Italy Software Development Market

ITALY Software Development Market size is forecast to reach EUR 13,562 million by 2027, after growing at a CAGR of 4.74% during 2022-2027. According to recent research, Italian businesses are far more mature in terms of digital transformation than those in other countries around the world. Italy, in particular, is ranked 12th out of the world's 20 largest countries, trailing only nations such as the United Kingdom, France, Germany, and the Netherlands. The current Italian government, formed in February 2021, has been characterized as a “technical government” with broad political party support. The government is focused on post-pandemic economic recovery and efficient application of the National Recovery and Resilience Program (NRRP), a fund of approximately USD 200 billion awarded to Italy by the European Commission. Assintel, the National Association of ICT Enterprises, supports this trend in its 2019 report, which depicts a very positive situation. The value of the Italian IT market reached €31 billion in 2019, a 2.3% increase over 2018, with a 1.6% increase expected by the end of this year. This means that not only will digital transformation be accelerated, but it will also be more widespread.

The report “ITALY Software Development Market– Forecast (2022-2027)”, by IndustryARC, covers an in-depth analysis of the following segments in the ITALY Software Development market.

By language: Java, Python, C++, Scala, Ruby, LISA, PERL, SQL, Android, iOS, and Others

By Market Demand: In-House on Payroll, Hired from Secondment Providers, Hired Freelancers, and Fully Outsourced.

By Deployment Type: On-Premise, Cloud.

By Business Size: Small and Medium Business, Enterprise, and Government.

By End-use Industry:  Banking and Financial Institution, Insurance Firms, Media and Entertainment, Government, Defense, Telecommunication, Automotive, Consumer Goods and retail, Healthcare, Manufacturing, and Others

• Italy, Belgium, England, and many other European countries have reached new heights in recent decades. As the fourth-largest economy in the European Union, Italy has a long list of software firms that contribute to the country, Europe, and global software development industries.

• The Cloud for Public Administration or “national cloud” project proposed by the current government is a major catalyst for ICT investments. Infrastructure cloud services (IaaS) and Platform cloud services (PaaS) were expected to record higher growth. Around 60% of large companies have already implemented at least one IaaS service, followed by PaaS services and SaaS services with around 45% implementation found.

• According to Eurostat, Italy has approximately 46,000 high-tech companies in total, making it one of the top four countries in Europe.

• In 2021, Accenture has agreed to acquire Ethica Consulting Group, a group of technology companies based in Italy that provides advanced software and professional services. The acquisition will strengthen Accenture’s capabilities in delivering digital transformation for clients and enabling them to develop innovative products and services using SAP® cloud-based solutions. 

Python held the largest share in the ITALY Software Development Market in 2021. There is a great degree of consistency between European and Italian data. The ranking of programming languages necessary for digital professionals shows very few modifications for the most often requested languages and considerable reversal of the ranking in the specialised languages. In addition, SQL is proven to be the most used programming language in Europe, followed by Java. When it comes to the Internet of Things, C++ is the dominant language, appearing in 31.4% of web ads in Italy and 25.4% in Europe. According to IndustryARC research, Python remains the most commonly used language, known for its ease of use and widely employed in ML and data analysis, with the biggest number of python developers in Italy estimated to be 11,618 developers. Then there's Java, which has 7,976 Java developers and is defined as a markup language that allows users to arrange items on a page.

In-House on Payroll held the largest share in the ITALY Software Development Market in 2021. According to IndustryARC research, Italy also outperforms the European average in terms of industrial robot production and use, as well as the adoption of 4.0 technologies such as the cloud, the Internet of Things (IoT), and machine-to-machine (M2M) communication. Italian businesses also make significant investments in scientific and technological development. Although the average software engineer would prefer to visit Italy rather than relocate, the EU's fourth-largest economy outperforms the global average in income, wealth, work-life balance, and healthcare and has a promising IT industry which can push more developers relocate in larger numbers in the near future.

Cloud held the largest share in the ITALY Software Development Market in 2021. According to IndustryARC research, under the Deployment model, the Cloud segment accounts for roughly 58% of the Italy Software Development Market. Italy is increasingly adopting cloud computing technologies and platforms to accelerate the country’s digital transformation. The move affects both state agencies and small to medium enterprises (SMEs) that form the backbone of the Italian economy. Thales Italy has recently joined the CSA Italian chapter, part of the non-profit CSA US organization, to enable Italian organizations to move faster and safer into cloud adoption.

Small and Medium Business held the largest share in the ITALY Software Development Market in 2021. According to the Assinform Industry Association of Italy, the overall ICT sector will grow by more than 2.5%. The growth of software development is expected to outperform that of the overall ICT market. In 2017, tax breaks encouraged two-thirds (67%) of Italian enterprises to invest in new technology and machinery. However, the impact was concentrated in large corporations, with 96.7% of those with more than 50 workers making new investments as a result of tax breaks. Only 42% of small businesses with less than 50 employees did so. According to ISTAT, the official Italian statistics source, the strategy spurred business digital investment. As stated by World Economic Forum, 96% of companies stated to accelerate the digitalization of work processes. Around 88% companies stated to adopt opportunities to work remotely. According to the Denmark Embassy in Italy's economic outlook report for the Italian market, the software sector has recovered from the effects of the worldwide crisis and is developing steadily. In 2019, the Italian software development sector had a 4.2% CAGR, allowing Italian developers to gain prominence in Europe.

