Software development is one of the most fast-growing fields in the world market today. But what is the name of the software development industry? In other words, what industry is software development a part of?
In this blog post, we’ll go into the details of what industry is software development and some of the main categories within it. Read on to learn more!
What Industry Is Software Development?
Interestingly, software development is part of the software industry, which itself falls into the category of information technology (IT) services and products.
This means that software developers are part of a larger IT industry which includes other related activities such as web design, database management, and more.
In this industry, software development is the process of creating and maintaining computer programs, applications, and systems. It involves gathering requirements from users, designing solutions, programming, testing, and then deploying and maintaining the software.
Brief History of the Software Industry
In 1955, Computer Usage Company became the world’s first company to specialize in delivering software products and services. This marked a major shift from customers or select vendors like Sperry Rand and IBM who used to program computers on their own.
In the mid-1970s, with computers becoming increasingly more accessible to consumers, came a boom in the industry. As office workers began using desktop computing for everyday tasks, this opened up an entire sector dedicated towards games and applications. Microsoft’s DOS was among one of the most popular operating systems at that time.
The software industry developed further in the late 70s when companies such as Microsoft, Oracle, and Adobe started developing their own software products.
In the 80s, software products became more user-friendly and easier to use. Microsoft’s Windows was released in 1985 and the industry continued to evolve and grow over the years.
Today, software development is an integral part of many industries. It’s used to automate processes, manage records, and store data. The industry is also responsible for creating cutting-edge solutions such as artificial intelligence and machine learning.
How Big Is the Software Industry?
The software industry has come a long way since its inception in the 1950s. According to BusinessWire, booming to a size of $968.25 billion in 2021, the global software products market had an impressive compound annual growth rate (CAGR) of 4%, making it one of the most rapidly developing industries out there.
Supported by gargantuan tech corporations such as Microsoft, HP, Oracle, Dell and IBM, this sector has contributed significantly towards economic prosperity all over the world.
The market is expected to reach $1493.07 billion in 2025 at a CAGR of 11%.
What Are Fields or Sectors within Software Industry?
The software industry can be divided into four key fields or sectors: programming services, system services, open source, and Software-as-a-Service (SaaS). Here’s a breakdown of the various types of business software used in this flourishing industry.
1. Programming Services
Programming services involve creating and maintaining software applications, coding, debugging, and testing. This type of service usually requires specialized knowledge in a certain language or field.
Historically, this sector has been the biggest market in terms of scope and entities. Microsoft Corporation, Oracle Corporation, and SDC Technologies are few exemplary names that come to mind when talking about innovation and enterprise solutions related needs such as data analysis, storage & organization, or providing programs for running machinery operations.
2. System Services
System services encompass the installation and maintenance of computer systems, networks, databases, and software applications.
While programming services reigned supreme during the early days of computing, system services quickly proliferated through the 1960’s and 1970’s.
This phenomenon exponentially increased with the dawn of personal computers in 1981, particularly due to Microsoft’s innovative Disk Operating System (DOS).
As a result, there became an immediate demand for comprehensive operating systems that would allow PCs to function properly.
3. Open Source
Open source is a software development method that encourages sharing of code or ideas between developers.
Unlike traditional software solutions, open-source software is often free and offers a high degree of flexibility in terms of customization.
This subfield of the software industry has witnessed rapid growth in the past decade and has been widely used by businesses to create software more efficiently and cost-effectively.
Popular open source projects include Linux, Android OS, MySQL, and Drupal.
4. Software-As-A-Service (SaaS)
Software-as-a-Service (SaaS) is a type of software delivery model where applications are hosted on the cloud and accessed online.
This method eliminates the need for users to install and manage software on their own devices, allowing them to access applications from anywhere and anytime.
SaaS solutions are mainly used in data analysis, project management, customer relationship management (CRM), workflow automation, and software asset management.
Popular SaaS products include Salesforce, Zendesk, Slack, and Zoom.
Is Software Development a Growing Industry?
Software development is one of the fastest-growing industries in the world. The software industry has grown exponentially over the past two decades and is projected to continue its growth in the coming years.
Per the United States Bureau of Labor Statistics, career prospects for software developers, quality assurance analysts, and testers are expected to skyrocket by 25% from 2021-2031 – a growth rate much faster than all other jobs.
Every year, on average over the next decade, there will be approximately 162,900 new job openings for software developers, quality assurance analysts, and testers. These roles are likely to be filled by people replacing employees who transfer to different tasks or retire from their labor force.
The software development industry is particularly attractive because of the wide range of career opportunities available. It is an ever-evolving field with a need for constant innovation, making it a great option for ambitious professionals who are passionate about technology and software.
