Custom Software Development Market Size, Share, & Trends Analysis Report By Deployment (Cloud, On-premise), By End-use (BFSI, Government), By Enterprise Size (SMEs, Large), By Solution, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global custom software development market size was valued at USD 29.29 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 22.4% from 2023 to 2030. Custom software development is the process of designing a software application that meets 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 and the emergence of a variety of technologies such as AI-driven Chatbots, robotics automation is helping boost the growth of the market. Furthermore, the COVID-19 pandemic accelerated the adoption of technology enabling remote work among enterprises and cost reduction, leading to the implementation of custom software for easy scalability.

The use of analytical tools in custom software development, such as business intelligence (BI), machine learning, and artificial intelligence, allows for cross-departmental communication, identifying market trends, and automating processes. Furthermore, embedding analytics into a company's custom software allows the company to better understand its customers 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, was able to transform 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 developing custom software. In addition, cloud-based software development releases new, high-quality software more quickly and efficiently. Custom software developers are currently collaborating with cloud infrastructure providers to enable companies to accelerate their development processes 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 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 build sites customizable for multiple devices from a single platform. For instance, in December 2022, Genesis Global, a low-code application development platform provider, announced enhancements in platform for software developers. The platform enhancement would help software developers build user interfaces, manage enterprise applications, and integrate data faster and easier. Developers can develop robust applications using the Genesis platform in record time, speeding up the delivery of innovative software to power risk management, compliance, trade, and other financial functions.

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 its business.

Solutions Insights

The enterprise software accounted for the largest revenue share of over 60.5% in 2022. 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 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 communication with customers.

Web-based solutions are expected to register substantial growth over 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 the market growth. Additionally, web-based software can help enterprisers facilitate more simultaneous processes.

Deployment Insights

The cloud deployment segment accounted for the largest revenue share of over 55% in 2022. 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 enterprisers and, provides a highly flexible environment for managing their business applications. Additionally, 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 are also driving cloud software development growth.

The on-premise segment is expected to register significant growth over the forecast period. The on-premise software offers total ownership and control, and is deemed to be 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, the cost of 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 accounted for the largest market share of over 54% in 2022. 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.  Additionally, 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 add an extra layer of security by encrypting the data.

The SMEs segment is anticipated to grow significantly 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 don't need 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.

End-use Insights

The IT & telecom segment accounted for the considerable market share of over 21% in 2022. 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 their traditional software. Custom software enables more efficient operations, streamlined updates and reports, and lower maintenance and licensing costs. By using custom software, businesses can create clear and accessible reports. As a result, they are able to save time and concentrate on core tasks.

In the BFSI industry, organizations leverage custom banking and finance software applications to deliver an authentic user experience. Furthermore, it is imperative to take advantage of new technology possibilities to generate real value for their customers. Billing, card insertion, and biometric scanning are made more accessible. Furthermore, the development of custom software assures the security requirements are adjusted to the company's needs and provides proper protection for customer data. Custom software enables customers to make real-time payments or transactions and encounters a bug instantly.

Regional Insights

North America dominated the custom software development market in 2022 with a revenue share of over 37%. There are a variety of factors that 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 to provide custom software development services. The development of custom software is becoming more popular in this region due to an increasing number of high-skilled developers working in minimum time.

The Asia Pacific region is expected to grow significantly over the forecast period due to the advancement of technological implementation in the enterprises. Additionally, the emergence of SMEs, the growing market for custom software, and the need to modernize legacy software development system 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 are contributing to the market growth. In addition, government of various developing countries such as, India, China are working with local tech companies to advance goals in fields such as cloud-based systems and artificial intelligence.

Key Companies & Market Share Insights

There is a collaboration between companies to develop custom software or to improve existing software. This can enable companies to meet time-to-market requirements. Additionally, collaborating with the software developers of other companies can provide insight into the expertise of each on a particular project. Moreover, custom software implementing a variety of technological toolsto improve efficiency, including cloud software, artificial intelligence, and machine learning. Artificial Intelligence-enabled custom software can help users predict future disease risk through predictive analysis. For instance, in August 2023, Butterfly Network, Inc., a digital health company, announced the launch of software development kit (SDK) for third party users. The kit is available for AI software developers, telemedicine companies, and medical devices companies for building ultrasound into their platforms and virtual care workflows.

The e-commerce sector is growing at a rapid pace, but capturing the attention of customers is difficult in a hypercompetitive environment. E-commerce companies invest in custom solutions to meet the increasing demands of their customers and ensure a flawless customer experience. For instance, in April 2023, eGrove Systems, a custom software developer, launched Elite mCommerce (EMC) version 4.0. Through the new version businesses can access a multi-vendor marketplace website and mobile app with EMC. The EMC app is suited for a various industry, including, retail stores, grocery stores, grocery delivery services, and food delivery services. Some of the prominent player in the global custom software development market include:

• Brainvire Infotech Inc.

• Capgemini

• Iflexion

• Infopulse

• Infosys Ltd.

• Magora

• MentorMate, Inc.

• Tata Consultancy Services Limited

• Trigent Software, Inc.

• TRooTech Business Solutions

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 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 solution, deployment, enterprise size, end-use, and region:

• Solution Outlook (Revenue, USD Million; 2018 - 2030)

  • Web-based Solutions

  • Mobile App

  • Enterprise Software

• Deployment Outlook (Revenue, USD Million; 2018 - 2030)

  • Cloud

  • On-premise

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

  • Large Enterprises

  • Small & Medium Enterprises (SMEs)

• End-use Outlook (Revenue, USD Million; 2018 - 2030)

  • BFSI

  • Government

  • Healthcare

  • IT & Telecom

  • Manufacturing

  • Retail

  • Others

• Regional Outlook (Revenue, USD Million; 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • France

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Australia

  • Latin America

    • Brazil

    • Mexico

  • MEA

    • United Arab Emirates (UAE)

    • Saudi Arabia

    • South Africa