IHS Technology analysis and commentary on the Service Provider Outsourcing to Vendors Annual Market Report follows.
As service providers operate in saturated markets everywhere in the world, they increasingly focus on customer satisfaction and retention and on business and network transformation, which require increasing dedicated resources. However, significant revenue growth may no longer be achievable, so it is necessary to de-emphasize network operations through outsourcing and managed services to preserve margins and sustain cash flow.
Service providers’ unabated need to outsource non-core tasks led global outsourcing services revenue to increase 3 percent in 2015 over the prior year and reach $69 billion. This slow growth is the result of a combination of musical chairs between the traditional telco vendor club, which includes Ericsson, Huawei and Nokia, big IT players such as IBM and Hewlett Packard Enterprise, and the execution of existing large contracts in the absence of new ones. Ericsson and Huawei reported double-digit year-over-year revenue growth in managed services in 2015, while IBM and HPE saw declining revenue.
In the long run, the telecom outsourcing services market is projected to reach $76 billion by 2020, growing at a compound annual growth rate (CAGR) of 2 percent and driven by mobile network outsourcing deals as more and more mobile operators try to keep their opex under control by removing non-core task and focusing on customers’ experience and information and communications technology (ICT) business, as well as network transformation that requires a merger of IT and telecom network teams.
More Carrier Outsourcing Market Highlights
- Ericsson retained its lead in telecom outsourcing revenue market share in 2015, followed by Huawei, HPE, IBM and Nokia Networks
- Making up 52 percent of carrier outsourcing revenue in 2015 were network maintenance, build, planning and design
- Managed service revenue—including operations, network maintenance and network planning and design—is expected to grow at a 3 percent CAGR from 2015 to 2020, driven by a mix of full operation outsourcing and radio access network (RAN) sharing
- From a regional perspective, EMEA (Europe, Middle East, Africa) remained the world’s largest outsourcing and managed services market in 2015 and is expected to do so through at least 2020
Outsourcing Report Synopsis
The IHS annual Service Provider Outsourcing to Vendors report tracks the revenue vendors derive from the services they provide to their telecom carrier customers. The report tracks both the overall network outsourcing market as well as the fast-growing managed services segment within it, also referred to as “full-service outsourcing,” where an equipment vendor takes over an operator’s entire infrastructure on an end-to-end basis over an extended period, including network maintenance, operations, planning and design tasks.
The report provides market size, market share, forecasts through 2020, analysis and trends. Vendors tracked include Alcatel-Lucent, Ciena, Cisco, Ericsson, Fujitsu, Hitachi, HPE, Huawei, IBM, Juniper, Microsoft, Motorola, NEC, Nokia Networks, Tellabs, UTStarcom, ZTE, others.
For information about purchasing this report, contact the sales department at IHS in the Americas at +1 844 301 7334 or [email protected]; in Europe, Middle East and Africa (EMEA) at +44 1344 328 300 or [email protected]; or Asia-Pacific (APAC) at +604 291 3600 or [email protected].