Connect with us


Custom software development services market size 2020

Evidence from market data shows that the custom software development services market is still thriving despite the impact of Covid-19 in many industries

development coding
Image: StackSocial

The prevalence of the Covid-19 pandemic has affected businesses across industries globally. With scaled-down operations, many businesses experienced reduced revenues and profits. However, some industries remained relatively strong and resilient through these times. The custom software development services market is one such industry.

It is estimated that the custom development service market size can grow to upwards of $26.74 billion. This follows years of meteoric growth in the industry.

The industry size 

The custom software development service market remains largely fragmented. In the past, only a few players were offering specialized services to clients. However, there has been an increase in the number of companies offering custom software development services. Consequently, the industry has seen a marked increase in strategic collaborations for increased dominance and strategic leverage in the market.

Notably, the collaboration and expansion of the market base are now multi-continental. While the Asia-Pacific region remains the largest and most preferred offshore destination for custom software development, Eastern Europe and North America are also seeing an increase in the number of custom software development companies setting up. Eastern Europe, Africa, South America, and Australia are also experiencing growth, although the growth rate is slower than the Asia-Pacific and North American regions. 

Increased adoption of cloud-based services 

For a while now, the popularity and preference of cloud-based services have been on the rise in the custom software development industry. This is attributable to the fact that cloud services offer more advantages than on-premise deployment, including increased flexibility, ease of access, scalability, and advanced security features.

Even with increased adoption and preference of cloud-based services, the on-premise deployment will not be phased out, at least not in the near future. On-premise custom applications are suitable for businesses and brands that need more ownership and control over their software and hardware. Large enterprises handling large volumes of client data often prefer on-premise deployment to complete control over data security, access, and controls. 

The hybrid model that adopts both on-premise deployment and cloud deployment is also increasing in popularity in 2020. They allow clients to leverage the benefits of cloud-based services while maintaining the controls that come with an on-premise deployment.

Overall, the increase in demand for cloud-based services by small and medium-sized enterprises continues to influence the custom software development services market dynamics in 2020. The increased demand translates to an increased number of vendors offering the services. As a result, the market is expected to experience significant growth over the coming years.

Key market drivers and restraints

Increased demand for custom software development services is largely attributable to the increased need for businesses to utilize tailor-made software that addresses their unique demands. In the past, there was little need for specially designed software. Software solutions would serve across various business departments and segments. However, an increase in stiff competition and a rise in demands of excellence, speed, and accuracy have rendered this software inadequate. As a result, custom software development is used to cater to specific demands and needs for businesses.

The key trends in this service market include the continued necessity of integrating AI-powered Chatbots, an increase in the application of open-source solutions, and increased demand for Platform as a Service solution. Chatbots remain the fastest-growing tools demand-wise. In today’s world, where clients have multiple alternatives and are looking for convenience and speedy service delivery, AI-powered Chatbots have become the solution business needs. They allow brands to give customized responses to clients fast, thus increasing conversion rates. With such power, Chatbot development is expected to be one of the leading drivers of growth in the custom software development services market in the years to come. 

Another great demand fueling custom software development services continued growth is the increased need for open-source software (OOS). This software allows for collaborative development and provides a pathway for bringing together diverse perspectives for continued learning.

Other key trends in the industry include:

  • Focus on customer experience-driven solutions; and
  • Increased demands for new technologies – Artificial Intelligence (AI), Machine Learning, and blockchain technology.

Software outsourcing services 

With outsourcing becoming a norm in today’s market, it would be a great injustice to ignore the contribution of this market trend to the growth of the custom software development service market. Today, businesses from small startups to large enterprises opt for outsourcing software development to satisfy their software development needs.

Outsourcing is largely preferred due to easier access to top talent and the latest technologies, all at a lower price. Furthermore, for most companies, outsourcing provides a shorter avenue for achieving digital transformation by leveraging the latest disruptive technologies in developing their products.


Evidence from market data shows that the custom software development services market is still thriving despite the impact of Covid-19 on many industries. It is estimated that the industry will grow at a year-over-year rate of 6.76% through 2024. The growth will be mainly experienced in the rapidly expanding North American market. Nonetheless, the future looks more promising for players in this market, and it is expected the more players will join. 

Have any thoughts on this? Let us know down below in the comments or carry the discussion over to our Twitter or Facebook.

Editors’ Recommendations:

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

More in Development