Capital expenditure on computer software

IBISWorld forecasts capital expenditure on computer software to rise by 9.0% in 2025-26 to $11.15 billion. A dip in interest rates has supported this trend, with businesses and consumers more inclined to spend on computer software compared to their activity during the inflation peak in 2023-24. Growth-based businesses and tech companies have found obtaining and financing their more expensive business loan repayments challenging over the past couple of years. In addition, downstream consumers and businesses have looked to cut costs on hefty up-front investments, including computer software, leading to a slower growth in expenditure over the past few years.

Since the COVID-19 outbreak, spending on technology solutions has dramatically tilted upwards as businesses have adopted more intense remote working arrangements domestically and abroad. Furthermore, the nationwide move to Alert Level 4 in August 2021 renewed investment in technological solutions. On and off pandemic restrictions remained in place for another year, maintaining strong demand for technology solutions. As a share of GDP, capital expenditure on computer software has increased from 2.2% in 2015-16 to an expected 3.8% in 2025-26.

Over the past five years, the productive applications of software have expanded. Businesses have shifted operations to online channels and have invested heavily in productivity software, like Artificial Intelligence (AI). Examples of applications in which software has boosted productivity include digital communication, performance monitoring, inventory management and the analysis of consumer purchase data. An area of software development that has displayed robust growth has been the uptake of mobile application software. The expansive technological capabilities of mobile devices have led businesses to offer more services via mobile platforms, including banking or grocery shopping. Overall, IBISWorld forecasts capital expenditure on computer software to increase at a compound annual rate of 9.1% over the five years through 2025-26.