“Global Custom Software Development Market to reach a market value of USD 184.63 Billion by 2031 growing at a CAGR of 22.0%”
The Global Custom Software Development Market size is expected to reach $184.63 billion by 2031, rising at a market growth of 22.0% CAGR during the forecast period.
Custom software is being used by financial institutions more and more to manage client data securely, expedite key banking activities, and guarantee compliance with laws like PCI-DSS and GDPR. Thus, the BFSI segment recorded 11% revenue share in the market in 2023. The demand for customized solutions that are specifically designed for financial transactions and risk management is being further exacerbated by the proliferation of digital banking, mobile payments, and online insurance services. As the BFSI industry evolves, the demand for robust, secure, and scalable custom software continues to grow.
The major strategies followed by the market participants are Partnerships, as the key developmental strategy to keep pace with the changing demands of end users. For instance, In November, 2022, Tata Consultancy Services extended its partnership with Randstad, a world-leading HR services company, to modernize the latter's application estate on the cloud, upgrade its growth and transformation journey, and strengthen its security posture. This partnership would strengthen the TCS capabilities in the security portfolio. TCS would enhance Randstad's security posture with onboarding and rolling out global security services. Additionally, In October, 2022, Capgemini came into collaboration with Panasonic Automotive Systems Company of America, a company that develops, produces, and sells automotive products and technologies. This would also allow the latter company to use Capgemini skills in automotive connectivity and data migration, to complete the project. This collaboration expresses the ability of Capgemini's understand the clients' goals and make them a reality.
Based on the Analysis presented in the KBV Cardinal matrix; Microsoft Corporation is the forerunner in the Custom Software Development Market. Companies such as IBM Corporation, Accenture PLC, Tata Consultancy Services Ltd. are some of the key innovators in Custom Software Development Market. In May, 2024, IBM Corporation partnered with Salesforce, a U.S.-based cloud software company, to integrate IBM watsonx AI and Data Platform with the Salesforce Einstein 1 Platform. This partnership aims to enhance AI-driven CRM solutions by enabling bidirectional data integration, flexibility in large language models, and prebuilt AI-powered actions. The partnership seeks to improve customer engagement, data accessibility, and AI-driven automation, helping enterprises streamline workflows and make more data-driven decisions.
Digital transformation has become a cornerstone of strategic growth across various industries, driven by the need to stay agile, customer-centric, and competitive in an increasingly connected world. Organizations rapidly adopt custom software solutions to modernize legacy systems, integrate emerging technologies, and meet sector-specific challenges. In conclusion, the demand for custom software solutions surges as industries accelerate their digital transformation journeys.
Additionally, one of the main advantages of cloud computing is scalability. Custom software hosted on the cloud can easily adjust to fluctuations in user demand, allowing businesses to scale resources up or down as needed. This elasticity improves performance and ensures cost-efficiency by minimizing idle resource consumption. As a result, cloud adoption is increasingly seen as a strategic move for organizations aiming to modernize operations through customized, high-performance software solutions.
Developing custom software involves a detailed and resource-intensive process—from initial planning and requirement gathering to coding, testing, and deployment. Unlike off-the-shelf software pre-built for general use and mass distribution, custom solutions are tailored to meet specific business needs. This customization demands time, effort, and specialized technical expertise, all contributing to a higher development cost. Consequently, the high development and maintenance costs remain a persistent obstacle, limiting the broader adoption of custom software across industries.
The leading players in the market are competing with diverse innovative offerings to remain competitive in the market. The above illustration shows the percentage of revenue shared by some of the leading companies in the market. The leading players of the market are adopting various strategies in order to cater demand coming from the different industries. The key developmental strategies in the market are Partnerships & Collaborations.
Free Valuable Insights: Global Custom Software Development Market size to reach USD 184.63 Billion by 2031
Based on type, the market is classified into web-based solutions, mobile app, and enterprise software. The web-based solutions segment procured 31% revenue share in the market in 2023. As businesses embrace remote work and digital interactions, web-based applications have become essential for ensuring seamless communication, collaboration, and customer engagement. The rise of cloud computing has also made it more feasible for organizations to deploy scalable and easily upgradable web-based software.
On the basis of deployment mode, the market is bifurcated into cloud-based and on-premises. The on-premises segment recorded 44% revenue share in the market in 2023. Healthcare, finance, and government organizations prefer on-premises custom software to maintain data integrity and comply with stringent regulatory requirements. The appeal of hosting data within the organization's infrastructure and the perceived security advantages make on-premises solutions a preferred choice for businesses with critical data protection needs.
By enterprise size, the market is divided into large enterprises and small & medium-sized enterprises. The small & medium-sized enterprises segment garnered 42% revenue share in the market in 2023. Small & medium-sized enterprises (SMEs) often face challenges related to limited resources and budget constraints; hence, they seek cost-effective yet flexible solutions that can be tailored to specific business needs.
Based on end user, the market is segmented into BFSI, government, healthcare, IT & telecom, manufacturing, retail, and others. The IT & telecom segment procured 30% revenue share in the market in 2023. As telecom companies upgrade to 5G and expand network capabilities, they require bespoke software to optimize performance, manage customer data, and enhance service delivery.
The custom software development market is highly competitive, driven by increasing demand for tailored digital solutions across industries. Competition arises from global IT firms, regional players, and specialized development agencies offering bespoke applications, enterprise solutions, and AI-driven innovations. Market differentiation relies on expertise in emerging technologies, cost-effectiveness, and agile development methodologies. Open-source tools, cloud platforms, and low-code solutions further intensify competition. Customer expectations for rapid deployment, scalability, and security also push companies to innovate and refine their offerings.
Region-wise, the market is analyzed across North America, Europe, Asia Pacific, and LAMEA. The Asia Pacific segment garnered 28% revenue share in the market in 2023. Countries like China, India, and Japan are at the forefront due to their large tech-savvy population and growing number of SMEs. The rising adoption of mobile applications and cloud-based solutions, driven by digital-first business strategies, has significantly increased the demand for custom software.
| Report Attribute | Details |
|---|---|
| Market size value in 2023 | USD 38.04 Billion |
| Market size forecast in 2031 | USD 184.63 Billion |
| Base Year | 2023 |
| Historical Period | 2020 to 2022 |
| Forecast Period | 2024 to 2031 |
| Revenue Growth Rate | CAGR of 22.0% from 2024 to 2031 |
| Number of Pages | 338 |
| Number of Tables | 464 |
| Report coverage | Market Trends, Revenue Estimation and Forecast, Segmentation Analysis, Regional and Country Breakdown, Competitive Landscape, Porter’s 5 Forces Analysis, Company Profiling, Companies Strategic Developments, SWOT Analysis, Winning Imperatives |
| Segments covered | Deployment Mode, Enterprise Size, Type, End User, Region |
| Country scope |
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| Companies Included | Tata Consultancy Services Ltd., Infosys Limited, Capgemini SE, Accenture PLC, Magora Systems, Microsoft Corporation, MentorMate, Inc. (Taylor Corporation), IBM Corporation, Cognizant Technology Solutions Corporation and Brainvire Infotech, Inc. |
By Deployment Mode
By Enterprise Size
By Type
By End User
By Geography
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