Custom Software Development Market Growth and Forecast 2031

The custom software development market size is projected to reach US$ 181.81 billion by 2031 from US$ 35.16 billion in 2023. The market is expected to register a CAGR of 22.80% in 2023–2031. The integration of progressive web apps (PWAs) is likely to remain a key custom software development market trend.

Custom Software Development Market Analysis

The growing digital transformation across various industry verticals, such as BFSI, government, retail, healthcare, and others, is raising the demand for the development of custom software. The growing demand for digital banking is increasing as it helps customers conduct their financial operations with more ease, fuelling the growth of the market. Also, the growing need for business process automation is boosting the growth of the custom software development market. Furthermore, the integration of artificial intelligence, machine learning, and advanced analytics to gather data regarding customer behaviour and provide personalized solutions is further creating an opportunity for the growth of the custom software development market. Moreover, the rising demand for cloud computing is further fuelling the growth of the custom software development market.

Custom Software Development Market Overview

Custom software development is the process of designing software applications to meet the specific needs of an individual or a company. Various companies invest in custom software development specifically to address the exact needs of the customers. Furthermore, as the business grows with time, the need for various features in the software will also grow. Purchasing an off-the-shelf software solution can become a problem when it is not able to support the business or becomes too expensive to license, raising the demand for custom software, which can help to grow and scale the business processes. Furthermore, with custom software development, a user can integrate new software with the already existing software to refine business processes.

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Custom Software Development Market: Strategic Insights

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Custom Software Development Market Drivers and Opportunities

Business Process Automation to Favor Market

Business process automation (BPA) is becoming increasingly important for businesses as they recognize the efficiency and productivity gains that can be achieved through automation. By automating routine tasks, organizations can enhance operational efficiency, minimize errors, standardize processes, and free up employees to focus on more strategic activities. BPA helps organizations reduce costs by streamlining processes and minimizing the need for manual intervention. Automated processes are less prone to errors, reducing the need for rework and correction, which further improves efficiency and reduces costs.

Increasing Adoption of AI – An Opportunity in the Custom Software Development Market

In this digital era, software plays a very important role in enabling companies to create automation tools, enhance customer experience, and reduce costs. This growing digitization is leading the growth of the software development sector, particularly due to the rapid advancement of technologies like Artificial Intelligence (AI), Machine Learning (ML), IoT, and others. This technological advancement is significantly impacting many industries, as the integration of the above technologies can help solve complex problems and the ability to generate information.

Custom Software Development Market Report Segmentation Analysis

Key segments that contributed to the derivation of the custom software development market analysis are type, deployment, and end use.

• Based on type, the market is divided into enterprise software development, web application development, and mobile application development. The web application development segment held a significant market share in 2023.
• Based on deployment, the market is bifurcated into on-premises and cloud. The on-premises segment held a larger market share in 2023.
• Based on end use, the market is bifurcated into BFSI, government, healthcare, it and telecom, and others. The BFSI segment held a significant market share in 2023.

Custom Software Development Market Share Analysis by Geography

The geographic scope of the Custom Software Development market report is mainly divided into five regions: North America, Asia Pacific, Europe, Middle East & Africa, and South America/South & Central America.

North America is expected to witness significant growth in the custom software development market in the forecasted period. In the region, the US will hold the largest custom software development market share in 2023 and will register the highest CAGR during 2023-2031. The demand for business process automation to improve efficiency and reduce costs is fuelling the growth of the custom software development market in the region. Also, the growing digital transformation in various industries is another factor fuelling the growth of the market. The region witnessed a digital transformation in its healthcare sector in recent years. The governments of various countries, as well as other organizations, are continuously working on the digitization of the healthcare sector. 

Custom Software Development Market Regional Insights

The regional trends and factors influencing the Custom Software Development Market throughout the forecast period have been thoroughly explained by the analysts at Insight Partners. This section also discusses Custom Software Development Market segments and geography across North America, Europe, Asia Pacific, Middle East and Africa, and South and Central America.

Custom Software Development Market Report Scope

Custom Software Development Market Players Density: Understanding Its Impact on Business Dynamics

The Custom Software Development Market market is growing rapidly, driven by increasing end-user demand due to factors such as evolving consumer preferences, technological advancements, and greater awareness of the product's benefits. As demand rises, businesses are expanding their offerings, innovating to meet consumer needs, and capitalizing on emerging trends, which further fuels market growth.

Market players density refers to the distribution of firms or companies operating within a particular market or industry. It indicates how many competitors (market players) are present in a given market space relative to its size or total market value.

Major Companies operating in the Custom Software Development Market are:

1. Buffalo Americas, Inc.
2. Dell EMC
3. Hewlett Packard Enterprise Development LP
4. Hitachi Vantara Corporation
5. NetApp
6. NETGEAR

Disclaimer: The companies listed above are not ranked in any particular order.

Custom Software Development Market News and Recent Developments

The custom software development market is evaluated by gathering qualitative and quantitative data post primary and secondary research, which includes important corporate publications, association data, and databases. The following is a list of developments in the market for innovations, business expansion, and strategies:

• In August 2023, Butterfly Network, Inc., a digital health company, announced the release of its software development kit (SDK) for use by third parties. The SDK can be leveraged by artificial intelligence (AI) software developers, medical device companies building ultrasound into their platforms, and telemedicine companies adding ultrasound into their virtual care workflows. The kit will allow developers to utilize Butterfly’s platform to build custom applications that can be commercialized to Butterfly’s customer base – the largest user network in handheld point-of-care ultrasound. (Source: Butterfly Network, Inc., Press Release)
• In July 2023, Tietoevry announced that it had acquired MentorMate, a digital engineering company, from Taylor Corporation. MentorMate plays a key role in driving customers’ digital agenda with its strategy, design, and engineering capabilities. The acquisition accelerates Tietoevry’s strategy with a focus on software and digital engineering services. MentorMate will be part of the Tietoevry Create business, supporting its ambition to be a leading digital engineering player globally. (Source: Tietoevry, Press Release)

Custom Software Development Market Report Coverage and Deliverables

The “Custom Software Development Market Size and Forecast (2021–2031)” report provides a detailed analysis of the market covering the following areas:

• Custom Software DevelopmentMarket size and forecast at global, regional, and country levels for all the key market segments covered under the scope
• Market dynamics such as drivers, restraints, and key opportunities
• Custom Software Development Market trends
• Detailed PEST/Porter’s Five Forces and SWOT analysis
• Custom Software Development market analysiscovering key market trends, Global and regional framework, major players, regulations, and recent market developments
• Custom Software DevelopmentIndustry, landscape, and competition analysis, covering market concentration, heat map analysis, prominent players, and recent developments
• Detailed company profiles