Cloud communications is set to experience significant growth over the next five years as businesses increasingly shift from traditional PBX solutions to cloud-based alternatives.
This trend is driven by a preference for the pay-as-you-go model, which optimizes expenses and avoids hefty upfront investments. Leading data and analytics company, GlobalData, forecasts that the cloud communications market will exhibit a compound annual growth rate of 18.3 percent, growing from $78 billion in 2022 to a staggering $180.7 billion in 2027.
In 2022, the United States emerged as the largest market for cloud communications, commanding a substantial 36.7 percent share of the total revenue. China followed with an 8.5 percent revenue share. Looking ahead, India and Singapore are anticipated to witness the fastest growth, boasting compound annual growth rates of 28.4 percent and 28.1 percent respectively over the forecast period.
Tejal Hartalkar, Senior Technology Analyst at GlobalData, noted, “Cloud communications is expected to continue its growth significantly due to scalability and adaptability. The technology offers both enhanced user and customer experience, often including advanced analytics and reporting features that help businesses gain insights into their communication patterns. This data-driven approach allows enterprises to make informed decisions and improve their communication strategies.”
GlobalData’s report identifies key verticals driving the cloud communications market, including manufacturing, information technology (IT), retail, retail banking, and government. Together, these sectors accounted for 33.7 percent of the overall market in 2022.
The rising trend of work-from-anywhere (WFA) and bring-your-own-device (BYOD) policies will continue to fuel the adoption of cloud communications across industries. Cloud-based communication API solutions are playing a pivotal role in revolutionizing communication and enhancing operational efficiency across various sectors.
Gary Barton, Research Director for Enterprise Technology and Services at GlobalData, emphasized, “The cloud model offers the flexibility that most businesses require as work patterns evolve, and workforces grow and shrink. The cloud model also offers a strong disaster recovery component. The addition of complimentary components such as API plug-ins and AI are increasing the ability of these solutions to offer business value and enhance customer engagement.”
Furthermore, the integration of AI in cloud communication platforms is reshaping business operations, with enterprises increasingly utilizing AI-powered virtual assistants and chatbots to automate tasks, allowing agents to focus on more critical functions. As AI continues to advance, these virtual interactions will become more natural and engaging, enhancing overall customer experience.
In response to increasing regulatory pressures regarding data storage and transfer, cloud communication vendors are investing in robust security measures, encryption capabilities, and local hosting options. These investments ensure compliance with stringent data protection and privacy laws, including GDPR and CCPA, reducing compliance risks for businesses and underscoring the ongoing relevance of the cloud-hosted collaboration model.