With the digital economy as the core growth engine, developing the software industry is strategically significant for Xiangyang to promote intelligent manufacturing and enhance urban competitiveness. Based on Xiangyang’s enterprise registration data and in-depth interviews with representative firms, this study identifies four key bottlenecks of the local software industry and proposes six countermeasures, providing practical reference for Xiangyang and similar tier-3 cities in pursuing high-quality development of the software industry.