Telecom outsourcing services revenue reach $69 billion in 2015, Ericsson leads the market: IHS

Ericsson managed to retain its lead in telecom outsourcing revenue market share in 2015, followed by Huawei, HPE, IBM and Nokia Networks, according to a research by HIS Technology, which said that global outsourcing services revenue went up 3% on an yearly basis to $69 billion, due to telcos’ unabated need to outsource non-core tasks.

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The firm said that the slow growth in this market segment 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.

Stéphane Téral, Senior Research Director, Mobile Infrastructure and Carrier Economics at IHS said, “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.”

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 % 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.

The report said that network maintenance, build, planning and design made up 52% of carrier outsourcing revenue in 2015. Managed service revenue—including operations, network maintenance and network planning and design—is expected to grow at a 3% 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.

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