Communications and Technology Industry Research

A recent report from analyst firm Infonetics Research (News - Alert), Professional Services to Service Providers: Market Share and Forecast, says that service providers are driven to outsource their day-to-day network operations to professional service houses due to pressures for quickly innovating with new services and to cut operational expenditures (OPEX (News - Alert)).

 

Last year, service providers worldwide spent $57 billion on such outsourced services. According to the research firm, driven by traditional IT integrators and the telecom vendor integrator arms of Alcatel-Lucent, Cisco (News - Alert), Ericsson, HP, Huawei, IBM, Microsoft, Motorola, NEC, Nokia Siemens, Nortel, and others, the professional services shops now offer a growing range of services. These include vendor network integration, network assessment, monitoring, and network design, and even the service providers who hire them.

 

Stéphane Téral, principal analyst for service provider VoIP, IMS, and mobile infrastructure at Infonetics Research, said Asia Pacific is a particularly lucrative market for equipment vendors who want to increase their market share or get into the professional services market. Carrier spending in this region represents about a third of the worldwide market.

 

The report also indicates strong activity in India, with multi-billion dollar outsourcing contracts. Infonetics expects new deals to emerge in China once telecom restructuring is complete there. It also sees Africa and Latin America as the next big opportunities in this market.

 

Téral added that once the competitive landscapes in Mexico and Brazil become more consolidated, with a few large players combining to reach economies of scale, they too, will look to further cut OPEX by outsourcing key professional services.

 

The report says that, from 2006 to 2007, global service revenue from professional services to service providers jumped 25 percent, and predicts an increase of 49 percent from 2007 to 2011.

 

Infonetics estimates worldwide carrier OPEX to have hit $1 trillion in 2006. Carrier spending on equipment vendor professional services accounted for just 4.5 percent, suggesting strong potential for growth. Also, Tier 1 carriers (those with annual revenue greater than $7 billion), take in the lion’s share of revenue from professional services to carriers, representing 83 percent of the market in 2007.