UK Software Development Market: £63.6 Billion Forecast for 2030
The sector now has 992 businesses and grows at 4.8% yearly between 2020 and 2025. Software development has become the centre of the British economy. The UK software market generated $23.7 billion in 2019, with an impressive 12.7% yearly growth from 2015 to 2019.
The digital world of UK software development shows promising signs ahead. Recent data suggests the software industry will hit $38.21 billion in revenue by 2025. The sector boasts a £56.5 billion turnover and has attracted £2.5 billion in investments. Strong momentum continues in the software development market. Experts predict the UK software market will expand from $41.9 billion in 2024 to $63.6 billion by 2030.
This piece breaks down what stimulates this remarkable growth and analyzes regional trends affecting UK software developers. We'll also explore market segments that fuel expansion. On top of that, we'll get into how cloud computing, artificial intelligence, and changing work patterns alter the future of software development in the United Kingdom.
UK Software Development Market Size and 2029 Forecast
The UK software development market shows impressive growth as we move into the second half of this decade. Recent data points to several growth indicators that show this tech sector's continued strength.
£36.78 Billion Market Projection by 2029
The UK software market is set to hit the £36 billion mark by 2029. Market analyzes suggests the United Kingdom's software market will reach about £36.91 billion by 2030. This growth comes from steady expansion in multiple software segments. Recent industry research shows the UK software development market's steady progress. Mobile application development alone could reach £10.75 billion by 2029. The enterprise software solutions segment looks even more promising with an expected market size of £17.35 billion that same year.
CAGR Analysis: 2024–2029 Growth Trajectory
Different segments of the UK software development market show varied growth rates based on research methods. In spite of that, all signs point to continued positive growth. Market researchers expect a compound annual growth rate (CAGR) of about 6.18% from 2024 to 2029. Some reports show different numbers, with a CAGR of 3.9% during the 2024-2030 period. These rates reflect ongoing tech innovation, increased cloud adoption, and higher demand for specialized software solutions in all sectors.
Comparison with 2024 Market Size: £41.9B to £63.6B (USD)
The market's growth becomes clearer when we look at current figures. The UK software market should grow from its current value of £33.29 billion to £50.48 billion by 2030. The broader tech ecosystem keeps growing strong. The United Kingdom ICT market should expand from USD 162 billion in 2023 to USD 299 billion by 2029. This represents a CAGR of 10.63% for the entire ICT sector. These numbers confirm software development's vital role in the UK's digital economy.
Key Growth Drivers in the UK Software Industry
The UK software industry surges forward, driven by powerful tech and economic forces. These forces are reshaping software development, distribution, and use in sectors of all sizes.
Cloud-Based Software Adoption: 65% Market Share by 2025
Cloud-based technologies lead the UK's digital world. Software as a Service (SaaS) rules the market with £15.30 billion projected volume by 2025. The SaaS segment grabbed the biggest market share at 65.75% in 2024. Government programs like the G-Cloud Framework and Cloud First policy back this move by pushing public sector groups toward cloud solutions. Now, 94% of enterprises use some type of cloud service in 2025.
AI and Machine Learning in Application Development
AI and machine learning have altered traditional software engineering completely. These tools now handle everything from code generation to predictive analytics. This lets developers tackle complex problems instead of routine tasks. Natural language processing helps AI understand and create human language, which improves machine-user communication. Deep learning models are vital now for real-time image recognition, fraud detection, and individual-specific recommendations in modern software.
Remote Work and SaaS Demand Post-2020
Remote work technology adoption skyrocketed after COVID-19. Nearly six million UK residents work from home regularly in 2025. This change sparked huge growth in SaaS use, especially for collaboration tools, data storage, and streamlined operations. The global SaaS market reached £235.81 billion in 2023 and could hit £748.86 billion by 2032. Hybrid cloud solutions that mix public and private cloud environments gain more users as businesses look for better flexibility and security.
E-commerce and FinTech Sector Expansion
The UK stands as a global fintech hub, generating £11.0 billion in revenue during 2019 - about 8% of total financial services output. Venture capital worth £3 billion flowed into the fintech sector in 2020, making the UK Europe's top investment destination. Digital banking grows fast, with 25% of British adults using digital-only banks and 66% planning to switch completely to digital banking. London's position as a financial powerhouse and the UK's five fintech bridge deals with other global hubs support this growth.
Segment and Sector Breakdown of the UK Software Market
The UK software market has distinct segments, each showing different growth patterns as businesses embrace digital transformation in sectors of all sizes.
Application Software as the Fastest-Growing Segment
Application Development Software leads the market's most dynamic segment and will reach £8.20 billion by 2025. This category will grow at a 5.60% CAGR through 2030 and hit £10.78 billion. We see this driven by more people using low-code platforms that make application creation possible without coding knowledge. Microsoft (Visual Studio), Eclipse, and IntelliJ IDEA dominate this digital world as businesses look for tools with AI capabilities.
