Custom Software Development Market Size, Share & Trends Analysis Report By Type (Mobile App, Enterprise Software), By Deployment Mode (Cloud, On-premise), By Enterprise Size, By Industry Vertical, By Region, And Segment Forecasts, 2024 - 2030

Market Share & Trends

The global custom software development market size was estimated at USD 35.42 billion in 2023and it is projected to grow at a CAGR of 22.5% from 2024 to 2030. Custom software development is the design of software applications that meet the specific needs of an individual or a company. Various factors contribute to the market growth, such as the growing requirement for industry applications for real-time data analysis, the rising need for flexible workspace to enhance productivity, and the increasing adoption of the low code development platform (LCDP) for easier software development.

Moreover, the adoption of analytics with the emergence of a variety of technologies, such as AI-driven Chatbots and robotics automation, helps boost market growth. Analytical tools in custom software development, such as business intelligence (BI), machine learning, and artificial intelligence, allow for cross-departmental communication, market trend identification, and process automation. Furthermore, embedding analytics into a company's custom software allows it to understand its customers better and make strategic decisions based on the insight retrieved from the software. For instance, AEC Advisors, an investment banking and corporate finance advisory firm in New York, transformed its business by implementing Fingent Corporation's survey management system and analytics software.

One of the most important aspects of custom software development is cloud technology, as it improves the agility and performance of custom software. In addition, cloud-based software development releases new, high-quality software more quickly and efficiently. Custom software developers collaborate with cloud infrastructure providers to enable companies to accelerate their development process using artificial intelligence. For instance, in March 2023, Replit, Inc., a cloud-based software developer, partnered with Google LLC, a cloud infrastructure provider, to create a generative AI application. The partnership allows Replit developers to access Google Cloud infrastructures, services, and foundation models through Replit, Inc.’s AI software development platform, Ghostwriter. Traditional development of software, such as manual coding, can be challenging. Enterprises need a dedicated team to update the code each time, which usually takes 2 to 8 months.

However, low-code application development enables custom software development teams to develop more applications in less time than traditional coding. The visual development environment makes it easy to design and develop low-code applications. These features allow developers to build customizable sites for multiple devices on a single platform. For instance, in October 2023, The ESDS Software Solution launched a low-code platform called "Low Code Magic." The platform redefines the application development landscape, making it faster, easier, and more efficient for businesses to create custom applications tailored to their needs. Low Code Magic allows organizations to minimize development costs, reduce their time to market, and maximize productivity with minimal coding effort.

Open-source programs are becoming more popular among custom software developers to optimize application development and reduce custom software development expenses. However, it introduces significant risks, including a risk to intellectual property (IP) from restrictive and reciprocal licenses and a security risk from components with vulnerabilities. Open-source development is more problematic for smaller companies that prefer to use it to save time and resources but lack the appropriate security measures to ensure the components they implement are safe. Thus, companies should never open source anything that is core to their business.

Market Concentration & Characteristics

The technology environment in the custom software development industry is rapidly evolving, and the adoption of low-code or no-code platforms is experiencing substantial growth within the custom software development industry. These platforms empower developers to create applications using drag-and-drop tools, eliminating the need for writing code. The adoption of low-code and no-code software development platforms is expected to increase in the upcoming years. For instance, in October 2023, Kissflow Inc., a SaaS-based company, predicted that low-code platforms help reduce application development time by 90%. By 2024, 80% of non-IT professionals are expected to develop IT products and services, with over 65% of the professionals using low-code/no-code tools.

In custom software development, the threat of substitutes can be termed as low, as the costs associated with developing custom software are high for businesses. Custom software development incurs higher costs than packaged software due to various factors. Some of them include proficient data management and robust security measures, tailored development aligned with the specific business models and processes, seamless integration of essential tools and cutting-edge technologies into a unified system, ongoing maintenance and support services for the developed custom software, and prompt resolution of significant issues while prioritizing the needs of core end users.

Artificial intelligence and machine learning are prominent technologies in the software development industry. Artificial intelligence is poised to significantly reduce delivery time, minimize programming errors, and mitigate security risks in development processes. Its pivotal role extends to supporting critical functions such as requirement gathering, generating code, automating code reviews, conducting testing, and assisting in software design. Furthermore, predictive analytics facilitated by AI empowers software development firms to provide more precise projections regarding project costs, timelines, and resource allocation, enhancing overall project management efficiency. Thus, due to these benefits, various industries are increasingly adopting AI-based custom software applications, driving market growth.

Type Insights

The enterprise software segment held the largest market share of 60% in 2023. Factors such as a centralized system for multiple departments improved scalability and integration, and higher security across many different software platforms are contributing to the segment's growth. Moreover, enterprise software automates the business workflow, enhances the efficiency of the daily business process, controls data entry errors, minimizes costs, ensures growth, and integrates the strategies of all business areas for large organizations. Enterprise software comprises plenty of features, and organizations customize it according to their requirement. This software allows tracking and improving supply chains, managing resources, and communicating with customers.

