Businesses looking to gain a competitive edge are adopting hosted communications solutions to gain faster access to advanced features and more frequent functionality upgrades. Continued economic challenges are also forcing businesses to choose hosted solutions as they allow greater flexibility for rapid growth or downsizing.
New analysis from Frost & Sullivan, Analysis of the European Hosted IP Telephony and UCC Services Market, finds that the market earned revenues of $3.32 billion in 2014 and estimates this to reach $17.93 billion in 2021.
“Tight IT budgets and limited in-house IT expertise are pushing small and medium-size businesses to outsource communications solutions to expert third parties,” said Frost & Sullivan Digital Transformation Program Director Elka Popova. “For large, distributed organisations, avoiding the cost and hassle of integrating multi-vendor solutions combined with greater ability to support remote and mobile workers are driving their move to the cloud.”
The retail, professional services and IT sectors in Europe have been early adopters of hosted IP and UCC services. In some countries, public sector organisations are also moving to hosted communications. The presence of multiple distributed sites and OPEX-based IT budgets are driving demand for hosted IP telephony and UCC services in other sectors as well.
However, businesses with specific customisation, integration or security requirements continue to choose premises-based solutions over hosted services. Fear of losing control over communications capabilities is another factor preventing some firms from outsourcing telephony and UCC solutions. Lingering concerns about quality and reliability also prevent some businesses from migrating to IP-based communications systems and services.
Channel support is critical for service provider success in Europe. A barrier to broader hosted IP communications adoption has been traditional telecom resellers’ limited experience with cloud technologies and recurring revenue business models. Many perceive hosted services as a threat to equipment sales and their cherished relationships with equipment vendors.
Technology maturity, new architectures and business models, and greater awareness of cloud communications and their advantages are increasingly addressing these barriers to hosted services uptake in Europe. The wider availability of hosted solutions also means enterprises can find the best fit for their specific needs.
“In the future, greater incumbent carrier focus on next-generation services, as well as mergers and acquisition among smaller providers will expedite industry expansion,” observed Frost & Sullivan Digital Transformation Program Manager Robert Arnold. “Continued solution enhancements, such as better mobility support and tighter integration with other communications and productivity apps, will reinforce the appeal of hosted IP telephony and UCC in the European market.”