Unified Communication as a Service (UCaaS) Market

2021 Analysis and Review: Unified Communication as a Service UCaaS Market by Solution, Enterprise Size, and Vertical for 2021 – 2031

UCaaS Industry Snapshot

The Unified Communication as a Service (UCaaS) market revenue totalled US$ 19.6 Bn in 2020, according to Future Market Insights (FMI) analysis. Rising at a CAGR of 14.5% between 2021 and 2031, the overall market is expected to reach US$ 85.7 Bn by 2031.

The demand for UCaaS solutions will accelerate with top 5 providers holding around 36.5% of total market in 2020.

Newly released data on the UCaaS demand outlook indicates 12.8% y-o-y growth in 2021. Among industry vertical, share held by BFSI sector will remain highest among all. However, the IT & telecom segment will grow at 18.1% CAGR through the assessment period.

Key Points Covered in Unified Communication as a Service (UCaaS) Market Survey

  • Market estimates and forecast 2016-2031
  • Key drivers and restraints impacting market growth
  • Segment-wise, Country-wise, and Region-wise Analysis
  • Competition Mapping and Benchmarking
  • Market Share Analysis
  • Key Product Innovations and Regulatory Climate
  • COVID-19 Impact on UCaaS market and how to Navigate
  • Recommendation on Key Winning Strategies

2016-2020 UCaaS Demand Outlook Compared to 2021-2031 Forecast

Increasing demand for UCaaS from large as well as small and medium enterprises (SMEs) can be attributed to proliferation of mobility and Bring Your Own Device (BYOD) trends. The UCaaS demand is estimated to rise at 14.5% CAGR between 2021 and 2031 in comparison above 10.7% CAGR registered during 2016-2020.

The implementation of hosted solutions by enterprises to reduce costs and improve productivity is creating growth opportunities for the UCaaS market. Also, advantages of UCaaS over Unified Communication in terms of ROI, business continuity, speed, and flexibility are the factors increasing the popularity of UCaaS solutions.

Since its inception, unified communications (UC), has emerged as a cost-effective solution for various industries, such as healthcare, retail & CPG, and BFSI among others. Advent of cloud based unified communication solutions such as RingCentral and Mitel Networks Corporation, is shaping the way organizations manage their communication networks.?

For savvy IT and business leaders, present-day communications are already in the cloud. With the rise of 100% remote workforces, virtual teams need to be totally integrated, so they can connect and collaborate with all the tools necessary to do their jobs.

Unified Communications as a Service (UCaaS) delivers on that vision with resilient, cloud-based solutions that can be deployed more quickly—and for less—than an on-premises solution.

The global UCaaS growth scenario is anticipated to witness an increase in revenue from ~US$ 22.2 Bn in 2021 to ~US$ 85.7 Bn by 2031.

How is Rise in Demand for Remote Solutions shaping the Growth?

UCaaS has been at the center stage as the adoption of cloud solutions and services is increasing with each passing year. The demand for UCaaS is rising as businesses around the globe are looking to have more unified communications capabilities to ensure their ability to get work done and to acknowledge the cost and productivity benefits of cloud communications.

In the past few years, the continuous digitizing workspaces has increased the demand for remote solutions which is further creating opportunities for implementation of UCaaS solutions.

Besides this, the rising demand for mobile devices, applications, and a variety of collaboration tools is enabling employees to connect across geographies, platforms, and devices. This this further is transforming IT consumption trends and increasing adoption of cloud computing and UCaaS solutions.

What Is the Impact of COVID-19 Crisis on UCaaS Demand?

COVID-19 pandemic has impacted every sector and due to social distancing norms organizations are steering towards digitalization to ensure safety of their employees.

Restrictions implemented to curb the spread of the virus have compelled organizations to reconsider the future of work, and what it might look like for employees. COVID-19 prompted many companies that didn’t have work-from-home policies, to scramble and put them in place, which many experts forecast will extend into the post-COVID-19 period.

