The software comprises computer programs that instruct computers to perform and execute various operations. The software industry comprises all those businesses for the development, maintenance, and publication of software. According to an estimate, the market worth of the global software product industry is approximately 968.5 billion USD; comprising the world’s leading companies like IBM, Dell, Oracle, Oracle, HP, and Microsoft. Today, we’ll discuss the PESTLE analysis of Software Industry; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Software Industry
Some of the main political factors in the Software Industry PESTLE analysis of Tech Industry are as follows;
I-Government Regulations
The government regulations are very strict for the Software and Tech Companies. They comprise IPR, patents, data privacy, data security, quality service, features, and others. However, it is significant to mention here that government regulations of different countries like the USA, EU, and others vary depending on the tech policy of the country.
II-Trade Policies
The software and technology trade policies of different countries are variant depending on the type of government in power. For instance, the authoritarian and conventional government and political power won’t allow the free trade of technology and software products and services. China, Russia, the Middle East, and North Korea are some countries that censor information and ban the unrestricted use of technology.
III-Infrastructure
The government and private infrastructure play a key role in the growth of Software and Tech Companies. Without proper infrastructure like tech labs, software institutions, internet access, electricity, digital devices, and others; Software and Tech Companies can’t run and perform their business operations.
Economic Factors Affecting Software Industry
Some of the main economic factors in the Software Industry PESTLE analysis are as follows;
I-Economic Downturn
The global economy has been going through an economic recession for the past few years. Many people lost their jobs and have limited income due to economic recession and tight economy. When people have lower bargaining power, they won’t spend their income lavishly by procuring premium software features and services.
II-Inflation
The inflation rate is higher in different countries across the globe due to various political, economic, and international reasons. A higher inflation rate means higher prices that tech products and software services become unaffordable to ordinary working class people. However, it decreases the sale of software products and services.
III-Currency Exchange Rate
Software and Tech Companies are operating their business world. The currency exchange rate is highly volatile and it keeps fluctuating regularly depending on various factors. A small change in currency exchange rate would increase the cost and expenses, and it negatively impacts the revenue and profitability of the Software and Tech Companies.
Social Factors Impacting Software Industry
Some of the main social factors in the Software Industry PESTEL analysis are as follows;
I-Public Tech Interest
The general public and the consumer market have shown a great interest in software services. In fact, many students are getting professional degrees in the software and IT industry; because the software and IT industry offers them a prosperous future growth. It shows and proves the public interest and commitment to the software and tech industry.
II-Online Trends
Online shopping, social media platforms, home delivery service, surfing, mapping, travel and transport, and various online trends have been increasing significantly for the past few years. Overall, the usage of smart devices and software services has increased a lot, and they want a smooth and user-friendly experience.
Technological Factors Affecting Software Industry
Some of the main technological factors in the Software Industry PESTEL analysis are as follows;
I-Advanced Technology
Software and Tech Companies are employing the latest and advanced digital technology comprising cloud service, AI, ML, automation, data analytics, simulation, and others. It allows them to analyze the software growth, scope, application, accessibility, usability, and acceptance rate before developing the software product and service.
II-Vast Scope
Software and Tech Companies have a great scope and growth rate in almost every business and market. Almost every field of life and profession is moving toward digitalization with a customized software application. It provides a lot of business opportunities for software firms to develop new and unique products for different types of professionals.
III-Innovative Products and Services
Software and Tech Companies invest a significant amount of capital resources in research and technological development. It allows them to develop unique and innovative products, services, and software applications. Most importantly, it helps them to improve the services and features of the existing version to satisfy the customer satisfaction level.
Legal Factors Impacting Software Industry
Some of the main legal factors in the Software Industry PESTEL analysis are as follows;
Regulatory Compliance
Software and Tech Companies need to comply with the government regulations and policies of different countries. They comprise IPR (intellectual property rights), patents, data security and data privacy, cybersecurity, data collection, data usage, and others. Regulatory compliance would help the company to smoothly perform its tech and IT operations without any delays and disruption.
Environmental Factors Affecting Software Industry
Some of the main environmental factors in the Software Industry PESTEL analysis of IT Industry are as follows;
Sustainability Initiative
Software and Tech Companies consume energy and electricity profoundly and cause to increase the carbon waste and carbon emission rate. They need to invest in renewable energy projects and use sustainable materials for the production of digital devices. Environmentally sustainable initiatives would help them to keep up with the growing sustainable trends of the customer market.
Conclusion: Software Industry PESTLE Analysis |Tech Industry PESTEL Analysis of Software Industry |External Environmental Analysis of Software Industry | Strategic Analysis of Software Industry
After an in-depth study of the pestle analysis of software industry; we have realized that Software and Tech Companies are dominating the global business market. If you are learning about the Software Industry PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
