Last Updated: 22 Jul 2025
Source: Statifacts
Software Market (By Offering: AI-based Software Platforms, ADAS and Autonomy Software, Fleet Management Software; By Type: Application Software, System Infrastructure Software, Development and Deployment Software, Productivity Software; By Deployment: On-premises, Cloud; By Enterprise Size; By Vertical; By Region: North America, Europe, Asia Pacific, Latin America, Middle East & Africa) Industry Size, Share, Growth, Trends 2025 to 2034.
The software market size accounted for USD 2.93 billion in 2024 and is anticipated to be worth USD 34.87 billion by 2034, registering a CAGR of 28.10% from 2025 to 2034. The global software market has entered into a period of sharp growth, prompted by a global tilt towards the adoption of cloud, automation, and AI technologies. The European region is moving towards becoming the fastest-growing market, with an expanding group of technology start-ups across the region, and global digital transformation programs that are seeking to open doors for these start-ups.
| Industry Worth | Details |
| Market Size in 2025 | USD 3.75 Billion |
| Market Size by 2034 | USD 34.87 Billion |
| Market Growth Rate from 2025 to 2034 | CAGR of 28.10% |
The software market comprises many different types of products and services, including enterprise software (ERP, CRM), application development tools, operating systems, cybersecurity, and cloud-based platforms. Software is in every industry, including banking, healthcare, retail, automotive, logistics, and education. Software has become the lifeblood of business due to the increase in digital services, because it improves business processes, automates processes, and improves the quality of information for effective decision-making. Healthcare uses software for diagnostics and patient control; finance uses algorithmic trading software to detect fraud, deliver a better customer experience, and make money. The growth of e-commerce and increased demand for remote working have significantly increased the demand for SaaS platforms. An important growth area, due to the speed and agility of applications enabled by edge computing and 5G, is a countless number of new application types.
Artificial intelligence is transforming how software companies conduct business by automating tasks, enhancing analysis, and facilitating intelligence-based decision making. AI-enabled DevOps tools such as GitHub Copilot and Tabnine are workflow enhancements that provide an excellent level of value and reduce the time span of development efforts. AI will further enhance components of predictive analytics in business applications and business intelligence applications that will allow businesses operating in the logistics and financial sectors to detect patterns and anomalies in real-time. As per reports by Exploding Topics, as of 2025, 97 million people will work in the AI space to enhance the market. It is also estimated that 48% of businesses use some form of AI tool to utilize big data effectively.
The market trends in the software market are shaped by growing demand for industry-specific software solutions and the expansion of cloud computing and SaaS models.
Growing demand for software solutions
A prominent trend in the software market is the increasing demand for industry-specific solutions focused on vertical needs. Healthcare, for instance, has increased demand for EHR (Electronic Health Record) software that integrates diagnostic tools and telemedicine capabilities. Manufacturing has increased demand for MES (Manufacturing Execution Systems) to ensure improved productivity on the shop floor and to support manufacturers adopting industry 4.0 post-COVID. Retail and logistics have also extremely high demand for software tools related to inventory management, customer analytics, and route optimization.
The trend toward more vertically focused application development is certainly supported by the ability of software to be modular and scalable, which serves both small businesses and enterprises. As the regulatory burden becomes more substantial and complex across industries such as healthcare, finance, manufacturing, etc., the need for industry-specific compliance-based software solutions is becoming imperative, and the trend has now extended to software vendors that include industry-specific modules within ERP suites.
Expansion of cloud computing and SaaS models
The expansion of cloud-based software as a service economy (SaaS), driven by rapid cloud computing adoption, is evidently increasing. Although businesses were evolving from on-premises to cloud software well before the pandemic, the pandemic mandated operating in the cloud for optimal scale, lower cost of infrastructure, and available use. Most of the daily operations have now transitioned to platform-based systems with recurring services such as Salesforce, Microsoft 365, or Zoom, and are completely essential to operations in the present-day business environment. One of the main advantages of the SaaS offering model of software is the speed of deployment, automatic updates, and data security.
