Friday, May 8, 2009

Phone Companies Spend US$62 Billion On Outsourced Services in 2008

­Market research firm Infonetics Research is reporting that telecom carriers spent US$62 billion on outsourced services in 2008, and have plans to increase that spending. The report noted that the top revenue-generating tasks outsourced by service providers in 2008 include network maintenance, application service delivery, network build, and network planning and design.

"Our analysis of vendor financial reports clearly shows major double-digit increases year over year for equipment vendor service revenue, which more than offsets product revenue declines for some vendors in the Tier 1 category (vendors with $7 billion or more in annual revenue). As a result, worldwide service revenue from equipment vendor services to service providers hit $62 billion in 2008, up 17% from 2007, and will continue to increase as service providers outsource more tasks so they can continue to cut opex and beef up their margins. In the equipment vendor services market, no one sees a slowdown during this global recession; instead, they all see more opportunities," said Stéphane Téral, Principal Analyst, Mobile and FMC Infrastructure, Infonetics Research.

The vendor services to service providers market is driven by traditional IT integrators and the telecom vendor integrator arms of Tier 1 vendors, including Alcatel-Lucent, Cisco, Ericsson, Fujitsu, HP, Huawei, IBM, Microsoft, Motorola, NEC, Nokia Siemens, and Nortel 

In 2008, IBM continued to lead the equipment vendor services market, while Nokia Siemens Networks gained market share in 2008, and the other top 5 vendors maintained or dropped a point or two of worldwide market share. 

The bulk of the growth for the vendor services to service providers market comes from Asia Pacific, with major outsourcing deals such as Bharti Airtel in India. Worldwide Tier 1 vendor service revenue from equipment vendor services to service providers jumped significantly in 2008, due mainly to strong activity in India as well as the combination of smaller deals in Europe. 

In conclusion, between 2008 and 2013, the Central and Latin America region is expected to gain share at the expense of North America and EMEA 

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