The web-based solutions segment is anticipated to grow at a CAGR of 21.1% during the forecast period due to the ease of remote access, availability of real-time information, and elimination of hardware costs. Moreover, easy data sharing and collaboration due to a centralized software server and adding a new user simply by setting up an access control system are also driving market growth. In addition, web-based software can help enterprisers facilitate more simultaneous processes.

Deployment Mode Insights

In terms of deployment, the cloud segment held the largest market share of 56.4% in 2023. This segment is primarily driven by factors such as ease of access, flexibility, and cost-effectiveness for small and medium-sized businesses. A cloud custom software service has no upfront cost to enterprises and provides a highly flexible environment for managing their business applications. In addition, cloud computing enables smartphones and other devices to access data from anywhere. The rising number of smartphone users and Bring Your Own Device (BYOD) usage also drive cloud software development growth.

The on-premise segment is anticipated to expand at a CAGR of 21.0% over the forecast period. On-premise software offers total ownership and control and is considered more reliable in companies; on-premise application development services are preferred as they provide a high level of data security through physical security controls and security protocols. Employees can access the data with on-premise solutions without an internet connection. Moreover, annual maintenance and one-time license fees are lower than recurring expenses associated with cloud software. The system can also be accessed by multiple users simultaneously without affecting performance.

Enterprise Size Insights

The large enterprises segment dominated the market, with the largest market share of 61.4% in 2023. Many large corporations rely on custom software for competitive advantage. Custom software development ensures the creation of solutions tailored to meet the specific requirements of enterprises. There is a growing need for custom software in various large enterprises as it allows particular criteria to be fulfilled at a lower cost than purchasing. In addition, custom solutions can easily be integrated with existing systems and can even be used to extend the functionalities of existing tools. Furthermore, custom software solutions developed from scratch are hard to infiltrate, and the software adds an extra layer of security by encrypting the data.

The SMEs segment is anticipated to grow at a CAGR of 24.1% during the forecast period. Several factors correlate with the growth prospects of this segment, including the growth of small and medium businesses, cost-effectiveness, and scalability. Extra features can be added to the existing system when the business grows. It offers integration of the latest technologies and enhances business operations for SMEs. Custom software solutions are an easy way for businesses to implement business workflow. Businesses are not required to adapt to the software; apparently, it is developed based on what they do. These solutions can streamline repetitive tasks and help boost collaboration within companies.

Industry Vertical Insights

The IT and telecom segment held the largest market share, 22%, in 2023. Custom software can incorporate all essential security apps and programs that comply with current trends and industry standards. IT solutions tailored to customer needs often provide more flexibility than traditional software. Custom software enables more efficient operations and lower maintenance and licensing costs. By using custom software, businesses can create clear and accessible reports. As a result, they can save time and concentrate on core tasks.

The government segment is anticipated to grow at a CAGR of 25.9% during the forecast period. Governments worldwide know the potential transformation technology can effectuate, translating into improved citizen services, operational efficiencies, and thriving economies. Custom software solutions tailored to the unique needs of government agencies are becoming indispensable tools for modernizing legacy systems, automating processes, and fostering transparency and accountability.

Regional Insights

North America custom software development market held the largest global revenue share of 32.55% in 2023. Various factors contribute to the region's growth, including the widespread use of advanced expertise, the surge in IT services, and the rise of SMEs. Moreover, with growing automation and digital transformation in the region, North America is becoming the preferred destination for custom software development services.

U.S. Custom Software Development Market Trends

The custom software development market in the U.S. is growing significantly at a CAGR of 18.5% from 2024 to 2030. The promising growth prospects of the U.S. market can be attributed to several leading custom software providers in the country, including Trigent Software, Inc. and Brainvire, which cater to consumers’ custom software development requirements.

Europe Custom Software Development Market Trends

The custom software development market in Europe is growing significantly at a CAGR of 23.0% from 2024 to 2030. The promising growth prospects of the European market can be attributed to the presence of various companies in the region that introduce advanced solutions to better cater to specific industries. In December 2023, Nokia Corporation announced that its 5G Standalone Core SaaS software was chosen by Telia Company (Finland) as part of an innovation program funded by the European Union (EU).

The UK custom software development market is growing significantly, at a CAGR of 20.2% from 2024 to 2030. This growth can be attributed to improving cybersecurity regulations, especially AI-related ones. These regulations are likely to encourage businesses to procure AI-integrated custom software solutions, thereby driving market growth in the country.

The custom software development market in Germany is growing significantly at a CAGR of 22.5% from 2024 to 2030. This growth can be attributed to increasing partnerships/collaborations aimed at creating sustainable product development and operations.

The French custom software development market is growing significantly, at a CAGR of 27.1% from 2024 to 2030. This growth can be attributed to increasing investments in cloud technology, which enables software solution providers to offer services as SaaS.

Asia Pacific Custom Software Development Trends

The custom software development market in Asia Pacific is growing significantly at a CAGR of 25.2% from 2024 to 2030 due to the advancement of technological implementation in enterprises. The emergence of SMEs, the growing market for custom software, and the need to modernize legacy software development systems are also driving the market growth. Large tech firms and an increasing number of custom software suppliers in advanced Asian economies such as Japan and South Korea contribute to market growth.

