Contract Lifecycle Management Market - Forecasts from 2023 to 2028

The contract lifecycle management market is projected to grow at a CAGR of 13.16% to reach US$3,372.336 million in 2028 from US$1,419.366 million in 2021.

Contract lifecycle management (CLM) is the process of automating the monitoring and administration of the initiation, execution, performance, renewal, and expiry procedures relating to the contracts of an organization. The adoption of on-premises and cloud-based contract lifecycle management software and services by companies enables the use of in-built legal clauses and templates to fortify the regulatory and operational compliance of contracts. In addition, they assist in acquiring IP licenses, internal agreements, and sales contracts easily and rapidly. The automation of contract lifecycle management by organizations eliminates the cost, time, and resources associated with signing and shipping a vast number of contracts by using e-signature features. The growing importance of contracts and the established legal implications of contracts in courts of law is creating the demand for the contract lifecycle management market across different industry verticals including BFSI, retail, manufacturing, healthcare, education, and IT sectors. Therefore, the extensive application of contract lifecycle management across different industries is expected to result in the prominent growth of the contract lifecycle management market over the forecast period.

Market Drivers

Legal significance of contracts signed by companies

The various types of contracts signed and undertaken by companies across different industries have legal consequences and obligations associated with them which necessitate the use of contract lifecycle management solutions to carefully develop the terms, conditions, and provisions of contracts. For instance, in September 2021, the lawsuit filed against Apple Inc. by Epic Games, Inc. on the grounds of breach of contract was ruled in favor of Apple Inc. by the U.S. District Court for the Northern District of California. Therefore, it is necessary to formulate precise contracts with unambiguous provisions to prevent the occurrence of legal accidents which creates more demand for contract lifecycle management software and services. In addition, the increase in the number of contracts signed by large companies across different industry verticals is stimulating the growth of the CLM market since these companies are constantly involving themselves in different collaborations, mergers, agreements, acquisitions, and strategic alliances on a contractual basis lasting for a wide range of years. For instance, Samsung Electronics formed a patented cross-license agreement with Ericsson to prevent any patent lawsuits and concerns by agreeing on the mutual provision of a patent license. Further, Samsung has major contracts with leading companies such as Google, Microsoft, Nokia, and GlobalFoundries for different purposes. Hence, the enlargement of the contracts signed by large-sized companies accompanied by the critical legal consequences associated with contracts is a significant factor driving the demand for the contract lifecycle management market.

Expansion of companies in the BFSI sector

The application of contract lifecycle management solutions in the banking and financial services sector provides an opportunity for the development of the CLM market as the companies operating in the BFSI industry have to deal with a multitude of contracts on a daily basis. Contracts are the core and fundamental part of BFSI companies as they sign a voluminous number of contracts with their customers and third parties. For instance, HDFC Bank Limited, a leading company in the Indian BFSI industry revealed that its contingent liabilities resulting from outstanding derivative contracts increased from INR3,577 crores in 2021 to approximately INR5,898 crores in 2022. In addition, banks regularly engage in contracts with their customers for loan forms and fixed deposit forms among many types of contracts. Therefore, the BFSI sector needs to place large levels of focus on its risk management and assessment across a wide range of applications ranging from insurance premiums to extending loans to customers which is resulting in the customization of CLM software to meet the requirements of the BFSI sector. For instance, a number of Noida Bank customers faced an aggregate loss of INR25 million in March 2020 as a result of contract management failures by outsourced vendors. Hence, the prime importance of contracts in the BFSI sector is expected to increase the contract lifecycle management market over the forecast period.

The differences in contract laws across different nations could result in restricted growth of the contract lifecycle management market.

Every nation has its own set of contract laws and regulations which must be adhered to for the development and execution of contracts. Hence, the differences in contract formats and requirements across different countries could lead to complications in contracts entered into by companies situated in different countries. Certain major contract lifecycle management software has in-built knowledge of the contract laws existing only in major economies which results in a lack of standardized legal and contractual language used by several underdeveloped economies which restricts the penetration of the CLM market into such regions.

Key Developments

In March 2023, ContractPodAi, a company primarily focusing on the provision of CLM solutions to its clients introduced a new assistant platform, Leah with ChatGPT-powered features to improve the user experience of its CLM software.

In August 2022, an India-based digital legal services and business analytics company, Manupatra launched a cloud-based contract lifecycle management application, Manucontract with in-built report development and contract management features that be used by enterprises of varying sizes.

In June 2022, SirionLabs and the Indian KPMG announced their strategic alliance to collaborate and merge the AI-based CLM software services of SirionLabs and the contract management solutions of Indian KPMG to mutually enhance the CLM services offered to different businesses in India.

North America presently holds a significant share of the contract lifecycle management market and is expected to grow significantly during the forecast period.

The expansion of the operations of companies in the BFSI sector fueled by the overall development of major North American economies such as the US and Canada is anticipated to drive the North American contract lifecycle management market. In addition, the Asia Pacific region is also expected to witness expansion in its contract lifecycle management market due to the developments in the retail, education, and healthcare sector of the region as a result of the increasing digitalization and globalization of companies in these areas.

Market Segmentation:

By Solution

• Software
• Services

By Enterprise Size

• Small and Medium
• Large

By Deployment

• On-Premises
• Cloud

By Industry Vertical

• BFSI
• Healthcare
• Retail
• IT and Telecom
• Manufacturing
• Education
• Others

By Geography

• North America
• USA
• Canada
• Mexico
• South America
• Brazil
• Argentina
• Others
• Europe
• Germany
• France
• United Kingdom
• Spain
• Others
• Middle East and Africa
• Saudi Arabia
• UAE
• Israel
• Others
• Asia Pacific
• China
• Japan
• India
• South Korea
• Indonesia
• Taiwan
• Others