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Telecoms software professional services market is expected to grow by $18 billion in five years, according to Analysys Mason.

The global telecoms, media and IT adviser Analysys (News - Alert) Mason in a report said that the worldwide telecoms software professional services (TSPS) market generated US $ 43 billion in revenue in 2009, and will grow at a CAGR of 7.2 percent to reach US $ 61 billion in 2014.

The report points out that the strongest growth will come from the hosted managed services sub­segment, where spending will grow at 8.3 percent CAGR.

Systems integration and outsourced operations will not be far behind, both with CAGRs of 8 percent.

The report said that the product-related services and design consulting will achieve similar CAGRs, at 6.3 percent and 6.6 percent respectively, because vendors tend to provide technology consulting with the deployment of their products and solutions.

Design consulting will grow at a higher rate because of communications service providers’ deployments of new technologies, such as LTE (News - Alert).

According to the report, business consulting and custom development will have the lowest growth rates, at 3.8 percent and 2.8 percent respectively.

“In the short term, TSPS spending will be driven by transformation initiatives in developed markets and by outsourced operations in emerging markets,” said Glen Ragoonanan, senior analyst at Analysys Mason and author of the report, in a statement.

Ragoonanan said that in the long term, new technologies, services and business models will drive spending in developed markets, while transformation projects become increasingly common in emerging markets.

“The economic downturn has had a muted impact on the TSPS market, because TSPS have provided cost reduction benefits that have helped service providers to navigate through the recession,” said Ragoonanan, who also heads the infrastructure solutions research programme in the telecoms software research stream.

The report noted that the main drivers behind the market growth include transformation projects that are part of larger, long-term transformation programmes.

Service providers are also spending to secure TSPS suppliers’ expertise when launching new technologies and new services.

However, some of the market’s drivers could evolve into inhibitors.

“Increasing competition will help to drive down prices, which will make TSPS more attractive to service providers and TSPS spending easier to justify in a business case,” said Ragoonanan.

He said that that such competition, however, could restrict the overall market size. Some suppliers are already devaluing business consulting and some design consulting services by bundling them into implementation and integration projects, as well as managed services contracts, he added.