML into their toolchains to automate the analysis of legacy PL/1 code, identify dependencies, and generate equivalent code in modern languages like Java or Python, reducing manual effort by a claimed 30-50%.
• Mainframe as a Service (MFaaS) Adoption (2022-Present): The ability to run mainframe development and test environments on public clouds (e.g., AWS, Azure) is reducing capital expenditure and providing flexible, on-demand capacity for modernization projects.
• Industry Consolidation (Jan 2023): OpenText completed its acquisition of Micro Focus, consolidating a significant portion of the legacy language compiler and modernization tool market under a single entity. [Source - OpenText, Jan 2023]
• Major Supplier Restructuring (Nov 2021): IBM spun off its managed infrastructure services business to form Kyndryl, creating a new, independent Tier 1 competitor focused heavily on managing complex, hybrid environments, including mainframes.

7. Supplier Landscape

8. Regional Focus: North Carolina (USA)

Demand for PL/1 services in North Carolina is strong and stable, driven by the heavy concentration of banking headquarters (Bank of America, Truist), insurance carriers, and healthcare systems in the Charlotte and Research Triangle Park (RTP) areas. Local delivery capacity is robust, with major offices for IBM, Infosys, and Kyndryl in the RTP region. However, the local labor market for this niche skill is extremely tight, with suppliers competing for a small pool of talent against high-paying roles in the broader tech sector. Expect suppliers to leverage nearshore or offshore resources to supplement local teams.

9. Risk Outlook

10. Actionable Sourcing Recommendations

1. Mitigate Talent Risk with Hybrid Sourcing. Prioritize suppliers who blend scarce human expertise with automated code conversion toolsets. Mandate that RFPs require bidders to detail their talent development programs and demonstrate their automated refactoring platforms. This hedges against the High supply risk and +20% wage inflation by reducing reliance on manual coding.

2. Shift Spend from Maintenance to Modernization. Initiate a fixed-price pilot project to migrate one non-critical PL/1 application to a cloud-native language using an automated tool. This will establish a clear business case and ROI for a broader migration strategy, addressing the High technology obsolescence risk and creating a path to reduce long-term maintenance costs.