Custom Software Development Market Size - By Solution (Web-Based Solutions, Mobile App, Enterprise Software), End Use (BFSI, IT & Telecom, Healthcare, Government, Manufacturing, Retail), Deployment Model, Enterprise Size & Global Forecast, 2023 – 2032

Custom Software Development Market Size - By Solution (Web-Based Solutions, Mobile App, Enterprise Software), End Use (BFSI, IT & Telecom, Healthcare, Government, Manufacturing, Retail), Deployment Model, Enterprise Size & Global Forecast, 2023 – 2032

Custom Software Development Market Size

Custom Software Development Market size was valued at USD 28.2 billion in 2022 and is estimated to register a CAGR of over 21.5% between 2023 and 2032. Enterprise Resource Planning (ERP) systems are propelling the market growth by creating a demand for tailored solutions. ERPs often require customization to align with the unique business processes and industry-specific needs. Custom software developers are designing, integrating, and maintaining these solutions, which is augmenting market size. Additionally, ERP systems generate data that necessitates the use of specialized software for analysis, reporting, and business intelligence, further expanding the opportunities for custom software development.

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The rising need for business process automation is driving the custom software development market demand. Businesses are increasingly recognizing the efficiency and productivity gains achieved through automation. Custom software developers are essential in the design, implementation, and maintenance of tailored automation solutions that align with the specific workflows & requirements. As companies across industries seek to streamline operations and reduce manual tasks, the demand for custom software to automate processes will continue to grow, thereby fueling the market expansion.
 

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The limited budgets for IT investments can hinder the custom software development market revenue by restricting the funds available for companies to invest in developing customized software solutions. This challenge can lead to the reduced demand for custom software development services as businesses may opt for more cost-effective off-the-shelf software solutions. Additionally, limited budgets can also hinder the resources & capabilities of custom software development companies, making it difficult for them to compete with larger firms or invest in research & development to innovate their offerings.

COVID-19 Impact

The COVID-19 pandemic accelerated the digital transformation efforts of many businesses, leading to the increased demand for custom software development services. This was also driven by the need for remote work solutions, online collaboration tools, and e-commerce platforms to adapt to the new normal. Furthermore, the shift toward digitalization created opportunities for custom software development companies to offer tailored solutions that address the specific industry challenges in the healthcare, logistics, and education sectors.

Custom Software Development Market Trends

The increasing investments in custom software development startups are augmenting the custom software development industry growth. Such investments are providing these startups with the necessary resources to innovate & develop cutting-edge solutions. Investors are recognizing the increasing demand for customized software solutions across various industries, leading to a surge in funding for these startups.

For instance, in May 2023, Builder.ai, a startup dedicated to the simplification of custom software development, secured USD 250 million in funding through its Series D round. The Qatar Investment Authority led the investment, in association with Iconiq Capital, Jungle Ventures, and Insight Partners. This financing initiative increased the company’s total funding to USD 450 million. Builder.ai estimates that this round will boost its valuation by as much as 80%.

Custom Software Development Market Analysis

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The large enterprises segment held over 58% of the custom software development market share in 2022. The AI development assistant in software development is levitating the approach of large enterprises in the market. By leveraging AI technology, these assistants can streamline & automate various aspects of the development process such as code generation, bug detection, and performance optimization.

For instance, in June 2023, Harness Inc., a company specializing in modern software delivery platform solutions, introduced its AI Development Assistant (AIDA), a groundbreaking AI assistant that will revolutionize the entire Software Development Life Cycle (SDLC). Unlike the conventional AI applications in the field that mainly center on code generation and assistance, this approach represents significant advancements in AI for software delivery. The integration of AI systems into software development will enable the growth of large enterprises within the custom software development market.

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The IT & telecom segment recorded around 23% of the custom software development market share in 2022. Technological advancements, such as 5G, IoT, AI, and edge computing, are propelling the IT & telecom segment growth within the market. These innovations are enabling the development of custom software solutions that optimize networks, enhance cybersecurity solutions, enable IoT integration, and provide real-time data processing at the edge. This technology-driven approach helps IT & telecom companies in improving services, reducing latency, and meeting the growing demands of end users.

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North America custom software development market accounted for 36% of revenue share in 2022. The partnerships among software development companies in North America are driving the market growth. Collaborations allow firms to combine expertise & resources, thereby facilitating the development of more comprehensive & innovative solutions.

For instance, in March 2023, Replit entered a strategic collaboration with Google Cloud. As per the partnership, Replit developers can access Google Cloud services and foundational models through Ghostwriter, Replit's AI model for software development. Conversely, as part of this arrangement, the Google Cloud and Workspace developers can gain access to Replit's collaborative code editing tool. These partnerships enable the access to a wider range of technologies & expertise, thereby fostering the creation of custom software that meets the diverse industry needs. Such alliances will ultimately enhance competitiveness and drive the market value.

Custom Software Development Market Share

The major companies operating in the custom software development market are

• Accenture plc
• ATOS SE
• Cognizant
• Tata Consultancy Services Limited
• Infosys Ltd.
• IBM Corporation
• Infopulse

These companies focus on expanding their service offerings to meet a broader range of client needs. This include adding new technology stacks, offering mobile app development, providing consulting services, or entering related fields like data analytics or cloud computing.

Custom Software Development Industry News

• In January 2023, Crowdbotics, a software development platform that offers a library of pre-built app architectures, secured an investment of USD 40 million through a successful Series B funding round. This round was led by NEA, with contributions from Homebrew, JSV, Harrison Metal, and Cooley. The freshly acquired funds will be directed toward the expansion of the company’s presence within the enterprise sector.

This custom software development market research report includes in-depth coverage of the industry, with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments

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Market, By Solution

• Web-based solutions
• Mobile app
• Enterprise software

Market, By Deployment Model

• Cloud
• On-premises

Market, By Enterprise Size

• Large enterprises
• SMEs

Market, By End Use

• BFSI
• IT & telecom
• Healthcare
• Government
• Manufacturing
• Retail
• Others

The above information has been provided for the following regions and countries

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Italy
  • Spain
  • Russia
  • Nordics
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • ANZ
  • Southeast Asia 
• Latin America
  • Brazil
  • Mexico
  • Argentina
• MEA
  • UAE
  • South Africa
  • Saudi Arabia

Frequently Asked Questions (FAQ)

How big is the custom software development market?

The market size of custom software development reached USD 28.2 billion in 2022 and is set to grow at over 21.5% CAGR from 2023 to 2032, due to the rising need for business process automation.

How are large enterprises contributing to the custom software development industry?

The large enterprises segment garnered over 58% of the market share in 2022, owing to the growing need to streamline & automate various aspects of the development process such as code generation, bug detection, and performance optimization.

What is the size of the IT & telecom custom software development market?

The IT & telecom end use segment recorded 23% of the market share in 2022, propelled by technological advancements, such as 5G, IoT, AI, and edge computing.

What factors are driving custom software development industry in North America?

North America held over 36% of the market share in 2022, driven by rising collaborations to allow firms to combine expertise & resources.