As long as enterprise capabilities keep growing, the SaaS cloud-based model reduces the requirements for small to medium-sized enterprises to maintain their own IT infrastructure, and provides direct access to business technology capabilities which was previously reserved for large enterprises. Even large enterprises that previously refused to rely on cloud platforms have begun to leverage their hybrid-cloud and multi-cloud environments for expanding on their own terms.
Restraints in the software market include talent shortage in advanced software development and rising cybersecurity threats, and regulatory barriers.
The software industry is facing a global skill shortage, particularly in emerging areas of skills in AI, cybersecurity, and full-stack development. The rapid pace of change in technology has outstripped educational institutions and training programs' ability to keep up, and as a result, the gap in talent is widening. By now, firms have been falling behind schedule on the delivery of some projects due to the struggle to attract or retain qualified developers in the market. This scenario is serious for most organizations and critical for start-ups and small to medium enterprises (SMEs) as they struggle for the skills of developers, where the budgets don't quite match the needs of the higher-end tech companies. Additionally, hiring across international borders is more difficult because of the considerations for compliance and regulations. This becomes a bigger problem in developing economies in most cases, where the need for digital transformation is growing faster than ever, but the workforce is unable to keep pace. If businesses in the software space can't access skilled workers, there is no ability to capture the value in new opportunities available in the market.
The rising number of cyberattacks is wreaking havoc on the growth of the software market. Not only has the growth in the amount of data stored in the cloud increased the number of malicious actors, but interconnectivity has increased the attack surface astronomically. Software companies are constantly being forced to update their security protocols, which limits their ability to innovate while also adding expense. To compound the situation, in addition to the data protection regulations, the software companies have to also comply with acts such as GDPR in Europe and India's DPDP Act; the number of compliance requirements adds yet another layer on an international scale, which impacts ideation and strategic relationships with companies supporting software and overlapping compliance. The costs associated with a breach, potential liabilities, and reputational damage prevent smaller players from entering vulnerable segments of software for fear of expensive consequences.
The next area of considerable growth opportunity is in new software that integrates with new technologies, such as quantum, digital twins, 5G, and the metaverse. These technologies, as they become well-known, will require additional software of different types to model, manage, and optimize their complexities as architectures. The digital twin software is new to development and is growing rapidly in the automotive and manufacturing industries to do virtual prototyping and simulations, and to conduct testing for manufacturing processes. There are also commercial 5G networks coming, which also help in building software applications for ultra-low latency applications, such as connected vehicles (autonomous driving) or smart city infrastructure. Additionally, the metaverse will create high demand for software such as 3D models, VR interfaces, and collaboration platforms in the virtual environment. The combination of AI and IoT in industrial environments is also creating new software demand at the edge.
“As enterprises and the broader developer community increasingly contend with evolving security threats, the demand for more secure and transparent software packages has intensified. Bitnami Secure Images provides hardened images with a reduced attack surface, benefitting both the industry and individual users. Bitnami is helping enable a stronger industry posture for secure application development.”
“Whenever I’d give him a hard time about it, he’d tell me he just kept forgetting to call his salon during the day. “This was back in 2015, when you could book pretty much everything else online, so it didn’t make sense to us that you couldn’t book a haircut online.” “We came to learn that most of them did, in fact, have online booking systems that they were paying for, but they were so ill-suited to the very specific needs of their businesses that they just wouldn’t use them,” “The more we learned, the more we realized we were onto something, and by 2016, Boulevard was officially born.” “We feel as though there are countless revenue-optimizing use cases for AI within these self-care businesses.”
The ADAS and autonomy software segment dominated and is expected to sustain the position with the fastest rate of growth due to rapid innovation in the automotive industry and increased investment in autonomous vehicle development. These systems increase driver safety and are increasingly becoming mandatory in new cars. Automakers have included Level 2+ autonomy software in cars with lane-keeping, adaptive cruise control, and automatic emergency braking. As the number of EVs increases, so will the adoption of AV technologies.