Italian manufacturing sector’s shift to a digital economy, while also drawing attention to the significant role of industry 4.0 in the new industrial strategy of the EU. Manufacturing has dominated the Italy Software Development Market with a market share of 20% as of 2021. For Instance, ABB S.P.A, also took the floor to share the experience of one of Italy’s leading global technology companies, which directly applies digital solutions to improve EU industrial competitiveness. A virtual tour of the ABB factory allowed all participants to get a more concrete understanding of what digitized manufacturing processes look like. According to IndustryARC research, Italy has developed a reputation as a granular IT industry that is highly focused on the domestic market, making it even more difficult to approach from the outside. Nonetheless, the country's location makes it an entry point to other Mediterranean markets such as Tunisia, Turkey, Greece, Libya, and the southern Balkan countries.  The Italian ICT market is currently dominated by American corporations, as the majority of them possess an Italian subsidiary. Lombardy is regarded as the region having the highest developed ICT activity at the regional level. Demand in the public sector has also decreased, leading to a shift toward the private sector. According to the Think Tank at European House Ambrosetti, simply bringing Italian SMEs cloud computing utilization levels in line with those of English SMEs would result in a joint gain in GDP of USD 20 billion over the next five years.

According to Eurostat, Italy is one of Europe's top four high-tech manufacturing countries (together with Germany, the United Kingdom, and Poland), with roughly 5,400 high-tech manufacturing enterprises. With more than 105,000 high-tech firms, Italy remains one of the leading countries in Europe when all sectors are considered – services as well as manufacturing. Italy also outperforms the European average in terms of industrial robot production and use, as well as the adoption of 4.0 technologies like cloud computing, the Internet of Things (IoT), and machine-to-machine (M2M) communication. Italian businesses also make significant investments in scientific and technological development. The average annual research and development (R&D) expenditure of Italy's top R&D spending firms, at €185.4 million, is greater than the equivalent EU average of €165.8 million, according to the European Commission. According to the CEDEFOP report, Italy's employment outlook will rise to 26 million by 2025.

In Italy, the use of IoT is rapidly increasing. The top IoT sectors in 2017 were smart meters and smart cars, with outputs of €980 million and €810 million, respectively. Smart buildings (€520 million) and IoT solutions for industrial logistics (€360 million) followed. Italy is also making strides in cloud computing, another critical technology for digital innovation. Other solutions, such as information management, such as big data and cognitive analytics; predictive models; artificial intelligence and machine-learning tools, to name a few, are made possible by cloud computing. According to Eurostat data, over 22% of Italian enterprises have adopted cloud technologies, somewhat more than the European average of 21%. The cloud technologies market in Italy rose by 18% in 2017, to about €2 billion, according to the Polytechnic University of Milan, with manufacturing companies leading the way. Italy ranks in the top 10 countries in the world in terms of robotic intensity, or the number of industrial robots per worker. Italy has 185 robots per 10,000 manufacturing personnel, according to the International Federation of Robotics. Italy is ranked sixth in the world for M2M connectivity, which is critical for Industry 4.0. This technology allows data to be exchanged automatically and in real time across a network of systems, devices, sensors, and industrial robots.

Challenges – ITALY Software Development Market

Italy's debt, at more than 130% of GDP, is the second-highest in the EU after Greece. The yield on Italy's benchmark debt, the ten-year government bond, rose in late November 2018 to around 3.2% – not a high figure historically, but one that compares very unfavourably with yields on German and French government bonds of the same maturity of only around 0.36% and 0.7%, respectively. The new government's initial proposal to run a 2.4% of GDP budget deficit has frightened financial markets and the EU. This deficit is not unusually large, and it falls within the EU's Maastricht criteria. However, Italy's debt is substantial, and rising yields on that debt will exacerbate the government's fiscal problems, potentially reducing funds available for technology investment.

Italy ranks 58th in ease of doing business, 98th for starting a business in the Doing Business 2020 report. While it takes faren less time than the EU average to start a business, it can however cost more than the EU average. The cost of starting business is around 14% of the income per capita, out of which the required notary fees for drafting the company deed and preparing other formation documents alone contribute 75% of the costs. Italy also requires entrepreneurs to pay €310 for a government grant tax, €200 for the registration tax, €156 for a stamp duty, as well as the Chamber of Commerce’s registration fee of €90 and an annual membership fee of €120. Italy also ranks 122nd in enforcing contracts, due to lengthy judicial process with considerable regional variability, as cities are challenged by backlogs, adjournments, delays in judgment issuance and staffing shortages. Companies must also pay 14 tax payments annually such as corporate income tax (IRES), regional production tax (IRAP), social security, real estate, and VAT.

Technology launches, acquisitions, and R&D activities are key strategies adopted by players in the ITALY Software Development market. In 2021, the ITALY Software Development Market share has been consolidated by the top ten players accounting for XX% of the share. Major players in the ITALY Software Development Market are Laurenzi Consulting, Accenture S.p.A., and others.