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
May 3, 2023 - Biden Administration Sets Cybersecurity Strategy Implementation Target
- The White House plans to release its implementation plan for the new National Cybersecurity Strategy (NCS) in June. 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. Computer programming services may be among the entities facing greater cybersecurity burdens. The initiative is intended to expand the use of minimum security standards for critical infrastructure and establish a common set of regulations to make it easier to comply with that baseline. It would also shift some liability for software and services to developers that ignore recommended cybersecurity practices or ship products with known vulnerabilities. A safe harbor provision would protect companies that make a sincere effort to develop secure products.
- 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.
- Federal contractors including computer programming services would be among the first to experience serious financial consequences if the US Congress fails to raise the federal debt limit, according to Bloomberg Law. The slow pace of updates on major IT opportunities could be an early sign that federal agencies are looking for funding assurances before committing to large, long-term projects. Some new work may get pushed into the new fiscal year as a result. Lawmakers raised the debt limit to $31.4 trillion in December 2021. That limit was reached in January 2023. The Congressional Budget Office said that without congressional action, the federal government will no longer be able to borrow funds to meet its obligations using “extraordinary measures” for accounting for debt starting at some point between July and September. That date could come sooner if revenues collected over the next three to four months are lower than anticipated.
- Many software development firms are being impacted by the ongoing invasion of Ukraine by Russia. Some 20% of Fortune 500 companies have their remote development teams in Ukraine, according to Amsterdam-based software development outsourcing company Daxx. The region is known as Eastern Europe’s Silicon Valley. “We hear these tales of people delivering code in between air raid sirens or developers going into active military service to defend their country. This is truly heroic and only indicates the resilience of Ukrainian people,” said Saulius Kaukenas, CEO of software development firm Agmis.
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