Indonesia Software Development Market - - Forecast(2024 - 2030)

The Indonesia Software Development Market is estimated to grow at a CAGR of 5.34% during the forecast period 2024-2030 and reach USD 7.64 billion by 2030, from around USD 5.05 billion 2023.

Indonesia declared the realization of the digital economy as a national industrial policy goal as it entered the second presidential government and policies and investments are in progress to support the establishment of ICT infrastructure to achieve this. A representative state-led ICT infrastructure project is the Palapa Ring project, a 13,000-kilometer-long telecommunications network that connects Indonesia's western region through central and eastern regions and the government spent 32 trillion rupiahs (about $2.27 billion) to complete it. Currently, Indonesia's data center industry is concentrated in Jakarta, the capital region. The business side of the regional data center is expected to reach 198.5 MW by 2025 and is estimated to reach up to 236,3 MW at the maximum. Recently, the size of the Indonesian data center market is forecast to grow further as data construction has been promoted around Batam, Labuan Bajo and various new cities. The Indonesia Software Development market is analyzed to be EUR 4,220 million in 2023 and is projected to reach EUR 5,878 million in 2030, growing at a CAGR of 5.34% during the forecast period of 2024 - 2030.

The major driving factor of Indonesia software development market growth is the growing E-commerce and online shopping in this region. Indonesia's e-commerce market is showing steady growth. In 2018, 40 million e-commerce cases were recorded in Indonesia and 80 million in 2019 and 140 million in 2020, showing rapid growth. According to research firm Similarweb, Tokopedia, an Indonesian e-commerce platform, has reached 126.4 million visitors as of the first quarter of 2023, becoming the most popular e-commerce site in Indonesia. Shopee came in second with 117 million visits, followed by Bukalapak, Lazada and Blible, respectively, in the top five e-commerce rankings. In other words, the Indonesian e-commerce market is considered an attractive market for global companies such as Shopee and Lazada and is set to drive the demand for software development in this region. 

By language, the software market is further fragmented into Java, JavaScript, Python, C++, PHP, Scala, Ruby, LISA, Perl, SQL android, iOS and others. Above all, the Java segment accounted for the dominant market share in 2023 among other programming languages owing to the presence of major players using java. Major companies in Indonesia such as Oracle adopt Java as the main programming language as it reduces costs, shortens development timeframes, drives innovation and improves application services. 

In terms of market demand, the market is segmented by In House on Payroll, Hired from Secondment Providers, Hired Freelancers and Fully Outsourced. The in-house on payroll segment accounted for the biggest revenue share in 2023 and is projected to grow at a higher rate owing to the availability of a skilled workforce in the region. Some of the in-house software development enterprises in Indonesia include Arfadia and ToffeeDev.

By deployment type, the Cloud segment had the majority of overall market share in 2023 owing to its wide usage of it by various businesses. Indonesia has an emerging Cloud computing hub and the recent Covid-19 pandemic coupled with the high penetration of mobile services in the region is propelling the growth of the underlying market segment. It is reported that 80% of the large enterprises in the region actively use cloud technology and 11% of the large enterprises showed growing intent to use it.

With regard to business size, the Small and Medium Business segment had the highest market share in 2023 owing to the growing government initiatives and stimulus package for SMEs. As a part of this, the Government of Indonesia announced the National Economic Recovery Program, in which the government allocated IDR 58.74 trillion to support the SMEs in the region through interest subsidies for microcredit (KUR), MSME financing, guarantees and placement of funds in banks. Developments like these are analyzed to boost the growth of the underlying segment. 

By end-use industry, the market is poised with respect to the end-use industries to be processed including Banking and Financial Institutions, Insurance Firms, Media and Entertainment, Government, Defense, Telecommunication, Automotive, Consumer Goods and Retail, Healthcare, Manufacturing and others. The Consumer Goods and Retail segment generated the largest market share in 2023 based on the growing retail sector in Indonesia. The growing e-commerce market and the presence of key ecommerce players in the region including Tokopedia, Shopee and Bukalapak among others are analyzed to drive the underlying market growth. 

The base year of the study is 2023, with forecasts done up to 2030. The study presents a thorough analysis of the competitive landscape, taking into account the market shares of the leading companies. The assessment includes the forecast, an overview of the competitive structure, the market shares of the competitors, as well as the market trends, market demands, market drivers, market challenges and product analysis. These provide the key market participants with the necessary business intelligence and help them understand the future of the Indonesia Software Development Market.