According to Fortune Business Insights, the global Unified Communications industry is expected to grow from $47.26 billion in 2021 to $113.81 billion by 2028, exhibiting a compound annual growth rate of 13.4%. The growth drivers in this market are an increasing integration of innovative technologies to grow businesses, boosting growth in North America, and mergers and acquisitions to consolidate business.While mergers and acquisitions spur growth and help consolidate businesses, they do present unique challenges to service providers and their customers. One of the difficulties with mergers and acquisitions is that communications platforms are becoming increasingly indiscernible. There’s nothing that sets one solution apart from another, so price is becoming the only differentiator, leading to a race to the bottom — which isn’t a productive way to grow revenue. While customers are able to price out platforms and decrease costs, they may not receive the customized solutions and the individual assistance their businesses require. Customers can become frustrated and experience business setbacks if UC consolidation is not seamlessly integrated.
At this mature state of the market, the UC industry becomes an issue of either scale or niche. Mergers and acquisitions are being driven by scale because scale lowers costs of acquisition, decreases operating costs, and increases profitability in mature businesses. Because acquisitions are such a driving factor in the industry, the challenge of scale is that it needs to be integrated well. If it’s integrated poorly, integration will quickly become a key stress point of many providers. While there is this growing trend of scale in the industry, there is also room for smaller providers to differentiate themselves by creating a niche.
Unless a UC provider has a unique differentiation, they may struggle in this market; providers can no longer be one of a few. Within the industry, providers will need to analyze their competition and their customers, and differentiate themselves from other providers. Creating a niche also involves getting closer to the customers and solving their problems because there are tremendous opportunities in creating solutions. These custom solutions will have the capabilities that are helping end users work more efficiently, be more productive, and provide a superior customer experience.
Because many (if not nearly all) business owners are not technologists, service providers will be essential in helping close the chasm between technology capabilities and their customers’ needs. Because of the increased use of remote work, customers are trying to fundamentally make this digital transformation much sooner than they would have otherwise, and they need new and simple ways to support communication, remote work, and selling products. These solutions with robust UC capabilities are essential for supporting a best-in-class customer experience. UC providers will thrive in this market of mergers and acquisitions if they can combine a knowledge of their customers' needs, provide a customized solution, and scale seamlessly.
For more on this topic, check out our recent podcast with BroadSoft co-founder and former CEO Mike Tessler.