With the emergence of new technologies like artificial intelligence (AI) and machine learning (ML), the demand for software engineers is only likely to increase in the coming years. This makes it an ideal time to enter the software industry and start pursuing a lucrative career in this field.
If you’re looking for a booming sector where your skills will be in high demand, the software industry is definitely worth considering.
Salaries in the Software Industry
Although the salaries of software professionals vary vastly depending on the particular title and geographic location, the software industry remains one of the best-compensating fields in the world today.
According to the US Bureau of Labor Statistics, the mean annual wage for software developers and related professionals is $109,020 per year, more than twice as much as the salary of an average American.
In the software development industry, salaries are determined based on experience, title, and geographic location. A software engineer with 5 years of experience who works in Silicon Valley, for example, could expect to make significantly more than a software engineer with the same experience who works in a small town.
At the same time, software developers in specialized roles may also be able to command higher salaries than those in more general positions. For instance, software engineers with experience in artificial intelligence and machine learning may be able to secure higher salaries than software engineers with just a general understanding of programming languages.
All in all, software developers and related professionals are often among the highest-paid professionals in their respective geographic areas. Therefore, if you’re interested in entering the software development industry, it may be worth exploring how much you can expect to make and what types of positions are available.
What other Industries Hire Software Developers?
Though software engineers are primarily employed in the software development industry, there are a number of other industries that employ these professionals as well.
1. Retail, E-Commerce, and Logistics
Companies in these industries rely heavily on software engineering to create efficient processes for ordering, tracking, and delivering goods. As such, they tend to hire software engineers to help them build and maintain their systems.
Nowadays, the retail sector hires just as many, if not more software developers than the renowned Silicon Valley.
Some of the popular retail companies include Amazon, Walmart, Target, and Best Buy.
2. Banking and Finance
Banking and finance companies also rely heavily on software engineers to develop secure systems for managing their money and transactions. Banking and finance companies often offer some of the highest salaries in the software development industry, as well as plenty of opportunities for upward mobility.
The most prominent banking and finance companies include Goldman Sachs, JPMorgan Chase, Citigroup, and Bank of America.
3. Media and Entertainment
Software engineers are also employed in the media industry to create software applications that aid in the production, distribution, and consumption of media content.
Developers in this space are often tasked with developing applications for streaming services, gaming platforms, and content management systems.
Some of the biggest media companies that employ software engineers include Netflix, Hulu, Walt Disney, and Meta.
Software engineers also play an important role in the healthcare industry. They are responsible for developing software applications that help manage patient data and optimize medical processes.
With the demand for healthcare software on the rise, software engineers are more in demand than ever before. Some of the biggest names in healthcare include Kaiser Permanente, CVS Health, Johnson & Johnson, and Novartis.
Government organizations are also heavily invested in software development, as it helps them streamline their processes and provide better services to citizens.
Software engineers in the government sector may be responsible for developing software applications that are used to manage public records, support national security initiatives, and aid in financial management.
These organizations include the Department of Defense, NASA, the FBI, and the US Postal Service.
As you can see, software engineers are in high demand across a variety of industries. Whether you’re interested in retail, finance, media and entertainment, healthcare, or government, there are plenty of opportunities for software engineers to make a great career out of their skills. So, if you’re looking to break into the software development industry, now is a perfect time!
Software development is part of the large and growing software industry, which, in turn, falls into the Information Technology industry. This industry is responsible for the development, production, and maintenance of software products.
As such, it combines elements of both programming and engineering to create robust software solutions. As this industry continues to grow and expand, software developers will continue to be in high demand for their ingenuity, creativity, and problem-solving abilities.
Software professionals are able to command high salaries and can capitalize on their knowledge and skills to further advance the software industry.
With its expansive opportunities, the software engineering sector is sure to be a valuable asset in the technology industry for years to come. There is no doubt that the software development industry will remain an important part of the Information Technology sector in the years ahead.
If you’re looking to get your foot in the door of this lucrative industry, now is a great time to do so. With plenty of job opportunities across various sectors, software engineers can easily find their place in the tech industry.
So if you are looking to make a career out of software engineering, don’t wait any longer – start your search and take advantage of the amazing opportunities that await you! Good luck!
Elmar Mammadov is a software developer, tech startup founder, and computer science career specialist. He is the founder of CS Careerline and a true career changer who has previously pursued careers in medicine and neuroscience.
Due to his interest in programming and years of past personal experience in coding, he decided to break into the tech industry by attending a Master’s in Computer Science for career changers at University of Pennsylvania. Elmar passionately writes and coaches about breaking into the tech industry and computer science in general.