The adoption of integrated UCaaS platform has increased in the pandemic owing to the current remote working mandates. Thus, the demand for UCaaS is estimated to grow around 10.3% to 12.8% Y-o-Y from 2019 to 2021.

Since many employees have started working from home due to COVID-19, video conferencing, web conferencing, collaborative meetings, mobile telephony and VoIP phone systems have become some of the most sought-after tools.

Country-wise Insights

How big is the Opportunity for UCaaS Adoption in the U.S.?

North America is predicted to remain one of the most attractive markets during the forecast period, according to Future Market Insights. According to the study, the U.S. is expected to account for more than 83% of the North America share through 2031.

The UCaaS demand in the U.S. is projected to offer the most lucrative opportunity for revenue generation over the forecast period. The presence of various key players in the U.S. and proliferation of trends such as Work from Home (WFH) and Bring-Your-Own-Device (BYOD) are some of the key factors encouraging the adoption of UCaaS solutions in the country.

Moreover, increasing investments in digitizing IT infrastructure, rising popularity of cloud based communication solutions, growing mobile workers, and continuous increase in penetration of smart devices are some of the significant elements to segment the growth of UCaaS solutions in the U.S.

Why is Demand for UCaaS Increasing in ASEAN Countries?

Demand for UCaaS platforms in ASEAN countries is expected to rise at nearly 19% CAGR over the forecast period owing to growing remote workforce and continued digitization of work culture in these economies.

The presence of an increasing number of AI-development hubs in various ASEAN countries, such as Singapore and others has resulted in surge in number of startups that offer AI-related services to clients across the globe.

Furthermore, rapid penetration of smartphones and an aggressive rollout of high-speed internet at affordable tariffs in the region are y encouraging enterprises to opt for UCaaS solutions to allow people to work remotely.

This is typically driving the adoption of UCaaS solutions and platforms in the region and is expected to contribute to the overall demand during the forecast period.

As per the report, ASEAN countries is recognized as a primary industry, and it holds a major revenue share of 52.0% in 2020.

How is the U.K. Contributing towards the UCaaS Sales?

Demand for UCaaS solutions in the U.K. is estimated to total US$ 1,016.7 Mn by the end of 2021. Expansion of the retail industry in the U.K., together with the presence of major players such as 8x8, a US-based company, who is among the leading UCaaS providers has positively influenced market growth.

The company has expanded significantly in the Europe market, by making two major acquisitions of UK-based enterprises.? Furthermore, several network providers in the U.K. are likely to discontinue the integrated digital network services, resulting in the migration of carriers and customers towards IP connectivity services.

This major shift is driving the adoption of next-generation business communication solutions, such as UCaaS solutions and hosted private branch exchange (PBX), thereby propelling significant growth in the U.K.

Category-wise Insights

Why the Demand for Integrated UCaaS Platform/Suite Continuously Rising?

Based on software, integrated UCaaS platform/suite is expected to contribute nearly 64.5% of the overall share in 2021. UCaaS platforms provide a broad range of communication and collaboration applications and services in the cloud. The three main capability areas that UCaaS solutions cover are: voice/VoIP, audio and video conferencing, and instant messaging/chat. Many vendors also include team collaboration features, such as screen sharing or real-time document editing.

As a result, UCaaS platforms have become mainstream and are fast becoming the ultimate business communications technology of choice. This allows developers to add in even more capability into the platform, facilitating its growth along with that of businesses. These elements are estimated to create new growth avenues for integrated UCaaS platforms during the forecast period.

Why is UCaaS Application Higher in Large Enterprises than SMEs?

The large enterprises segment accounted for more than half of the overall demand for UCaaS in 2020. Contract and remote work is increasingly common, offering enterprises the agility to be responsive as well as strategic in order to maintain an edge in the marketplace.

