The Software Development industry comprises of operators that write, modify and test systems and applications software, web pages and databases. The industry has made considerable progress over the past 10 years, as businesses and individuals have become reliant on electronic devices in many aspects of everyday lives. Online access to news, social media, video and other websites, in addition to automated client-relationship software and advertising software applications, are now integral components of modern culture. Industry revenue is expected to rise at a compound annual rate of 5.3% over the five years through 2022-23 to reach £41.4 billion.
The rapid increase in IT and telecommunications adoption, most notably the adoption of smartphones and tablet computers, has driven the industry's growth over the decade. Economy-wide trends in business software investment have been a key determinant of industry performance over the past five years. The industry was fairly unaffected by the COVID-19 pandemic due to the essential and digital nature of the software provided by operators. Furthermore, demand for cloud-based and business operation software was boosted due to the nationwide lockdowns that led to a surge in remote working. Revenue is forecast to grow by 4.2% in the current year. Industry profit margins have remained high over the past five years, expanding slightly to 12.6% in 2022-23.
Over the five years through 2027-28, the industry's revenue is expected to grow at a compound annual rate of 3.5% to reach £49.1 billion. UK technology companies are likely to find it increasingly difficult to recruit skilled employees and to operate within an inward-turning economy. However, new technologies such as cloud computing are likely to support industry expansion through more challenging conditions. These emerging niche technologies are anticipated to attract new entrants to the industry. Large operators are expected to absorb some smaller companies to increase their specialisation in new and lucrative segments.
Industry overview provided by IBISWorld.
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