Thinking of Buying a Software Development Business in Australia? Here Are 3 Vital Questions to Ask
The Australian software development industry is valued at $85.9 billion in 2024, with an annualised growth rate of 3.56% from 2008 to 2025.
However, revenue is expected to increase at an annualised 4.25% through 2031, driven by cloud computing, AI-driven automation, and cybersecurity demand.
While competition from offshore developers and AI-driven code generation remains strong, businesses that focus on niche solutions, compliance-driven software, and enterprise integrations will maintain a competitive advantage.
However, financial stability, developer retention, and scalability must be carefully assessed before investing.
1. Is the Business Financially Stable and Profitable?
Why It Matters
Software development businesses generate revenue through custom-built applications, SaaS subscriptions, and long-term support contracts.
While industry-wide profit margins stand at 10.6%, profitability depends on labour costs, project scalability, and intellectual property (IP) ownership.
What to Check
- Revenue trends & profit margins – Review financial statements from the last three to five years to assess revenue stability.
- Recurring revenue & contract base – Identify if the business relies on one-off software projects or has long-term SaaS subscriptions.
- Labour costs & developer retention – Developer wages account for 55% of industry expenses, making workforce stability critical.
- Scalability & expansion potential – Assess opportunities in enterprise SaaS, cybersecurity development, and government contracts.
2. How Competitive is the Business’s Market Position?
Why It Matters
The software development market is highly competitive, with offshore firms, low-code platforms, and AI-driven automation tools changing the landscape.
Businesses with strong niche positioning, industry-specific expertise, and cloud integrations will have a competitive edge.
What to Check
- Independent vs. enterprise software model – Determine if the business operates as an independent developer or integrates with enterprise platforms (e.g., AWS, Azure).
- Market demand & customer segmentation – Large enterprises (37%), government agencies (15.6%), and SMEs (5.4%) drive demand.
- Technology & AI adoption – Review the business’s use of AI-driven development tools, cybersecurity protocols, and cloud-based infrastructure.
- Brand authority & intellectual property – Evaluate the business’s portfolio of proprietary software, licensing models, and differentiation from offshore developers.
3. Is the Business Aligned with Industry Trends and Future Growth?
Why It Matters
Cloud computing, cybersecurity, and AI-powered automation are reshaping the software industry.
Businesses that integrate these innovations will achieve greater scalability, recurring revenue, and long-term client retention.
What to Check
- AI & automation capabilities – AI-powered development tools (e.g., GitHub Copilot, OpenAI Codex) are reducing manual coding times and improving efficiency.
- Regulatory & compliance considerations – Ensure compliance with Australia’s Privacy Act, GDPR, and APRA IT security regulations.
- Revenue diversification & expansion strategies – Identify opportunities in vertical SaaS solutions, cybersecurity software, and enterprise contracts.
- Resilience to offshore competition – Assess whether the business differentiates itself through customisation, compliance expertise, or specialised integrations.
Ready to Invest in a Thriving Software Development Business?
With increasing demand for AI-powered software, cybersecurity development, and cloud integrations, the Australian software development industry presents strong investment opportunities.
However, financial sustainability, workforce retention, and technological adaptability are key to long-term success.
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