Despite being in a complex industry influenced by macroeconomic factors, the Communications Platform as a Service (CPaaS) market is projected to grow at a 14% CAGR through 2027.

The market is dynamic

While leading regions like North America, at the forefront of CPaaS adoption, may see a slowdown, the rise of mobile-first markets in Asia-Pacific, Latin America, and Africa is becoming more pronounced. For instance, the Middle East and Africa's CPaaS market is anticipated to grow by 20.47% by 2028.

Factors such as real-time communication demands, digital transformation, and the banking sector’s embrace of CPaaS are driving adoption globally.

Given this demand, it’s reasonable to expect telcos to lead CPaaS offerings. They have the infrastructure and capabilities for API-based communication services. However, less than 2% of global telcos have tapped into this transformative opportunity. What’s holding them back, and is this a cause for concern? Let’s explore.

Challenges for Telcos in Launching CPaaS Offerings

1. Lack of Skills

Telcos need developers with expertise in APIs, cloud computing, and communication protocols to build CPaaS platforms. However, the global talent shortage is a significant obstacle. For example, Google's 2020 report noted only 700,000 developers across Africa, which poses challenges for telcos in this region.

2. Cost Implications Due to Fraud

Telcos face revenue loss due to shifting communication preferences, such as customers using chat apps like WhatsApp. Fraud, including grey routes, high termination fees, and premium callbacks, further strains telcos. These issues make them hesitant to invest in CPaaS offerings.

3. High Development Costs

Building CPaaS platforms is resource-intensive and costly. Beyond initial development, ongoing maintenance, feature upgrades, and regulatory compliance are required. With large upfront investments and uncertain ROI, telcos may be reluctant to proceed.

4. Security Concerns and Customer Trust

Security risks, including API abuse, data leaks, and the absence of end-to-end encryption, threaten CPaaS platforms. Such breaches can lead to financial losses and damage telcos' reputations, making them wary of launching CPaaS offerings.

5. Customer Acquisition and Retention

The competitive landscape, with OTT and SaaS players offering feature-rich solutions, makes it difficult for telcos to acquire and retain customers. Differentiating their CPaaS offerings in such a market is challenging.

6. Slow Time to Market

Developing CPaaS platforms from scratch is complex. Talent shortages, regulatory issues, and infrastructure development delays hinder progress, increasing time-to-market and reducing potential revenue.

7. Adapting to Market Changes

The telecom industry is fast-evolving. Telcos must continuously adapt to new communication trends to remain relevant, but constant innovation requires significant resources. The speed and agility demanded make it tough for telcos to keep up.

How Can Telcos Solve These Problems?

Building an in-house CPaaS platform can be daunting when telcos lack time, budget, or skilled talent. Partnering with a reliable CPaaS solution provider can ease these challenges.

A trusted CPaaS partner offers secure, compliant, and feature-rich platforms, enabling telcos to scale their offerings. By adopting usage-based or pay-as-you-go models, telcos can reduce upfront investments and streamline costs. The best CPaaS platforms are easy to implement, secure, cost-effective, and scalable, with built-in API integrations.

At Prudent Tech, we offer a full-stack CPaaS platform designed to empower telcos globally. Recognized as one of the top 20 CPaaS players to watch in 2024 by Channel Futures, Prudent Tech assists telcos across the entire lifecycle—from customer acquisition to implementation and ongoing support. Our no-code/low-code platform enables telcos to deliver value to enterprises while enhancing customer experiences. Our proprietary IPRs make integration with OSS, BSS, and other communication applications seamless, allowing telcos to launch services ahead of competitors.

To take the first step in launching your world-class CPaaS offering, contact us today.