The software market in the Asia Pacific excluding Japan and China (APeJC) region has demonstrated robust growth, expanding by 12.1 percent to reach a total value of $53.5 billion in 2022, as reported by the International Data Corporation (IDC) Worldwide Semiannual Software Tracker (2022H2 release).
While the region’s software sector has displayed resilience, experts anticipate a softening trend in 2023 due to global economic uncertainties, inflationary pressures, and supply chain disruptions. However, the market is projected to stabilize by the latter part of the year. Over the 2022-2027 period, the software market is predicted to further grow, reaching a size of $99.3 billion at a compound annual growth rate (CAGR) of 13.3 percent.
Chris Zhang, Senior Research Manager at IDC APAC, highlighted the region’s resilience, driven by China’s economic recovery and the normalization of digital initiatives post-pandemic. Technology’s integral role in organizational digital strategies and the shift to public cloud services have contributed to the software industry’s ability to withstand economic downturns.
Throughout 2022, software investments were driven by major themes including customer and employee experience, data-driven decision-making, and automation. Among the fastest-growing secondary markets, artificial intelligence platforms, collaborative applications, and integration and orchestration middleware saw YoY growth rates of 35.8 percent, 28.3 percent, and 21.4 percent respectively.
The Application Development and Deployment (AD&D) market exhibited the strongest YoY growth at 12.7 percent in 2022, with a projected five-year CAGR of 17.1 percent until 2027. Organizations prioritized placing data at the core to enhance customer experience and leverage technologies like AI/ML, cloud services, data lakes, and integration tools to break down data and system silos. Adoption of modern development practices such as microservices, APIs, and DevOps played a pivotal role in digital product and service agility. While Generative AI (GenAI) garnered attention, practical applications, governance, and ethical implications remained key concerns for business leaders.
The applications market, the largest software segment, experienced 12.4 percent YoY growth in 2022, with a projected CAGR of 13.3 percent by 2027. AI-infused and AI-centric applications emerged as the next generation of software, focusing on connectivity and automation to enhance employee productivity, operational efficiency, and user experiences. This surge in demand boosted the software development and modernization tools market within the AD&D sector. Collaborative applications, aligned with the shift towards hybrid work, are expected to remain resilient against budget cuts.
The system infrastructure software (SIS) market, growing by 10.8 percent YoY in 2022, is mitigating talent scarcity through intelligent automation. Concepts like “AIOps” and “NoOps” are gaining traction to optimize resources in hybrid cloud environments. Early mainstream adoption of containers and Kubernetes was observed among enterprises, and security budgets are expected to remain robust as safeguarding corporate resources in hybrid work models remains a priority. The SIS market is projected to grow at an 8.7 percent CAGR from 2022 to 2027.
