The Telecom Managed Services Market is expected to register a CAGR of 14.7% over the forecast period 2020 to 2025. The Telecom sector is a significant market for the managed services, due to the high rate of various technological adoptions, increased frequency of confirmation of the BYOD policy (to make business operations much more comfortable and controllable), and increased need for high-end security due to the rapidly increasing data among the organizations. The telecom industry has observed extensive growth during the past few years. Telecommunication companies are encountering constant pressure to deliver innovative services at lower costs to retain their customers in the competitive market. The factors such as the constant requirement for network optimization & large level of network performance, advancements in technologies such as SDN, 5G, & NFV, growing smartphone usage & BYOD trends, and the growing number of cyber-attacks will further encourage the growth of the telecom managed services market during the forecast period.
- According to the 2019 SD-WAN Managed Services Survey, 64% of the surveyed network and IT managers are planning to add an SD-WAN managed service in the next two years. This is because the end-users believe it will deliver better security, improved cloud application performance, and more flexible management. This demand is encouraging Telcom service providers to purchase hardware, software, and regular management of their networks from a third party.
- Many of the SD-WAN managed service providers are distinguishing themselves with a broad range of security offerings. For instance, Cato Networks gives a cloud-native platform that includes NGFW, Advanced Threat Prevention, CloudSecure Web Gateway, and Mobile Access Protection, and a Managed Threat Detection and Response service. Colt proposes a Layer 3/4 stateful firewall or Layer 7 firewall with DDoS protection. CenturyLink proposes a suite of security services it refers to as Adaptive Network Security.
- Telecom companies are also acquiring managed service providers to gain a more significant market share. In July 2019, Spirit Telecom acquired managed services provider Arinda IT to heighten its current service offerings for its SME customer base. In February 2020, Sprint acquired Trident Business Group (TBG), which owns Neptune Managed Services and Trident Computer Services. Besides, in March 2020, Ericsson was chosen by NTT DOCOMO as the AI-powered optimization solution supplier for its radio access network (RAN).
- The Telecom businesses are increasing at a higher pace, so enterprises are frequently relying on MSPs. An MSP helps enterprises to achieve excellent business outcomes by providing a great level of services. The companies are facing several challenges in terms of revenue, business transformation, cost implementation, and heightened competition in the marketplace in the telecom sector due to which they depend on MNOs and CSPs.
- Determinants such as security concerns related to the confidentiality of data of businesses that are outsourcing the business and assuring the optimum business functionality of the clients are expected to restrict the outgrowth of the market during the forecast period.
- However, due to COVD-19, operational services like Telecom managed services and support services have been affected globally. The current crisis due to the pandemic may see work volume increase for many of the contracts in the short term as firms need to use service partners to support homeworking arrangements.
Key Market Trends
Managed Data Center Services to Dominate the Market
- The growing volume of data and its management is causing the managed data center services to develop, over the forecast period. Reduced risk is one of the benefits offered by managed data center services, especially on compliance issues, data security, and government regulations, as experts in IT mitigate these.
- According to a study done by AFCOM in 2018, the average number of data centers managed is likely to increase to 10.2 per organization over the coming three years, and over three years, on average, 12.8 data centers per organization are likely to be refurbished.
- Moreover, increased use of big data analytics and cloud computing has fueled the demand for data centers, which may further drive the demand for managed data center services. According to Cisco, Big data may reach 403 EB by 2021, up almost 8-fold from 51 EB in 2016. Big data alone may represent 30% of data stored in data centers by 2021, up from 18% in 2016.
- Colocation data centers are becoming increasingly popular, as businesses realize the majority of benefits of leasing from a colocation building their own data center infrastructure. The complexities in the infrastructure facilities, owing to the integration of technologies like network and connectivity devices, are increasing rapidly.