The AI-based software platforms segment is anticipated to show a notable rate of growth due to the transformative capabilities of AI technology that extend to the ways in which organizations behave and operate in many industries, including financial services, healthcare, logistics, and many more. AI platforms provide a range of functional capabilities to organizations, including predictive analytics, automation, and cognitive decision-making capabilities. Furthermore, increased digitization of industries is driving demand for machine learning models, natural language processing tools, and generative AI systems, in addition to enterprise adoption of AI platforms (e.g., Azure AI, Google Vertex AI, OpenAI API), which is also increasing at pace.
The application component dominated the software market because it is the implementation of the user component in multiple industries, which includes ERP systems, CRM, content management, and applications for specific industries. These applications manage business operations, engage customers, and improve analytics. All enterprises across healthcare, finance, and retail have been relying more and more on customized applications to help them navigate complex business requirements and follow industry compliance. Further to this is the growth of mobile applications and web applications, which continue to support the dominance of the application segment.
The development and deployment of software segments is anticipated to grow at a considerable rate as application delivery becomes increasingly rapid and agile in nature, with the utilization of these tools. Initially, the arrival of DevOps, CI/CD, and low-code/no-code tools began to reduce time-to-market for SaaS and cloud-native markets. The additional value adds for tools that support modular architecture, similar to containerization, as well as automated testing, come into focus. Furthermore, the growth of global distributed teams and a shift in workplace patterns due to collaborative remote work have the same effect on the uptake of cloud-native development environments.
The on-premises segment registered its dominance over the market in 2024 because of the consideration of the on-premises presence of software in many regulated industries. Many industries, such as governments, banks, and defense, require complete control for data security and privacy, as well as the infrastructure. This is why customers want to deploy on-premises, as they want the ability to keep their legacy systems and have stability. We shall still see cloud growth, but many large organizations keep investing in hybrid environments that will definitely be on-premises workloads.
The cloud segment is anticipated to grow at the fastest CAGR over the forecast period due to scalability, efficiency, and mobility features of cloud-based software deployment. The emergence of remote-work models and digital transformation has compelled organizations to switch over from on-premises software solutions and resort to cloud-native solutions in order to conduct business as usual with operational agility. This is why a majority of companies operate under hybrid and multi-cloud strategies to avoid getting trapped with any given vendor. Additionally, cloud deployment enables automatic updates and integration with AI and analytics solutions.
The large enterprises segment enjoyed a prominent position in the market during 2024. This is all due to large enterprises having wide-ranging infrastructure and huge budget margins as compared to startups. Software vendors used this opportunity to sell more complex software solutions at higher costs. Enterprise software for ERP, cybersecurity, HRM, and business intelligence that requires customization and scalability for global operations. Organizations require enterprise-grade applications like ERPs that work according to industry standards. Large companies are also more likely to invest in artificial intelligence, robotics, process automation, and advanced analytics platforms. Businesses have compulsory demands for intradepartmental, cross-border, and regulatory integration that cannot be reconciled with fragmented software ecosystems.
The small and medium enterprises segment is set to experience the fastest rate of market growth from 2025 to 2034 as more organizations adopt operations digitally and migrate to the cloud. The availability of cloud and affordability of low-priced, Software as a Service (SaaS) platforms combined with pay-as-you-go models now create an opportunity for SMEs to utilize tools for customer relation management (CRM) software, inventory management, human resource (HR), and digital marketing without the high capital costs. SMEs are also exploring AI-based software for customer sentiment analysis and process automation. Government-induced digital drives and improved internet infrastructure are also enabling this shift in emerging economies. According to a Salesforce report, 53% of the SME sales globally are anticipated to be using artificial intelligence by the end of 2024.
The IT & telecom segment captured a significant portion of the market in 2024 because of its emphasis in the areas of digital transformation, infrastructure, and international communications networks. The demand for high-performance software has established a base in many areas, as shown in the need for software use in network management, cybersecurity, customer service, service desk, and operational automation. The rollout of 5G, edge computing, and AI-enabled network optimization has resulted in increased demand for deep telecom software. The services segment of IT has been a strong focus for investment in tooling and platforms to support clients within every vertical.
