Communications Platform as a Service Market worth $45.3 billion by 2027
The global Communications Platform as a Service Market is projected to grow from USD 12.5 billion in 2022 to USD 45.3 billion by 2027, at a Compound Annual Growth Rate (CAGR) of 29.4% during the forecast period, according to a new report by MarketsandMarkets™. The growth of the CPaaS market can be attributed to the growing demand for improved customer service and client engagement. Moreover, the boost in the adoption of CPaaS solutions during the pandemic fuels the growth of the market.
The solutions segment is expected to account for a larger market share during the forecast period. CPaaS solutions allow organizations to add voice, video, and messaging features to their existing business software using APIs. This allows them to cherry-pick real-time communications features and embed them into their apps and services. This feature is attractive to growing companies who already use a cloud-based technology stack and want to customize their communications infrastructure.
By services, the managed services subsegment is expected to grow for a higher growth during the forecast period
The managed services subsegment is expected to account for the highest growth rate during the forecast period. The managed service providers support and manage third-party infrastructure that help organizations to manage their products or services. The need for comprehensive managed services has increased as it has alleviated the workload placed on IT, all while ensuring business continuity and customer communications.
By region, North America is expected to account for the largest market size during the forecast period
North America is expected to account for the largest share of the CPaaS market. North America, for this study, includes the US and Canada. It is one of the most technologically advanced regions in the world. The region is well-connected with advanced infrastructure, which helps CPaaS vendors offer quality services to their clients. It offers the most innovative and fastest services available in the world through its network infrastructure. The CPaaS market in North America is competitive due to the presence of a large number of solution providers. North America is expected to be one of the early adopters of 5G technology, which would boost the adoption of CPaaS solutions in the region. The presence of most key vendors of CPaaS solutions such as Twilio, Avaya, Vonage, Bandwidth, and RingCentral has contributed to the market growth in the region.
Driver: Demand for improved customer service and client engagement
Today, most organizations are customer-centric and looking for solutions that better suit customer service. The emergence of CPaaS solutions and services has overcome the drawbacks of traditional systems. Many organizations utilize CPaaS to send custom messages including appointment confirmations and reminders, purchase confirmations, and order tracking. CPaaS Solutions such as chatbots can be used to fulfill customer requests. Furthermore, enterprises demand ease of access to omnichannel service providers with a single integrated API. Therefore, enterprises are adopting to CPaaS solutions to offer enhanced customer service.
Opportunity: New channels to transform digital transformation
The new and emerging channels such as Rich Communication Services (RCS) and social media messaging provide vast new opportunities for digital communication. While standard SMS is limited to 160 characters in black and white, the new OTT channels have introduced full rich media experiences including images, videos, group chats, and interactions that smartphone users now take for granted in their person-to-person (P2P) communication with friends and family. This has led to the increasing adoption of CPaaS solutions to manage the complexity and facilitate the opportunities these new technologies present.
Restraint: Security concerns over public cloud
There are many benefits of the public cloud, but there are several concerns over its security that need to be considered by organizations before adopting it. The public cloud is a multi-tenant environment. Due to this, security threats are always there; multitenancy may allow a hacker to view the data or assume the identity of another client to access the data. Furthermore, organizations are well-aware of the compliance regulations that need to be followed. Hence, security concerns related to the public cloud are expected to act as a restraint in the CPaaS market as the majority of CPaaS solutions are deployed on the public cloud.
Challenge: Security limitations and weakness issues
While CPaaS APIs have given developers tools to integrate real-time communications, such as voice and video communications, into their apps without building interfaces and backend infrastructure, it comes at the cost of decision-making power over API security. The potential for CPaaS data breaches not only applies to data in motion such as in the case of real-time voice and video communications, but also to data at rest such as data stored in services at the edge of the network. Without strong security controls, CPaaS companies are vulnerable to fraud attacks.
Key players
The major vendors in the Communications Platform as a Service Market include Twilio (US), Sinch (Sweden), Avaya (US), Vonage (US), Bandwidth (US), RingCentral (US), TeleSign (US), Infobip (UK), CM.com (Netherlands), and 8×8 (US).