Driven by the disruption, the B2B market has seen an influx of communication tools to cover every type of interaction conceivable. Companies use a range of different communication platforms and performance measurement tools to connect and align their diverse global workforce.

UCaaS supports flexible working and keeps a disparate global workforce connected, maintaining high productivity regardless of geographical location. Moreover, UCaaS works in collaboration with existing workplace applications such as video calling and messaging, and integrates with a range of tools. Therefore, enterprises undergoing digital transformation have transitioned their communications stacks to the cloud to consolidate their tools and take advantage of improvements in efficiency.

How is Application in IT & Telecom Sector Supporting Growth?

The IT & telecom sector is expected to expand at an impressive CAGR of 18.1% between 2021 and 2031. Incumbents of the IT & telecom industry often have to work with high-profile clients, such as federal organizations and government departments, which calls for efficient and secure exchange of information.

Also, the strong emphasis of several IT & telecom companies to roll out more efficient collaboration tools among their globally-distributed teams is driving the need to deploy UCaaS solutions. Thus, the growing need for privacy protection, data security, and seamless workplace integration is driving the adoption of UCaaS solutions by IT & telecom organizations.  

Competitive Landscape

Intense competition and growing customer expectations are creating a storm in the global UCaaS market which is compelling solution providers to innovate and improve customer engagement. The accelerated shift by the customers to cloud communication is creating a demand for enhanced user productivity and flexibility and is creating the opportunities for advanced communications and collaboration tools.

For instance, in May 2021, 8x8, Inc. announced Experience Communications as a Service (XCaaS), a cloud communications deployment model that erases the boundary between Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS). With XCaaS, organizations can support the communications requirements of all employees as they work together to deliver differentiated customer experiences.

Some of the leading companies operating in the market are:

  • 8x8 Inc.
  • Cisco Systems, Inc.
  • Google LLC
  • Microsoft Corporation
  • LogMeIn Inc.
  • RingCentral, Inc.
  • Mitel Networks Corporation
  • Fuze Inc.
  • Windstream Holdings, Inc.
  • ALE International
  • DIALPAD, INC.
  • Verizon Communications Inc.
  • NTT Communications Corporation
  • Vonage
  • Masergy Communications, Inc.
  • Avaya Inc.

*The list is not exhaustive, and only for representational purposes. Full competitive intelligence with SWOT analysis available in the report.

Scope of Report

Attribute

Details

Forecast Period

2021-2031

Historical Data Available for

2016-2020

Market Analysis

USD Million for Value

Key Countries Covered

US, Canada, Germany, U.K., France, Italy, Spain, Russia, China, Japan, South Korea, India, ASEAN, Australia & New Zealand, GCC Countries, Turkey, and South Africa

Key Segments Covered

Solution, Enterprise Size, Vertical, and Region

Key Companies Profiled

  • 8x8 Inc.
  • Cisco Systems, Inc.
  • Google LLC
  • Microsoft Corporation
  • LogMeIn Inc.
  • RingCentral, Inc.
  • Mitel Networks Corporation
  • Fuze Inc.
  • Windstream Holdings, Inc.
  • ALE International
  • DIALPAD, INC.
  • Verizon Communications Inc.
  • NTT Communications Corporation
  • Vonage
  • Masergy Communications, Inc.
  • Avaya Inc.

Report Coverage

Market Forecast, Company Share Analysis, Competition Intelligence, DROT Analysis, Market Dynamics and Challenges, and Strategic Growth Initiatives

Customization & Pricing

Available upon Request

Key Questions Answered

  • Which region is expected to showcase growth in UCaaS solutions?

    South Asia & Pacific is projected to register strong growth in the global UCaaS market at a CAGR of above 19% during the forecast period. However, North America currently leads the global market, with market share of nearly 33% in 2021.

  • Which is the most attractive standalone solution in the UCaaS software?

