Capital expenditure on computer software

IBISWorld forecasts capital expenditure on computer software to falter by 1.8% in 2023-24 to $8.74 billion. Climbing interest rates have taken their toll, with businesses and consumers more hesitant to splash on expensive computer software compared to their activity during the height of the COVID-19 pandemic. Growth-based businesses and tech companies have found obtaining and financing their more expensive business loan repayments more challenging than in the previous 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 slump in expenditure.

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. From November 2021, the updated COVID-19 response 'traffic light system' has been alternating between orange and red alert levels, maintaining the strong demand for technology solutions until the system was dropped in September 2022. As a share of GDP, capital expenditure on computer software has increased from 2.2% in 2013-14 to an expected 3.1% in 2023-24.

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 6.8% over the five years through 2023-24.