Global UCaaS market to reach over 131m users by 2028

The global Unified Communications as a Service (UCaaS) market is set to grow to over 131 million users by the end of 2028, with a compound annual growth rate (CAGR) of 10.3% over the next five years, according to new research released today by Cavell.

Cavell’s set of 2024 Cloud Comms Market Reports surveyed over 100 service providers across the UK, Europe and US. The latest findings also reveal that mobile UCaaS services are growing in importance, now accounting for over 15% of the market.

However, the total available market is reducing because the same number of on-premise PBX (private branch exchange) users are not moving to become cloud PBX users. Instead, many enterprises are putting some or all their employees on collaboration-only licenses without an external PSTN (public switched telephone network) functionality.

Other key findings revealed by Cavell’s latest set of Cloud Comms Market Reports, which have been a well-respected and utilised resource amongst the telco industry for over 17 years now, includes:

62% of providers are diversifying their portfolio to ensure the resilience and adaptability of their telecommunications business

48% are building AI capabilities into their products - to drive cost reduction in operators businesses

A third (33%) of users will be Microsoft Teams voice enabled by the end of 2028

Cavell has also noted a reduction in both margin and revenue streams relating to traditional cloud communication and UCaaS services for more than 36 months now. This has been acknowledged by more than 40% of respondents in the latest research who have recognised a decrease in UCaaS revenue.

Dominic Black, Director of Research Services at Cavell, commented: “Historically, providers won new users by migrating from on-premise solutions. However, as the market has matured this has changed as there are fewer on-premise deployments to migrate. This will drive more competition and the need for providers to differentiate whilst also potentially starting pricing consolidation.

“Indeed, we have seen from our research that the proportion of customers being won from a competitor’s UCaaS solutions has been increasing steadily in the last few quarters. Our latest research shows that nearly half (49%) of cloud communications providers have won the majority of their customers from competitors, which is the first time this figure has matched the percentage won by migrating from on-premise solutions.”

Dominic added: “Our research also shows that Microsoft Teams continues to grow in importance in the enterprise segment with a significant portion of the market enabling voice services within Microsoft Teams. Operator Connect is growing in importance, but Direct Routing is still the most adopted solution at the moment - although this is going to change in the future. Teams Phone Mobile is still in it’s infancy in many markets with only a few operators having launched services.

“The convergence trend is also being accelerated by the increasing overlap between the communications, IT, and productivity sectors enabled by collaboration solutions such as Microsoft Teams. Modern collaboration solutions now offer capabilities that would have previously fallen into different areas of technology. Now, as these solutions become more popular globally, partners who traditionally would have focused on IT services are encountering established communication partners and vice versa.”