    Hosted IP Telephony/VoIP is currently the most attractive in the market, accounting for over 40% of revenue generated in 2020. However, collaboration platforms is expected to witness robust CAGR of over 17% throughout the forecast period.

  • Which are some of the leading companies offering UCaaS solutions?

    Some of the leading companies in this landscape are Cisco Systems, Inc., Microsoft Corporation, Google LLC, Vonage, RingCentral, Inc., and Verizon Communications Inc. among others. As per FMI, nearly 60% of the market share is currently covered by the top 15 players.

  • Who are the leading industries of UCaaS? 

    BFSI sector is expected to dominate the market over the forecast period, generating revenue of US$ 23.8 Bn by 2031. However, IT & telecom sector is estimated to boost majorly with a CAGR of 18.1% over the forecast period.

  • How much is the global UCaaS demand worth?

    The UCaaS industry was valued at ~US$ 19.6 Bn in 2020, and is estimated to grow at an exceptional pace with a CAGR of 14.5% to reach US$ 85.7 Bn in 2031.

  • What will be the demand outlook/ sales forecast for UCaaS?

    The UCaaS sales is expected to be valued at ~US$ 22.2 Bn by the end of 2021, and is likely to reach ~US$ 85.7 Bn by 2031.

  • What was the last 5 year market CAGR?

    The market in last 5 years (2016 – 2020) grew by a CAGR of 10.7%.

  • What are the key trends of UCaaS industry?

    Key trends in the market includes:

    Focus on Training and Offering Advanced Solutions

    Growing Popularity of Three-Dimensional Video Conferencing

    Rising Demand for Remote Solutions to Boost Market Growth

  • What is driving demand of UCaaS?

    The rising demand for cloud based communication, increase in mobile workers, and transformation and adoption of technologies such as AI, IoT, and analytics are the key factors driving the market growth.

  • Which countries are key providers of UCaaS market?

    Countries involved in providing UCaaS solutions include the U.S., Canada, France, and Japan.

  • At what rate will the UCaaS adoption rise between 2020 and 2021?

    The global UCaaS market is expected to register growth at 12.8% CAGR between 2020 and 2021.

  • What are the top 5 countries driving UCaaS demand?

    Top 5 countries driving demand for UCaaS include the U.S., China, Germany, U.K., and ASEAN countries.

  • What is the North America UCaaS Market Outlook?

    North America is predicted to remain one of the most attractive markets during the forecast period, according to Future Market Insights. According to the study, the U.S. is expected to account for more than 83% of the North America market through 2031.

  • How will the UCaaS Market Growth unfold in Europe?

    The UCaaS industry in Europe is estimated to expand at a CAGR of 13.6% over the forecast period.

  • What is the key UCaaS market statistics in South Korea and Japan?

    The UCaaS demand in Japan and South Korea was valued at US$ 1,197.0 Mn and US$ 754.8 Mn in 2020, respectively and is projected to register CAGR of 17.3% and 15.0% respectively between 2021 and 2031.

UCaaS Outlook by Category

By Solution, UCaaS Solutions are segmented as:

  • Software
    • Integrated UCaaS Platform/Suite
    • Standalone Solutions
      • Audio & Video Conferencing
      • Hosted IP Telephony/VoIP
      • Collaboration Platform
      • Unified Messaging
  • Services
    • Professional Services
      • Integration & Deployment Service
      • Consulting Services
      • Support & Maintenance
    • Managed Services

By Enterprise Size, UCaaS Outlook is segmented as:

  • Small and Medium Enterprises (SMEs)
  • Large Enterprises

By Vertical, UCaaS Demand is segmented as:

  • BFSI
  • IT & Telecom
  • Healthcare
  • Retail & CPG
  • Travel & Hospitality
  • Transportation & Logistics
  • Military & Defense
  • Others

By Region, UCaaS Sales is segmented as:

  • North America
  • Latin America
  • Europe
  • East Asia
  • South Asia & Pacific
  • Middle East and Africa (MEA)

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