The custom software development market is huge. While software development has been around since the 1960s, custom software development and particualrly website design and development came about with the rise of the internet and large enterprises. Large businesses want to optimize their processes by commissioning software tailored to their specific needs. The demand for custom software development has never been larger.
Learn the size of the custom software development market and its particular dynamics in the following article. In it, I will go over the market’s growth, characteristics, segmentation, and trends.
First, let’s define custom software. Custom software (aka bespoke software) is software developed for a specific company, organization, or group. In other words, custom software is intended for a single user. It is not sold commercially nor marketed for multiple customers.
Other software is intended for more wide-spread use. For example, commercial software (aka off-the-shelf software) is marketed and sold to many users and businesses. To appease a wide range of users, owners brand commercial software more generically. They can keep the cost lower because by spreading it among many customers.
Just like any custom job, custom software can get expensive. But in the long-run, custom software is the cheaper option because it tailors to a business’ specific needs. The tailored software can be developed from scratch or integrated into a company’s existing software. Either way, custom software is made with the company’s needs in mind.
As mentioned, the market for custom software development is huge. But it is set to keep growing over the next few years. The market size was valued at $388.98 billion for 2020 and is expected to grow to $650.13 billion by 2025 at a CAGR of 10.7%. The key companies profiled for these estimates include Microsoft, IBM, and SAP.
Another metric for the size of the custom software development market lies in the number of custom software developers around the world. In 2019, there were 26.4 million software developers in the world. This number is expected to grow as high as 45 million by 2030. Consider the estimates by year in the table below:
As you can see, the number of custom software developers only increases with time. This will remain true so long as enterprises grow to require more custom programming to be as efficient as possible. Over time, every business tries to optimize its operations, and custom software is the number one way to do this.
Having established the immense size of the custom software development market, let’s take a closer look at some of the market’s unique characteristics. Among other traits, software developer demographics can be analyzed by age, gender, and nationality:
Consider the time it takes to develop a custom software: Custom software development projects can take anywhere from 1 to 9 months. The average time to develop a software is 4.5 months.
As for cost, custom software development projects can cost anywhere from $3,000 to $120,000. The price will depend heavily on the size of the enterprise and the required complexity of the software.
Different coding languages require different skill sets. Consider the number of software developers in the world by programming language:
Other programming languages that are used less in custom software development include C/C++, Visual tools, Swift, Objective C, Ruby, Kotlin, and Lua.
Of course, the preferred programming language within custom software development fluctuates with time. But the main coding languages remain relatively constant. Knowing the number of software developers that code in the preferred custom software languages gives a better picture of the market.
Beyond its broad characteristics, the custom software development market can be segmented into different areas by software type, service, deployment, enterprise size, and end-use. These help break down the market into its smaller submarkets.
Custom software hosted in the cloud, aka Software as a Service (SaaS), has become increasingly popular due to its low start-up price. Instead of an initial one-time cost, custom cloud software usually has a monthly or annual subscription fee. Interestingly, the cost of either software type converges over time:
The above graph shows the total costs of ownership (TCO) for both on-premise and cloud-based software over the span of ten years. By year 9, cloud-hosted and on-premise software cost about the same. Which software is right for you will depend on your starting budget.
Again, custom software is a giant market. Any of the above submarkets will offer an array of opportunities for software developers and enterprises alike. The need for custom software is prevalent across many departments, industries, and enterprises.
With the size of the custom software development market in mind, consider some of the current trends in custom software development. Below I list just a few:
Blockchain or distributed ledger technology (DLT) is revolutionizing the financial sector. But its uses are not limited to finances. Many large corporations are researching ways to use blockchain in their businesses, including Facebook and Microsoft.
Artificial Intelligence (AI) is the number one trend in custom software development. When implemented, AI can automate processes which otherwise require more people. In the long-run, AI can lead to massive cost savings, which explains why it is trending in custom software development.
All of these exciting new trends in custom software development are worth looking into. See the graph below for some other trends in custom software development:
So why is custom software development such a large market, anyway? To answer this question, you must look at the benefits that custom software has to offer.
Custom software pays off in the long-run. While it is more expensive at first than commercial software, the long-term savings and efficiency that come with custom software make it cheaper over time. Eventually, the tailored functions outweigh the low start-up cost of commercial software. Off-the-shelf software is rarely exactly what a company needs. And even if it works, companies usually outgrow the software and must then adapt to a new one anyway.
Besides the cost savings over time, custom software allows for increased scalability, profitability, lower integration costs, and independence:
In the end, custom software comes with far more benefits if you can afford the higher start-up cost. Companies are realizing this and favoring custom software development as a result.
If you want to dive into the custom software development market, look no further. Dev.co can help you with all of your custom software & website development needs. From Blockchain (DLT) to Extended Reality (AR/VR), we will help your business save money in the long-run. So don’t hesitate to contact us today.
Ryan is the VP of Operations for DEV.co. He brings over a decade of experience in managing custom website and software development projects for clients small and large, managing internal and external teams on meeting and exceeding client expectations–delivering projects on-time and within budget requirements. Ryan is based in El Paso, Texas.