Software - Philippines

Philippines

The Software market in the Philippines is expected to reach a projected revenue of €856.20m in 2024.
Among the various segments, Enterprise Software is set to dominate the market with a projected market volume of €359.00m in the same year.
Looking ahead, the market is anticipated to witness a steady annual growth rate (CAGR 2024-2029) of 8.09%, resulting in a market volume of €1,263.00m by 2029.
In a global context, it is noteworthy that United States is expected to generate the highest revenue, amounting to €333.50bn in 2024.
The Philippines is experiencing a surge in demand for software development services, driven by its highly skilled workforce and cost competitiveness.

Key regions: United States, Canada, Germany, China, Japan

Definition:

In general, software is defined as a set of instructions written as programming code to execute specific tasks on a computing device. The Software market covers a wide range of software products and solutions that are publicly sold by various companies. Most software solutions in this market are designed for professional use, but some can also be suitable for personal use. They can also range from basic productivity tools such as word processors and spreadsheets to complex software solutions such as project management tools, graphic design software, and enterprise resource planning software.

Products in the Software market can be obtained in two ways: as on-premises software that is sold via a transactional license or a subscription and as cloud-based software (software as a service/ SaaS) that is most frequently sold as a subscription.

Structure:

The market contains four markets that are based on the functionality of the software:

Productivity Software refers to application software that supports activities such as producing documents, spreadsheets, drawings, and presentations. This market includes Administrative Software, Collaboration Software, Office Software, Creative Software, and Construction and Design Software.
Enterprise Software refers to all software that supports essential large-scale business activities such as enterprise resource management, customer management, and supply chain activities. This market includes Enterprise Resource Planning Software, Customer Relationship Management Software, Business Intelligence Software, Supply Chain Management Software, Content Management Software, and Other Enterprise Software.
Application Development Software refers to software and tools that help the overall application development process.
System Infrastructure Software refers to software that provides the base framework for operating and managing organizational processes and services on hardware devices.

Additional Information:

The Software market comprises revenue and revenue change as the key performance indicators. Only revenues that are generated by primary vendors at the manufacturer price level either directly or through distribution channels (excluding value-added tax) are included, and revenues generated by resellers are excluded. Revenues are generated through both online and offline sales channels and include spending by consumers (B2C), enterprises (B2B) as well as governments (B2G). Detailed definitions of each market can be found on the respective page where the market data is displayed.

Key players in this market include Microsoft, Adobe, SAP, Oracle, and Salesforce.

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Analyst Opinion

The Philippines has been experiencing significant growth in its software market in recent years, with a variety of factors contributing to this trend.

Customer preferences: One key driver of this growth has been the increasing demand for software solutions across a range of industries in the Philippines. As more businesses in the country seek to digitize their operations and improve their efficiency, they are turning to software providers to help them achieve these goals. Additionally, consumers in the Philippines are increasingly reliant on software applications for everything from communication to entertainment, further driving demand for these products.

Trends in the market: One major trend in the Philippines software market has been the rise of cloud-based solutions. As more businesses in the country seek to move their operations to the cloud, they are turning to software providers that offer cloud-based solutions that can be accessed from anywhere with an internet connection. Additionally, there has been a growing trend towards the use of artificial intelligence and machine learning technologies in software development, as companies seek to create more sophisticated and intelligent applications.

Local special circumstances: There are a number of local factors that have contributed to the growth of the software market in the Philippines. One of the most important of these is the country's large and highly skilled workforce. With a large pool of talented software developers and engineers, the Philippines has become a hub for software development in Southeast Asia. Additionally, the country's relatively low labor costs and favorable business environment have made it an attractive destination for software companies looking to expand their operations.

Underlying macroeconomic factors: The growth of the software market in the Philippines is also being driven by broader macroeconomic trends in the country. With strong economic growth in recent years, the Philippines has become an increasingly attractive destination for foreign investment, including in the software sector. Additionally, the government has been actively promoting the development of the country's technology industry, providing incentives and support for companies that choose to invest in the Philippines. As a result, the software market in the Philippines is expected to continue to grow in the coming years, driven by both local and global factors.

Methodology

Data coverage:

The data encompasses B2B, B2G, and B2C enterprises, except for the Enterprise Software segment, in which consumer (B2C) spending is not considered. Figures are based on the allocation to the country where the money was spent at manufacturer price level (excluding VAT).

Modeling approach / Market size:

Market sizes are determined through a top-down approach with a bottom-up validation, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of the market-leading companies and reports from our primary research. In addition, we use relevant key market indicators and data from country-specific associations, such as GDP, level of digitization, GDP sector composition, and observed level of software piracy. This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the relevant market. The main drivers are the GDP and the level of digitization.

Additional notes:

The data is modeled using current exchange rates. The market is updated twice a year in case market dynamics change. The impact of the COVID-19 pandemic is considered at a country-specific level.