The retail segment is predicted to witness significant growth in the market over the forecasted period as the digitization of customer experiences and supply chain management moves forward. Retailers in particular are investing in e-commerce sites, point of sale hardware and software, customer analytics, omnichannel management software, and investing in order to remain competent. The introduction of generative AI applications for personalization, inventory forecasting, and demand planning opens the floodgates for software usage in this arena. Mobile commerce and integration to methods of payments and mobile commerce will also facilitate further software innovations.
North America
North America held the dominant share of the global software market primarily due to the maturity of the digital infrastructure, a significant level of enterprise technology investment, and the early adoption of AI, automation, and cloud computing tools. There are still significant tech giants alongside established organizations based in the U.S., which is home to well-known tech organizations such as Microsoft, Alphabet, and Apple, who each innovate and invest at a level where their collective growth pushes growth to the region. North America has a very mature ecosystem for SaaS, there is a large available pool of VC funding, and there is clarity in regulation and legislation around technology and data privacy that benefits organizations selling them SaaS. Similarly, mobile and broadband internet have some of the highest penetration rates in the world of any region, meaning that significantly more consumers gain access to compatible, consumer-facing tools and applications than anywhere else in the world, which means the adoption of these types of applications is much faster in North America than in most other locations.
Europe
Europe is expected to grow with the highest CAGR in the forecasted period as a result of growing investments in AI, cybersecurity, and government-funded digital transformation. Some of the largest advocates have been Germany, France, and the Netherlands, advocating for the adoption of ERP, CRM, and cloud-based tools in the manufacturing and public sectors. The EU's commitment to digital sovereignty and compliance with data protection laws under GDPR and a focus on privacy has made companies seek out more secure and regionally-compliant software and technology platforms. We are seeing a demand for enterprise software focused on sustainability as ESG (Environmental, Social, and Governance) reporting becomes a mandate for organizations.
The software market is highly competitive, with many leading companies and widely known brands competing to gain the highest market share with innovations in technology. Some of the prominent companies in the space are Apple, Alphabet, Microsoft, Adobe Inc., McAfee Corporation, Oracle, SAP SE, IBM Corporation, and NortonLifeLock Inc.
There are many big companies, but the prominent ones amongst them in the software market, known for their extraordinary contributions, are:
Apple operates in over 175 countries, focusing on the consumer electronics and software industries. However, while Apple is primarily now a software and service company with its iPhones, Macs, iPads, iOS, and iCloud and its App Store, Apple has launched many innovations, including the M3 chip, the Vision Pro (a new product). And its total revenue of approximately $391.035 billion in 2024.
Microsoft is a leading American multinational corporation, pioneering in providing technology worldwide with software such as Windows. The company is considered one of the Big Five American IT companies, along with Amazon, Alphabet, Apple, and Meta. The company reached its trillion-dollar market cap in the year 2019 and has been continuously growing since.
| Regions | Shares (%) |
| North America | 40% |
| Asia Pacific | 30% |
| Europe | 20% |
| LAMEA | 10% |
| Segments | Shares (%) |
| AI-based Software Platforms | 35% |
| ADAS and Autonomy Software | 15% |
| Fleet Management Software | 50% |
| Segments | Shares (%) |
| Application Software | 38% |
| System Infrastructure Software | 22% |
| Development & Deployment Software | 20% |
| Productivity Software | 20% |
| Segments | Shares (%) |
| On-premises | 30% |
| Cloud | 70% |
| Segments | Shares (%) |
| Small & Medium Enterprises | 48% |
| Large Enterprises | 52% |
| Segments | Shares (%) |
| IT & Telecom | 22% |
| BFSI | 18% |
| Retail | 12% |
| Government / Public Sector | 10% |
| Energy & Utilities | 6% |
| Healthcare | 18% |
| Others | 14% |
Published by Yogesh Kulkarni