The China custom software development market is growing significantly, at a CAGR of 23.3% from 2024 to 2030. This growth can be attributed to the investments made by global companies in China to develop advanced software solutions specific to industries.

The custom software development market in Japan is growing significantly, at a CAGR of 24.2% from 2024 to 2030. This growth can be attributed to increasing investments in the cybersecurity sector.

The India custom software development market is growing significantly, at a CAGR of 28.5% from 2024 to 2030. This growth can be attributed to growing digitalization and rising investment in the country’s IT ecosystem.

Middle East & Africa Custom Software Development Trends

The custom software development market in the Middle East and Africa is growing significantly, at a CAGR of 21.3% from 2024 to 2030. The growth of the MEA market can be attributed to increasing partnerships aimed at improving the region's IT sector.

The Saudi Arabia custom software development market is growing significantly, at a CAGR of 20.7% from 2024 to 2030. This growth can be attributed to increasing investment in various initiatives aimed at ICT development in the country.

Key Custom Software Development Company Insights

Some of the key companies operating in the market include Tata Consultancy Services Limited, Capgemini, Tietoevry, and among others are some of the leading participants in the market.

• Tata Consultancy Services Limited is an IT services, consulting, and business solutions provider. The company has categorized its services under Cognitive Business Operations, Cloud, Consulting, Data and Analytics, Cybersecurity, Enterprise Solutions, Network Solutions and Services, IoT and Digital Engineering, TCS Interactive, and Sustainability Services. The company also specializes in custom software development services, including complete product and platform development, next-generation product engineering, product integration, and flexible engagement models for products and product lines.

• Capgemini is a consulting, technology services, and digital transformation company that helps businesses transform their business operations by leveraging cutting-edge technology. The company has been a trusted strategic partner to businesses worldwide for more than 50 years. With deep industry expertise and technology expertise across cloud, data, Artificial Intelligence (AI), software, and digital engineering, the company offers a wide range of services, including strategy formulation, custom software development, and application designing to help businesses address their diverse needs.

Magora, Iflexion, and TRooTech Business Solutions are some of the emerging market participants in the market.

• Magora specializes in developing custom applications and software and providing seamless integration services. The company’s collaborative approach prioritizes maximizing value and returns on investment for clients by providing comprehensive technology tools to enhance customer engagement and drive commerce. The company employs a team of specialists to develop mobile applications for Android and iOS and offer software and web development services. The company offers a wide range of services, including web development, mobile app development, custom software development, bespoke software development, outsourcing software development, startup MVP development, AI & Machine Learning (ML) integration, enterprise app development, product discovery, and IoT app development, among others.

• TRooTech Business Solutions is a custom software development company. The company specializes in developing performance-boosting and purpose-driven tools that can be seamlessly integrated into any business application. The company’s team of experienced custom software developers and consultants offers comprehensive guidance from strategic planning and software optimization to deployment. The company’s software development services include custom software development, custom mobile app development, custom web app development, cloud app development, customized SaaS development, and remaking legacy software. The company also offers other professional services, including technology portfolio consulting, enterprise architecture consulting, software modernization, and application consulting.

Recent Developments

• In January 2024, Brainvire Infotech Inc. announced a collaboration with Sing In Chinese to develop an interactive app for children with advanced features and modules, such as lessons, games, quizzes, karaoke, pet management, and subscription options. The app offers a user-friendly educational platform for children, thereby revolutionizing the learning landscape.

• In November 2023, Infopulse announced the release of PACE Suite 6.1, a user-friendly solution that streamlines the complete workflow of application packaging management. The new updates help reduce complex scripting challenges, enhance installation success, and provide a consistent deployment experience.

• In July 2023, Tietoevry announced the acquisition of MentorMate, a provider of digital engineering, consulting, and design services. The acquisition was aimed at accelerating Tietoevry’s software and digital engineering capabilities, along with increasing its customer base and digital talent in the market.

Custom Software Development Market Report Scope

Global Custom Software Development Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global custom software development market report based on type, deployment mode, enterprise size, industry vertical, and region.

• Type Outlook (Revenue, USD Billion, 2018 - 2030)

  • Web-based Solutions

  • Mobile App

  • Enterprise Software

• Deployment Mode Outlook (Revenue, USD Billion, 2018 - 2030)

  • Cloud

  • On-premise

• Enterprise Size Outlook (Revenue, USD Billion, 2018 - 2030)

  • Large Enterprises

  • SMEs

• Industry Vertical Outlook (Revenue, USD Billion, 2018 - 2030)

  • BFSI

  • Government

  • Healthcare

  • IT & Telecom

  • Manufacturing

  • Retail

  • Others

• Regional Outlook (Revenue, USD Billion, 2018 - 2030)

  • North America

    • U.S.

    • Canada

    • Mexico

  • Europe

    • Germany

    • UK

    • France

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

  • Middle East & Africa

    • UAE

    • Saudi Arabia

    • South Africa