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The Software Industry is Shrinking
It's Time to Specialize or Be Cut
The software industry is in decline.
The last 30 years from the dot com boom to now have produced a huge wave of innovation across so many sectors, leaving healthcare, shopping, food, communications along with countless others completely transformed - but the massive momentum is beginning to slow. Data shows that the rate of growth of the software industry is slowing, but that certain sub-industries within software are still carrying the industry forward in terms of growth. This means that as a professional software developer, especially one that is trying to land their next job, it's wise to understand which areas of software are growing, and which are stagnating
Transformation in the 2010s
In 1990 you would drive your car to a grocery store and buy your food, once a week. In 2022, you connect to the internet and hail a driver plus a shopper to do the task for you and deliver your groceries directly to your door. In 1990, you would dial a friend on their home phone, and if they had gone out for a walk you would miss them. In 2022 you can instantly communicate with them for free at the touch of a button, from anywhere around the world.
The 2010s brought with them so many transformative changes across numerous industries, and have opened many doors to increased quality of life and productivity.
The Sun Is Setting
If you look at the software development industry, incremental innovations are starting to wane, and in many fields there is a ceiling on what more innovation can happen through software.
You can see the concrete evidence of this by looking at market size data. If you look at the global market for software products, you can see the growth rate is predicted at 6.5%, while reports in 2015 saw a roughly 12% increase in market cap year over year. This equates to a nearly 2x slowdown.
Why is this happening? Let's take the communications industry as an example. The leap from the 1990s to now has been astronomical, but now in a world that has near-instant video communication available to anyone with a decent wifi connection, what is the next big leap going to be? The meta-verse? Neural-link? Olfactory communication? Not only are the low-hanging innovations in the communications field few and far between, but they are also not acheivable with only software.
This "software ceiling" is echoed across many, many industries. The big unlock of the internet and internet protocols made software extremely powerful from the 1990s until now, but now we are seeing the end of software innovation.
The Shift is Industry Specific
Though this might seem scary, the reality is that while the industry might be slowing down, only some sub-industries are shutting their doors while others are expanging rapidly.
The Losers
The mobile messaging industry has seen fairly stagnant growth of around 7% increase per year over the last 10 years, and telecom industry has equally stalled out to a paltry 5.4% YOY growth rate.
Generic software companies are also stagnating, because there simply isn't enough innovation coming from "software-only" companies to support their hiring growth (the exception might be those elite software companies like google, but even they are beginning to diversify to adjust for the slowdown).
Companies that see software as their competitive edge, like the furniture company Wayfair, are just not able to drive increased sales by hiring better developers. In the last 3 years (2017–2022) they've had to lay off 30% of their workforce. I would expect to see many more of these types of layoffs in industries where "software innovation" is the only competitive edge.
The Winners
There are some fields within software that are still growing - cybersecurity, robotics, cloud computing + devops, bioinformatics, data science and machine learning, and blockchain technology. These feilds have registered tremendous growth (10-25% year-over-year) and will continue to do so for the next 15 years.
Conclusions
Are you a generalist programmer? It might be time to get yourself a certificate or degree in a specialized field, or otherwise make sure that you are at the top of your game as a generalist, because the next 10 years are going to see even more stagnation in the industry, and more competition to land the desireable jobs.