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The network managed services business will grow from US$14 billion in 2012 to $25 billion in 2017, according to market analyst Wireless Infrastructure. Five years ago, network operators were hesitant to outsource operations and entrust their business to someone else, so the money they spent on network managed services totaled US$5 billion in 2007.

 

However, it is a different story five years later. Today, almost every network operator depends on managed services for at least part of their operations; hence the network managed services revenue totaled US$12 billion in 2011. The shift in the network managed services paradigm is a natural next step as organisations grow.

 

When there is a speedy growth within an organisation, it may be ideal to offload some aspects of the business to a third party that has the right expertise and can deliver on time. Corporations often outsource non-critical part of the business. Security concerns comes into play when it comes to allowing someone else to manage your data. It is always a risky business trusting a third party with your corporate affairs.

 

However, there are checks and balances and contractual obligations that should be followed to avoid any kind of security breach. Outsourcing is a win-win situation,” says Jim Eller, principal analyst at Wireless Infrastructure. “Network operators can reduce costs, improve service quality and increase revenues.

 

Also, network equipment vendors earn higher margins on services than on hardware and software, which is increasingly commoditised,” Eller says. The leading vendors in network managed services are the major network equipment vendors: Ericsson, Nokia Siemens Networks (NSN), Huawei and Alcatel-Lucent. Ericsson has been number one in network managed services since the first offerings in the 1990s.

NSN has won more managed services contracts than anyone else over the past couple of years. Alcatel-Lucent has introduced innovative managed services offerings, such as energy managed services for sustainability. Meanwhile, Huawei has successes in emerging markets due to its low-cost service offerings.

Aditya Kaul, practice director at Mobile Networks, sees a fundamental change in network managed services. “It is not just about reducing operational costs anymore,” says Kaul. “Most operators have already achieved cost savings through outsourcing. Now, they are looking for managed services partners who can help them to transform their businesses and increase revenues.”

By Angela Sutherland  

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