Computer Programming Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 61,200 computer programming services firms in the US develop custom computer programs designed for clients’ specific needs. Services include developing application software, software analysis and design, software support, and web page design.
Off-shore Outsourcing
Clients attempting to reduce costs often look to foreign providers of programming services.
Highly Skilled Labor
Because of the complexity of IT systems and computer programming, firms rely on a staff of highly-skilled, educated professionals, including computer programmers, software engineers, and project managers.
Industry size & Structure
A typical computer programming services firm operates out of a single location, employs 16-18 workers, and generates about $3 million annually.
- The computer programming services industry consists of about 61,200 companies that employ over 1 million workers and generate about $185 billion annually.
- Many individual programmers provide contracted services and operate as non-employer firms (these firms are not included in industry revenue data).
- Large companies include Cognizant Technology Solutions and Perficient. Major companies based outside of the US include Infosys Technologies and Tata Consultancy Services, both located in India.
Industry Forecast
Computer Programming Services Industry Growth
Recent Developments
Nov 14, 2023 - Moderate Sales Growth Expected
- Computer programming service industry sales are forecast to grow at a 4.47% compounded annual rate from 2022 to 2027, comparable to the growth of the overall economy. Industry labor costs increased during the first eight months of 2023 as employment levels increased slightly while average wages for nonsupervisory employees were unchanged.
- False Claims Act (FCA) risks are increasing as government contractors including computer programming services face increasing cybersecurity obligations, according to the Morgan Lewis law firm. “Knowingly” failing to meet cybersecurity obligations included in government contracts carries significant FCA risk. The FCA defines “knowingly” to include acting with deliberate ignorance or with reckless disregard. The US Department of Justice (DOJ) launched in October its Civil Cyber-Fraud Initiative, which united its government procurement and cybersecurity enforcement efforts to pursue civil enforcement against government contractors who fail to satisfy required cybersecurity standards. The DOJ has indicated that criminal enforcement in the cyber space will increase significantly. Tighter enforcement is likely to impact contractors and implicate a range of additional issues, according to Morgan Lewis.
- The Biden Administration has released its National Cybersecurity Strategy Implementation Plan (NCSIP). The implementation plan was created to provide transparency and coordination for the administration's National Cybersecurity Strategy (NCS). The NCS seeks to rebalance the responsibility to defend cyberspace by shifting the burden for cybersecurity away from individuals, small businesses, and local governments, and onto the organizations that are most capable and best positioned to reduce risks, according to a White House statement. Programming services may face greater cybersecurity burdens as a result. The NCSIP details over 65 Federal initiatives (some completed, some ongoing, others planned for the future). Each initiative is assigned to a responsible agency and has a timeline for completion. There are five major “pillars” to the NCSIP: defending critical infrastructure, disrupting and dismantling threat actors, shaping market forces and driving security and resilience, investing in a resilient future, and forging international partnerships to pursue shared goals.
- A difficult start-up environment has worsened after a harrowing 2022, when easy money for start-ups dried up, leading to slashed valuations, lowered ambitions, and layoffs, according to the New York Times. Venture capital (VC) investors have increasingly backed away from start-ups or are too busy helping to strengthen existing ones to consider new deals. Some startups hope to avoid raising new funding so they don't have to face lower valuations, onerous terms, and stringent due diligence. "People are realizing it’s probably not going to get better,” said Mathias Schilling, an investor at VC firm Headline. The bank run that led to Silicon Valley Bank’s (SVB) demise showed how much fear was already in the market, and investors wouldn’t have set off such a panic if they weren’t already on edge, Schilling said. The bank's implosion followed a 61% year-over-year decrease in VC during Q4 2022, according to start-up tracker PitchBook.
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