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CPaaS, CCaaS, VaaS: Driving Forces for SIP Trunking

SIP trunking has been a robust industry for years, with a compound annual growth rate (CAGR) of more than seven percent. In a new study by the Eastern Management Group, 80% of businesses worldwide report using SIP trunking. So, a reasonable question would be how much more SIP trunking can companies absorb? Our latest survey data shows that the answer is plenty. But enterprises, particularly those with more than 1,000 employees, may be reluctant to accept the same old same old SIP trunking, particularly for hosted cloud services, and this should send service providers scurrying. (Note: EMG conducted its global SIP survey in February, March, and this month, during the current pandemic. Our economic projections, performed this month, take into account a Covid-19 forecast by Statista showing downward pressure on IT spending for the year 2020 but not future years.)
SIP trunking, which started as an inexpensive PSTN alternative, is the transport that technologies and UC applications depend on, and enterprise IT managers won’t live without.
In this post, I’ll address three cloud platforms, and how the need for them is driving both a new wave of SIP trunking and higher-quality SIP facilities expected by large enterprises with more than 1,000 employees. And what I have to say about the three applies to all enterprise-grade SIP. The technologies are communications platform as a service (CPaaS), contact center as a service (CCaaS), and video as a service (VaaS).
Market data in this post comes from the Eastern Management Group’s newly released SIP trunking study, “2020-2027 SIP Global Market 7-Year Forecast and Analysis.
CPaaS — this cloud-based platform enables developers to add real-time communications features without needing to build backend infrastructure and interfaces. 
To offer CPaaS, you need a few things beyond the underlying CPaaS platform APIs and SDKs for voice, video, SMS, security, and email:
  • Good bandwidth that comes with reliable and fast SIP trunks… not just everyday vanilla bandwidth
  • Global SIP facilities, numbers, and the like — perhaps covering 100 or 150 countries
SIP trunking can do this, but not all SIP trunking providers do this.
Most CPaaS providers — Eastern Management Group monitors 55 of them worldwide — bundle SIP infrastructure with their services. They then get voice coverage from many SIP trunk providers to cover all of their markets. But this approach won’t pass muster with many large enterprises with more than 1,000 employees that need CPaaS to embed communications into applications — say, for a website to enhance the customer and employee experience.
Downsides to the bundled approach have begun to emerge; this is particularly true when enterprises start to scale:
  • Operational costs may be higher when using a bundled solution with a CPaaS provider
  • Most bundled cloud communications vendors don’t own the SIP trunk technology but aggregate coverage and phone numbers from many SIP trunk providers. The quality and features available vary across markets.
  • With a bundled infrastructure, the enterprise loses call routing control, with security, privacy, and quality implications.
Because of these SIP trunking issues, enterprise CPaaS customers increasingly expect unbundling. They want the best carrier for their situation and the best communications platform. Breaking the bundle allows both.
Our research shows 10% of all businesses buy CPaaS today, and 20% will do so in five years; by then, 30% of enterprises with more than 1,000 employees will be buying CPaaS, many looking for unbundled CPaaS and SIP trunking. Eastern Management Group will continue assessing the Covid-19 impact on all of our long-term projections.
CCaaS — call center software hosted in the cloud. The Eastern Management Group monitors more than 20 providers that host call center software in the cloud.
As with CPaaS, CCaaS vendors bundle the platform with SIP trunking. But larger enterprises will increasingly expect the provider to unbundle the transport, freeing IT managers to bring their own carrier (BYOC). The trend is growing based on reasons such as:
  • Security
  • Reliability
  • Efficiency — contact centers often operate from several overseas locations. Instead of buying from many regional SIP trunk providers, buying from just one global service provider is better and easier for the enterprise.
  • Scalability — A global SIP provider can expand with the enterprise customer’s needs in any and every market in the world.
  • Compliance — Increased government scrutiny demands that the virtual numbers that accompany CCaaS platforms are compliant with local regulations for taxation, licensing, emergency calling, intercept requirements, and tariffs.
Eastern Management Group’s 2020 IT manager survey research shows that 40% of businesses use CCaaS, and the number will increase to 50% in five years. In five years, 75% of enterprises with more than 1,000 employees will have CCaaS. (Note: Unintended consequences from the Covid-19 pandemic could influence the timing of rollouts.) Their SIP trunking demands for security, reliability, efficiency, scalability, and compliance will be as I’ve described here. It sets the stage for unbundling CCaaS, enabling enterprises to purchase SIP trunks from best-of-breed providers.
VaaS — this is videoconferencing over an IP network by a managed service provider. Customers can log in using a browser from anywhere in the world.
Our research shows 40% of businesses use video today, and the number will grow to 75% over five years. By then, up to 85% of enterprises with more than 1,000 employees will use video. Long-term implications of the pandemic could affect these numbers more than IT managers opined during the current survey.
Enterprises are demanding SIP trunking unbundling from video services to address security, worker mobility, productivity, global expansion, and customer communications. Customers need service providers they are comfortable with rather than being locked into whatever a bundled solution offers.
Enterprise Solutions for the Next Decade
CPaaS, CCaaS, and VaaS are drivers of enterprise SIP trunking growth and will be for years. Whatever the cloud solution, large enterprises with more than 1,000 employees will increasingly need unbundled offers with SIP trunks not coming from the cheapest service provider, but the best.
For more information about the Eastern Management Group report, “2020-2027 SIP Global Market 7-Year Forecast and Analysis” or issues raised in this post, please ask our researchers or contact John Malone directly at [email protected].