Network Managed Services Market Slows After Double-digit Boom Years

11 Apr 2013

ABI Research forecasts that the market for network managed services will grow at a modest CAGR of 7% between 2012 to 2018, unlike the previous years where the market saw double-digit growth. The sudden turn to modesty can be attributed to a sluggish operator capex outlook, some level of disconnect between internal tools and scaling of network operations, commoditization of the low-end managed services, but the main reason is the wake up call to profitability.

The network managed services market saw its glory years starting around 2005, where vendors like Ericsson, Nokia Siemens, Alcatel-Lucent or their erstwhile existences benefitted from a trend where a large number of operators, many of them from developing regions, outsourced their day-to-day network management and operations in return for a considerable cost savings. Most managed services vendors invested heavily in growing network operations centers, taking on board staff, and building large cost structures. In these boom years we had managed service vendors sacrifice profitability for growing market share and revenues.

“The managed services market faces a reality check as many of the false promises of high cost savings begin to be shattered, as some vendors struggle to appease investors,” says Aditya Kaul, ABI Research practice director. “On one level we see a certain maturing of the market, as low-end field operations get commoditized and transactional cost based models give way to customer-centric managed services and strategic business transformation. However, it’s too early to say to what extent operators will bite this new shiny avatar of managed services. While operators face immense pressure to transform their business and not be relegated to dumb pipes by the OTTs, it remains to be seen if they will trust their managed service partners in helping with this transformation.”

The “Network Managed Services” Market Data is published as a part of the Managed Services Research Service that tracks traditional in-building systems like Active and Passive Distributed Antenna Systems and Repeaters.

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