PUBLISHER: The Business Research Company | PRODUCT CODE: 1888454
PUBLISHER: The Business Research Company | PRODUCT CODE: 1888454
Software development services refer to the process of designing, creating, deploying, and maintaining software applications designed to meet specific business requirements. These services include activities such as coding, testing, integration, and continuous support to ensure dependable and efficient software performance. They assist organizations in enhancing functionality, automating operations, and improving overall efficiency through customized digital solutions.
The key types of software development services include custom software development, application development, web development, mobile app development, software maintenance and support, software testing and quality assurance, and DevOps services. Custom software development refers to the process of designing, creating, deploying, and maintaining software applications specifically developed to address unique business needs or operational requirements of an organization. The engagement models include dedicated team model, fixed price model, time and material model, and on-demand development model. The enterprise sizes include small and medium enterprises and large enterprises. The key end-user industries include banking, financial services, and insurance (BFSI), healthcare, retail, IT and telecommunications, manufacturing, and others.
Note that the outlook for this market is being affected by rapid changes in trade relations and tariffs globally. The report will be updated prior to delivery to reflect the latest status, including revised forecasts and quantified impact analysis. The report's Recommendations and Conclusions sections will be updated to give strategies for entities dealing with the fast-moving international environment.
The rapid escalation of U.S. tariffs and the resulting trade tensions in spring 2025 are significantly impacting the information technology sector, particularly in hardware manufacturing, data infrastructure, and software deployment. Higher duties on imported semiconductors, circuit boards, and networking equipment have raised production and operational costs for tech firms, cloud service providers, and data centers. Companies relying on globally sourced components for laptops, servers, and consumer electronics are facing longer lead times and increased pricing pressures. In parallel, tariffs on specialized software tools and retaliatory measures from key international markets have disrupted global IT supply chains and reduced overseas demand for U.S.-developed technologies. To navigate these challenges, the sector is accelerating investments in domestic chip fabrication, diversifying supplier bases, and adopting AI-driven automation to enhance operational resilience and cost efficiency.
The software development services market research report is one of a series of new reports from The Business Research Company that provides software development services market statistics, including the software development services industry global market size, regional shares, competitors with the software development services market share, detailed software development services market segments, market trends, and opportunities, and any further data you may need to thrive in the software development services industry. This software development services market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.
The software development services market size has grown rapidly in recent years. It will grow from $443.90 billion in 2024 to $497.16 billion in 2025 at a compound annual growth rate (CAGR) of 12.0%. The growth in the historic period can be attributed to the rising adoption of enterprise software, increasing investment in IT infrastructure, growing digital transformation initiatives, expanding outsourcing of IT services, and rising demand for custom software solutions.
The software development services market size is expected to see rapid growth in the next few years. It will grow to $772.47 billion in 2029 at a compound annual growth rate (CAGR) of 11.6%. The growth in the forecast period can be attributed to growing demand for cloud-based development, increasing adoption of AI and machine learning in software projects, rising need for cybersecurity solutions, expanding use of DevOps and agile methodologies, and increasing investment in automation tools. Key trends in the forecast period include advancements in AI-driven development, innovations in low-code and no-code platforms, research and development in quantum computing applications, developments in cloud-native software architectures, and technological advancements in edge computing systems.
The rising adoption of business automation is expected to drive the growth of the software development services market in the coming years. Business automation involves the use of technology and software tools to streamline routine operations, enhance efficiency, and improve decision-making within organizations. It allows companies to concentrate on strategic and high-impact activities while minimizing manual work and errors. The increasing adoption of business automation is fueled by the growing demand for efficiency, cost optimization, higher employee productivity, and faster decision-making across industries. Advancements in artificial intelligence, machine learning, and cloud-based platforms are further accelerating the shift toward automation. Software development services facilitate this transformation by offering custom applications, automation platforms, integration services, and digital solutions that help organizations implement and scale automated processes across departments such as finance, human resources, sales, and marketing. For example, in March 2025, according to the Office for National Statistics, a UK-based government department, in 2023, 9% of firms adopted artificial intelligence while 69% adopted cloud computing. Therefore, the increasing adoption of business automation is contributing to the expansion of the software development services market.
Key companies operating in the software development services market are emphasizing the integration of artificial intelligence into their development workflows through AI-powered integrated development environments (IDEs) that support advanced AI-driven coding, testing, and modernization. AI-powered IDEs are software development platforms that incorporate large language models and other AI tools to assist developers in writing, refactoring, and securing code throughout the software development lifecycle. For instance, in October 2025, IBM, a US-based multinational technology company, introduced Project Bob, an AI-first integrated development environment in a private tech preview phase. This next-generation IDE supports enterprise developers with AI-driven code generation, multi-step refactoring, application modernization, and enhanced security compliance. It integrates multiple large language models such as Anthropic Claude, Mistral AI, Llama, and IBM's Granite within a unified development workflow. With real-time context awareness and built-in security automation, Project Bob simplifies complex development tasks and provides enterprises with a scalable, intelligent, and productivity-enhancing solution for modern software development.
In May 2025, Improving, a US-based digital service company, acquired DragonSpears for an undisclosed amount. Through this acquisition, Improving aims to strengthen its software development services by expanding its expertise in cloud adoption, agile coaching, and DevOps solutions. DragonSpears is a US-based software development company that delivers custom software development services with a strong focus on cloud adoption, agile coaching, DevOps, and data management.
Major players in the software development services market are Accenture plc, International Business Machines Corporation, Oracle Corporation, SAP SE, Tata Consultancy Services Limited, Fujitsu Limited, Capgemini SE, Cognizant Technology Solutions Corporation, Infosys Limited, DXC Technology Company, HCL Technologies Limited, Atos SE, Wipro Limited, Tech Mahindra Limited, EPAM Systems Inc., Globant S.A., Endava plc, Medidata Solutions Inc., Improving Holdings LLC, and Saksoft Limited.
North America was the largest region in the software development services market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in software development services report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East and Africa.
The countries covered in the software development services market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.
The software development services market includes revenues earned by entities through maintenance and support, software modernization, project management, and quality assurance. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.
The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).
The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.
Software Development Services Global Market Report 2025 from The Business Research Company provides strategists, marketers and senior management with the critical information they need to assess the market.
This report focuses on software development services market which is experiencing strong growth. The report gives a guide to the trends which will be shaping the market over the next ten years and beyond.
Where is the largest and fastest growing market for software development services ? How does the market relate to the overall economy, demography and other similar markets? What forces will shape the market going forward, including technological disruption, regulatory shifts, and changing consumer preferences? The software development services market global report from the Business Research Company answers all these questions and many more.
The report covers market characteristics, size and growth, segmentation, regional and country breakdowns, competitive landscape, market shares, trends and strategies for this market. It traces the market's historic and forecast market growth by geography.
The forecasts are made after considering the major factors currently impacting the market. These include the technological advancements such as AI and automation, Russia-Ukraine war, trade tariffs (government-imposed import/export duties), elevated inflation and interest rates.