Global UCaaS market to reach 131 million users by 2028

Research from Cavell has predicted significant growth in the global Unified Communications as a Service (UCaaS) market. With an anticipated compound annual growth rate (CAGR) of 10.3% over the next five years, the market is expected to have over 131 million users by the end of 2028. In their most recent Cloud Comms Market Reports, Cavell surveyed more than 100 service providers from the UK, Europe, and the US.

Another key finding note that mobile UCaaS services are growing in importance and currently account for more than 15% of the market. Conversely, the total available market is contracting as the same number of on-premise PBX (private branch exchange) users are not transitioning to become cloud PBX users. Instead, many businesses are assigning some or all their employees to collaboration-only licences without external PSTN (public switched telephone network) functionality.

Several other notable developments were revealed in the report, which has been a respected resource for the telecommunications industry for over 17 years. Among these, 62% of providers are diversifying their portfolio to ensure their telecommunications businesses' resilience and adaptability, and 48% are implementing AI capabilities into their products to drive cost reductions. By the end of 2028, a third (33%) of users are projected to have Microsoft Teams voice enabled.

Cavell has noted a decrease in both margin and revenue streams relating to traditional cloud communication and UCaaS services for more than 36 months now. This decrease in UCaaS revenue has been observed by over 40% of respondents in the recent research.

Dominic Black, Director of Research Services at Cavell, stated that with fewer on-premise deployments to migrate as the market matures, providers were winning new users differently. "This will drive more competition and the need for providers to differentiate whilst also potentially starting pricing consolidation," Black reported. He noted that an increasing number of customers are being won from a competitor's UCaaS solutions in recent quarters, with nearly half (49%) of cloud communications providers countering each other in this way.

Black further added, "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."

The trend of convergence is further hastened by the increasing overlap between the communications, IT, and productivity sectors made possible by collaboration solutions such as Microsoft Teams. Modern collaboration solutions now offer capabilities previously assigned to different technology areas. As these solutions gain popularity globally, partners traditionally focused on IT services are meeting established communication partners and vice versa.