- With the increasing demand, companies are introducing new offerings to leverage the rising demand for the market. For instance, in 2019, VMware released VMware Cloud on Dell EMC, which offers secure and scalable infrastructure delivered as-a-service to customers’ on-premises data center and edge locations. This system of delivering public cloud agility and simplicity to on-premise workloads is fully managed by Dell Technologies.
- In 2019, DXC Technology expanded its presence in data center colocation services, by signing a long-term managed colocation services agreement with Credit Suisse (USA) Inc. The company, via its data center colocation services subsidiary, is likely to acquire a New Jersey data center from Credit Suisse.
- Companies are finding it challenging to manage such complicated network devices, forcing them to transfer these responsibilities to colocation service providers, thereby, propelling the Telecom managed services market. Thus, organizations understand that they require telecom managed services to gain advanced technological improvements, bring innovative applications, and offer security features.
North America to Dominate the Telecom Managed Services Market
- North America held the biggest market share and is anticipated to dominate the telecom managed services market during the forecast period. The market will experience an abrupt rise in this region. The factors encouraging the growth of the market in North America include quickly evolving technological developments, the presence of the world’s largest telecom firms looking for optimizing their network investments & intensify customer satisfaction, and rising network cyber-attacks in this region.
- For instance, misconfigured servers accounted for 86% of the 8.5 billion records compromised, globally, in 2019, according to an IBM security analysis, and most of them in the United States. As the number of misconfigured incidents declined from 2018 to 2019, the total number of records affected increased. Also, according to a February 2018 White House Report, cyberattacks cost US businesses nearly USD 109 billion in 2016.
- With the speedy acceleration of modern technology and the need for streamlined IT functions, an increasing number of businesses in the region are finding it best to keep pace with the help of Telecom MSP. In fact, according to Acronis International GmbH, in 2018, 64% of the organizations reported using MSPs in one form or another.
- Further, the penetration of smartphones and tablets is increasing in the United States, which is likely to drive the BYOD policy. The increasing penetration of devices, coupled with strong network connectivity across the region, is expected to encourage the organizations to adopt BYOD policies.
- Moreover, in the United States, through 2020, public cloud and telecom managed services are anticipated to be leveraged more often for ITOM tools, which will encourage the growth of the subscription business design for both cloud and on-premises ITOM. In addition, in the region, telecom service providers, also called Telco’s, are making use of their existing scale and IT savviness, to shift beyond data services and voice, to selling managed offerings.
- Additionally, the presence of key telecom players in the region, rising in the deployment of data centers is expected to drive the market. Additionally, the need for improved operational efficiency and reliability in the business processes are driving the market in this region.
The Telecom Managed Services Market is consolidated, and it is dominated by major players. Primary vendors across various verticals are planning for huge investments in this market, and as a result, the market is anticipated to grow at an extraordinary rate in the upcoming years. The principal players are embracing several organic as well as inorganic growth strategies such as mergers & acquisitions, collaboration & partnerships, and joint ventures among others for being in a strong position in the market. The leading vendors covered in the report include Cisco Systems, Huawei Technologies, Ericsson, Fujitsu, IBM Corporation, AT&T Inc., ZTE, Tech Mahindra, and Unisys among others.
- Feb 2020 - Nokia Corporation partnered with Japan-based telecom operator Rakuten mobile, to enable the implementation of automated operations environments for the 5G era. Nokia is likely to be operating its virtualized core as a managed service, allowing Rakuten to focus on its portfolio of disruptive services and help expand its service footprint, worldwide.
- Nov 2019 - Orange partnered with Ericsson as its Telecom managed services provider in five European countries in a deal that will also see the deployment of the Ericsson Operations Engine. The agreement covers Orange operations in Spain, Belgium, Romania, Slovakia, and Moldova, supporting about 40 million customers.
- April 2019 - Indian service provider Bharti Airtel partnered with Cisco to provide networking and connectivity services to its enterprise and small-medium business customers. This includes an SD-WAN service based on Cisco’s Viptela platform.
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