Demand for Improved Resiliency & Automation Will Drive European Software Market Growth until 2027


The European software market grew by 15% year on year in 2022 despite economic turbulence and global instability. This represented the highest growth in the last 20 years, demonstrating the resiliency of demand for software in the face of major macroeconomic factors. The growth was primarily driven by increased price of software licenses (reflecting high inflation), customers locked in with existing partners, and contracts signed for longer time periods than in previous years. In 2023, however, the European software market is predicted to grow at “just” 11.7%, owing to general caution across all sectors.

Although the five-year compound annual growth rate (CAGR) for 2022–2027 is expected to 12% for the European software market overall, three main areas are predicted to grow substantially faster. Artificial intelligence platforms has an expected CAGR of 41% (reflecting a 16x increase from 2018 to 2027), followed by integration and orchestration middleware with a CAGR of 24% and software quality and life cycle tools with a CAGR of 20%.

In addition to those top 3 segments, the overall application development & deployment market (platform as a service) is forecast to post a 18% CAGR, making it a key spending driver. Prior to the COVID era, applications were the leading software investment area for European companies.

Security software was central to companies’ investment strategies during the pandemic period and in 2022, when the number of DDOS attacks reached a record high. Healthy growth in security spending is expected throughout the forecast period, alongside an increasing demand for tools used by developers and integration specialists. “Applications integration, business transactions, and automated decision making — including predictive and prescriptive analytics — are growth areas now, and we expect demand to be stable or increasing for the next five years, underpinned by massive AI enablement,” says Tomas Doktor, research manager with IDC European Software. “New capabilities and services based on GenAI will open opportunities for competitive differentiation and revenue growth for vendors that can offer those solutions with the appropriate security and governance.”

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IDC’s Worldwide Semiannual Software Tracker provides an in-depth look into the competitive landscape and the market dynamics shaping the current and future direction of the global software industry. It tracks and details individual software vendors’ historical business performance, and it forecasts the development of the industry 5 years into the future — across 54 geographies and 81 discrete software market segments.

In addition, the tracker provides an understanding of the transition from traditional on-premises deployments to public cloud services by segmenting software revenue by deployment type, vendor, geography, and market segment. With the rapid transition from 2nd Platform to 3rd Platform technologies, it is critical for software vendors, public cloud services providers, supply chain partners, and the investment community to understand the underlying dynamics behind this transition. This extensive coverage of vendor share information enables both global and local players to benchmark themselves in terms of business growth and market penetration.