Global Custom Software Development Services Market By Type (Cloud-based, Web-based), By Application (Large Enterprises, SMEs), By Region, And Segment Forecasts, 2023 to 2032

Custom software development is the process of creating software applications for a specific user or group of users within an organisation. It entails ordering, developing, and releasing a software product that is tailored to a specific detailed unit. With technological advancements and a shift towards customer-centricity due to the changing global technology landscape, every enterprise needs unique software applications to enhance customer experience and provide irreplaceable value. Businesses have two options for custom software development: hire an in-house team or partner with a software development company.

The global custom software development services were valued at USD 7.52 billion in 2023 and are projected to reach USD 14.73 billion by 2032, growing at a CAGR of 8.78 % from 2023-2032. Several factors contribute to market growth including an increasing demand for industry applications for real-time data analysis and an increasing adoption of the low code development platform (LCDP) for easier software development. 

Premium Insights: 

• Analytical tools like BI, machine learning, and AI in custom software enhance cross-departmental communication, identify market trends automate processes and embed analytics to help companies understand customers better and make strategic decisions based on insights.

• Open-source programs are gaining popularity among custom software developers as a means of optimising application development and lowering development costs. 

Global Custom Software Development Services Market Dynamics: 

Drivers: Focus on digital transformation, evolving business needs and integration with existing systems & data security.

-Businesses across industries are embracing digital transformation initiatives. Custom software development allows companies to create solutions that address their unique challenges, automate workflows, and streamline operations for improved efficiency.

-As business needs evolve rapidly, off-the-shelf software may not provide the necessary functionalities. Custom software empowers companies to develop solutions that precisely address their specific needs and differentiate themselves from competitors.

-Custom software can seamlessly integrate with existing enterprise systems and databases, ensuring data security and smooth information flow throughout the organization.

Restraints: Maintenance needs, high development costs and integration challenges.

-Custom software requires ongoing maintenance and support to address bugs, implement updates, and ensure security. Building a long-term partnership with the development team is vital.

-Custom software development can be expensive, with costs depending on project scope, complexity, and required functionalities. Managing project timelines and budgets effectively is crucial.

-Integrating custom software with existing legacy systems can be complex, time-consuming, and require additional resources.

Opportunities: Low code developmental platforms, focus on open-source technologies and focus on industry-specific solutions & domain expertise.

-The emergence of low-code/no-code platforms empowers businesses with limited technical expertise to participate in custom software development, potentially lowering costs and increasing accessibility.

-Leveraging open-source technologies and collaborating with the open-source developer community can reduce development costs and tap into a broader pool of talent.

-Software development firms specializing in specific industries can offer deep domain knowledge and pre-built components, accelerating development and reducing costs for clients.

Market By Custom Software Development Services Type Insights: 

Based on service type, the market can be segmented into Application Development, Application Modernization, Application Management and others. Application development is expected to hold a dominant market share in 2024. This dominance can be attributed to factors like the need for businesses across industries for custom applications, consisting of various types of software and the capacity to adapt to changing needs.

Based on deployment type, the market can be segmented into On-premises and Cloud-based. Cloud-based deployment is the most used due to several factors like its cost-effectiveness and offering on-demand scalability. Cloud-based applications are also accessible from anywhere facilitating remote work.

Based on organization size, the market can be separated into Large enterprises and Small-Medium Enterprises. Large enterprises occupy a major portion of the market due to many reasons. Large enterprises have intricate workflows and data management needs that require custom software solutions, larger budgets and custom software give these enterprises a competitive edge. 

Market By End-Use Insights:

Based on end-use, the healthcare sector held a dominant market share Healthcare held a large portion of the market in 2023 primarily due to the fact that the healthcare industry is undergoing a digital transformation necessitating custom software for areas like patient record management and can improve patient care by facilitating appointment scheduling, secure communication and personalized treatment plans.

Market By Region Insights:

Based on regional coverage, the market can be segmented into North America, Europe, Asia-Pacific, Latin America, Middle East and Africa. North America's custom software development market had the highest global revenue share of 32.56% in 2023. Several factors contribute to the region's growth, including the widespread use of advanced expertise, increased IT services, and the rise of SMEs. Furthermore, as the region's automation and digital transformation accelerates, North America is the preferred destination for custom software development.

Competitive Scenario:

Major players in the market include Accenture, Capgemini, Infosys, Tata Consultancy Services, Cognizant, HCL Technologies, Infosys, IBM,   Wipro and GitHub.

Scope Of Work-Global Custom Software Development Services Market

Key Market Developments:

• November 2022-Tata Consultancy Services and Randstad, a well-known HR services company, collaborated to modernise Randstad's application estate in the cloud. This collaboration aimed to improve Randstad's growth and transformation strategy while also strengthening its security posture.

• January 2023-Crowdbotics, a platform that offers pre-built code modules, has raised USD 40 million in funding. This investment aims to simplify the app development process for programmers by providing pre-built components that can be easily integrated into enterprise applications.

• May 2023-Zoho Corporation, an India-based global technology company, announced that BigBasket, India's leading online supermarket, had successfully implemented a custom-built CapEx procurement ERP software using Zoho Creator, the company's low-code application development platform. The cloud-based custom ERP has helped BigBasket improve operational efficiency, streamline processes, and significantly reduce costs.

Frequently Asked Questions (FAQs)

1. What is the size of the global custom software development services market?

Ans. As of 2023, the global custom software development service market is valued at USD 7.52 billion. 

2. What are the key drivers of the custom software development services market?

Ans. Key drivers include a focus on digital transformation, evolving business needs and integration with existing systems & data security.

3. What are the major challenges in the custom software development services market?

Ans. Challenges include maintenance needs, high development costs and integration challenges.

4. What are the growth opportunities in the custom software development services market?

Ans. Opportunities include low-code developmental platforms, a focus on open-source technologies and focus on industry-specific solutions & domain expertise.