Enterprise Software: ERP, CRM, and BI Tools
Enterprise Software is the centre of the UK market and will generate £13.05 billion by 2025. The Enterprise Resource Planning (ERP) sector's value stands at £4.5 billion in 2024 and will reach £12 billion by 2035, showing a strong 9.3% CAGR. Business Intelligence (BI) software has grown steadily from £0.7 billion in 2016 to £1 billion in 2023. The BI market will hit £1.13 billion by 2024, with a 6.79% CAGR between 2024-2028. Customer Relationship Management (CRM) tools track customer's interactions and data, which helps coordinate sales and support functions better.
Security and Infrastructure Software Trends
System Infrastructure Software will generate £5.76 billion by 2025. Growth remains modest compared to other segments at 2.32% CAGR through 2030, but the sector will reach £6.46 billion by decade's end. The UK's cybersecurity landscape has about 960 firms providing software security services. All but one of these companies (93) specialize in software security, while 867 offer these solutions as part of bigger cybersecurity portfolios.
UK SaaS Market Growth Among SMEs
The UK's Software as a Service (SaaS) sector has grown from £6.4 billion in 2020 to over £11.2 billion in 2023, and this is a big deal as it means that £13 billion. Small and medium enterprises stimulate this growth, with 45% now using at least one AI tool in 2024, up from 25% in 2022. Yes, it is worth noting that 90% of UK SMEs reported business growth in the last year, averaging a 27% increase. This move toward subscription-based software models creates predictable costs and gives access to advanced technologies that were once limited to larger enterprises.
Regional Trends and the Software Developer Job Market
The UK's software development landscape shows clear patterns and opportunities for professionals based on their location.
London's Dominance: 46% of Developer Vacancies
London continues to be the heart of software development positions and accounts for 46% of all developer vacancies nationwide. The capital's development roles bounced back strongly in early 2021, reaching 87% of the previous year's numbers. Experts project a 54% yearly increase. London holds its position as Europe's second most connected tech hub globally, right behind Silicon Valley.
Emerging Hubs: West Midlands, East Midlands, Yorkshire
Regional tech centers are growing rapidly beyond London's borders. The West Midlands has seen an impressive 32% growth in development roles. The East Midlands and North East & Yorkshire both grew by 13%. The West Midlands now houses over 12,500 digital companies. Tech incorporations in this region jumped by 51% year-over-year in Q3 2025. The East Midlands showed similar promise with 496 new tech incorporations, marking a 28% rise.
Software Development Job Market UK: Salary and Demand
Developer salaries vary substantially by region. London-based developers earn around £67,500 yearly, while their Yorkshire counterparts make £56,250. Several regions saw notable salary increases. Yorkshire's rates grew by 13.64%, the West Midlands by 15.79%, and remote positions surged by 21.90%. Manchester stands out as the biggest hub outside London, making up 8% of all vacancies.
Impact of Hybrid Work on Developer Hiring
UK's software development jobs lead the way in remote or hybrid arrangements, with 48% of positions offering this flexibility—more than any other tracked occupation. All the same, companies just need an average of 2.3 office days weekly, up 0.6 days over two years. This change might reflect companies' response to market conditions or their focus on in-person teamwork.
Conclusion
The UK software development market will grow remarkably through 2029, reaching £36.78 billion. This strong growth shows how resilient and adaptable the industry has become. British businesses now have amazing opportunities to leverage new tech trends.
Cloud-based software leads the charge and will capture 65% of the market share by 2025. This change has revolutionized how businesses buy and use software solutions. Small and medium enterprises can now access enterprise-grade technologies through subscription models. AI and machine learning have reshaped development processes. Developers can now build more sophisticated applications in shorter cycles.
The pandemic sped up many existing trends without doubt. Companies needed remote work solutions, which pushed SaaS demand up quickly. E-commerce and fintech sectors grew substantially. Application software became the fastest-growing segment and should reach £10.78 billion by 2030.
London still dominates with 46% of developer jobs, but regional tech hubs are growing fast. The West Midlands, East Midlands, and Yorkshire have become solid alternatives to the capital. These regions offer competitive pay and varied opportunities for tech professionals. Hybrid work remains common in software development roles, though companies want more office time now compared to peak pandemic days.
The industry faces exciting possibilities and hurdles ahead. Future growth depends on state-of-the-art AI-enabled software, expanded cloud infrastructure, and better security solutions. Knowing how to attract and keep skilled developers across the UK remains vital to maintain this impressive growth.
The UK software development market is the essence of the nation's digital economy. Its ongoing expansion shows both tech advancement and economic strength in our digital age. This market proves British innovation and adaptability, pioneering global software development for years to come.
