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Increased Outsourcing of Network Functions Spur Growth in North American Managed Telecom Services Markets

Posted on: Wednesday, 15 November 2006, 09:00 CST

PALO ALTO, Calif., Nov. 15 /PRNewswire/ -- The North American managed telecom services market revenues are likely to increase over the next few years as a greater portion of enterprise customers outsource network functions to telecom operators. While medium-sized enterprises constitute the consistent target market for managed services due to their limited IT resources, large enterprises are equally likely to outsource certain tasks or functions associated with their corporate voice and data networks.

New analysis from Frost & Sullivan (http://www.frost.com/ ), North American Managed Telecom Services Markets, reveals that the market revenues totaled $16.6 billion in 2005 and estimates this to reach $26 billion in 2010.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants with an overview of the North American Managed Telecom Services Markets, send an e-mail to Mireya Castilla, Corporate Communications, at mireya.castilla@frost.com with the following information: your full name, company name, title, telephone number, fax number, and e-mail address. Upon receipt of the above information, an overview will be sent to you by e-mail.

Expansion of business activities across national and international markets and the resulting increase in mobile workforce have further complicated the implementation and management of enterprise network infrastructure, thereby encouraging enterprise customers' interest in outsourced/out-tasked telecom services and functions. Adoption of various managed services is particularly popular with large enterprises seeking to reduce their capital and operating expenditures.

Despite the greater availability of managed telecom services, majority of enterprise customers are implementing outsourced/out-tasked solutions in conjunction with in-house managed networks. The piece meal adoption of managed services impacts service providers' revenues and profitability, given that a number of operators have invested significant resources in development and deployment of managed services.

From the enterprise customers' perspective, limited in-house telecom and IT resources as well as continuing enterprise focus on core competencies are facilitating demand for outsourced/out-tasked services. In addition, convergence of wire line and wireless services/applications is urging enterprise customers to take advantage of telecom carriers' expertise in developing and implementing integrated networking solutions. Moreover, greater focus on business continuity and disaster recovery is also helping drive adoption of managed network services among large enterprises. Finally, regulatory compliance requirements are also prompting utilization of professional/network management services, especially in finance and healthcare verticals.

The revenue and profitability potential of managed services can attract new market entrants, as well as encourage existing participants to boost their managed services customer base.

"While managed services market presents tremendous revenue and customer growth potential for telecom operators, service providers must address a number of financial and operational issues, particularly focusing on several back-end processes, functions, and systems that should be in place, prior to entering the managed services market," cites Frost & Sullivan Research Analyst Imran Khan.

However, potential market growth can be hindered by the continuing enterprise interest in in-house managed telecom and IT functions that is suppressing adoption of managed network services. Moreover, growing competition and the rising pressure on managed services prices, especially managed transport/access services, further impact long-term revenues and income of the managed services providers.

"As competition gains greater momentum, managed services providers are likely to seek creative product, pricing and distribution strategies to maintain or expand their share of the managed services market," notes Khan. "The recent increase in mergers and acquisitions is likely to help certain operators improve their market reach as well as expand their product portfolios."

The North American Managed Telecom Services Markets is part of the Business Services subscription, which also includes research services in the following markets: managed telecom services, enterprise product penetration and spending trends, enterprise voice services, and small business telecom services trend. All research services included in subscriptions provide detailed market opportunities and industry trends, evaluated following extensive interviews with market participants. Analyst interviews are available to the press.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership service, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective, and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit http://www.frost.com/ .

North American Managed Telecom Services Markets N022 Contact: Mireya Castilla Corporate Communications - North America P: 210.247.3830 F: 210.348.1003 E: mireya.castilla@frost.com Srividhya Parthasarathy Corporate Communications - Europe P: + 91 44 42044668 E: sparthasarathy@frost.com Sarah Lourdes Corporate Communications - Southeast Asia & ANZ P: +603 6204 5878 F: +603 6201 7402 E: sarah.lourdes@frost.com Surbhi Dedhia Corporate Communications - South Asia, Middle East P: +91 22 2832 4705 Ext: 131 E: sdedhia@frost.com http://www.frost.com/

Keywords in this release: managed telecom service, managed service, enterprise network infrastructure, outsource, out-tasked, research, information, market, trends, technology, service, forecast, market share

Frost & Sullivan

CONTACT: Mireya Castilla, Corporate Communications - North America,+1-210-247-3830, or fax, +1-210-348-1003, or mireya.castilla@frost.com , orSrividhya Parthasarathy, Corporate Communications - Europe, +91-44-42044668,or sparthasarathy@frost.com , or Sarah Lourdes, Corporate Communications -Southeast Asia & ANZ, +603-6204-5878, or fax, +603-6201-7402, orsarah.lourdes@frost.com , or Surbhi Dedhia, Corporate Communications - SouthAsia, Middle East, +91-22-2832-4705, Ext. 131, or sdedhia@frost.com , all ofFrost & Sullivan

Web site: http://www.frost.com/

Source: PRNewswire

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