According to Mordor Intelligence, the global Communication Platform as a Service market will grow from $16.3 billion in 2024 to $61.59 billion in 2029, a 30.4% annual growth rate. That growth is on par with what we've seen in past years regarding the expansion of programmable communications growing in popularity.
Voice calls, SMS messaging, video conferencing, APIs, analytics, management capabilities, customer management, etc., are the respective backbones of CPaaS. CPaaS also usually enables app functionalities like authentication/verification, call recording, transcription, caller identification tools, speech recognition, and more.
Webex Connect, Bandwidth, Aaure Communications Service, Amazon Chime, Alcatel-Lucent Enterprise Rainbow, Twilio, and MessageBird all play a role in the market that continues to shape customer and user experience.
The biggest perk of CPaaS is that it makes the jobs of developers, employees, and even the customer experience better. Essentially, developers can beef up their stacks without reinventing the wheel with backend infrastructure or expensive hardware.
While the CPaaS industry looks to continue on some familiar paths in 2024, such as flexibility and customizability, the market also suggests several new trends: omnichannel communication, the use of AI, and an increase in rich messaging.
SMS Key, but Rich Messaging Growing in Importance
CPaaS vendors, according to Juniper Research, will continue to rely on SMS as a chief revenue stream. And that will not dissipate, as according to Juniper Research:
"SMS has historically been the cornerstone of CPaaS revenue; SMS traffic revenue will still account for over 50% of all CPaaS revenue by 2025, owing to its established reliability in termination for services such as MFA (Multi-factor Authentication)."
However, rich media messaging will become increasingly important - they note. And that will come at a premium cost to subscribers. Email and social media are slated for continued expansion and will comprise over $10 billion in revenue by 2025.
That means over 40% of CPaaS market value. Furthermore, according to Juniper Research, platforms that fail to include managed services for rich media in their "three-year plans" run the risk of missing out on "substantial growth predicted for the CPaaS market.
Omnichannel Communication to Differentiate Customer Experience
CPaaS software enables companies to select which communication channels to offer their customers. Organizations and call centers can integrate channels like voice, SMS, video, and live chat into their websites and apps, making it easy for customers to reach them in various ways
And while 86% of customers still prefer using voice for customer service, younger demographics rely on web chat and SMS more frequently. Convenience is key, as 87% of millennials say that convenience is very important to them. That's why omnichannel solutions are expected to maintain a 13.6% annual growth rate through 2030.
As companies seek to provide greater convenience for customers in 2024, they will continue to integrate the channels their customers use. For example, some retail companies have begun employing video calls to showcase product features to customers.
Security to Take Center Stage in 2024
In 2021, over 22 billion records were exposed: due to cybersecurity attacks, which include sensitive information like names and social security numbers or non-U.S. equivalents.
And this should alarm most CPaaS providers and enterprises alike as these systems often require third-party integrations, an easy in for any halfway sophisticated hacker, and a bit of social engineering. Beth Schultz, VP of Research and Principal Analyst, Metrigy, noted:
"As enterprises expand and elevate their use of CPaaS, especially to deepen customer engagement, security has become the number one challenge for many. Particularly worrisome to enterprises are securing and assessing vulnerabilities of applications created using low- or no-code platforms."
In 2024 you can almost bet on CPaaS providers expanding platform features to ensure security. And there's a lot to be done to certify solid adherence to common security standards and compliance with data privacy and protection regulations like GDPR.
Of course, education remains a principal tool in the toolbox to ensure security. And there is also understanding customer behaviors and adding verification features combined with various channels that support and encourage security/compliance to ensure authentication is in order.
AI Will Enable Smarter Customer Service
ChatGPT's popularity and usage surged in 2023, grabbing the attention of leaders throughout the business world. According to Gartner, 45% of executives say that ChatGPT has boosted their interest in AI-based conversation. With AI-powered APIs like conversational chatbots and intelligent virtual agents, the CPaaS market will continue to participate in this machine-learning trend.
Machine learning can power customer self-service 24 hours a day, effectively cutting down on a team's employment needs and reducing staffing expenses. In line with this trend, 80% of customer service organizations are expected to incorporate generative AI by 2025. Using natural language understanding (NLU), IVA systems are becoming increasingly conversational, capable of offering more responses to a wider variety of customer inputs.
AI-powered CPaaS tools will power more than just customer self-service. CPaaS AI tools can improve agent performance as well, transcribing conversations and giving agents real-time response suggestions. Machine learning can identify trends and analytics like customer sentiment, helping administrators engage customers.
A Thriving Low-and-No-Code Environment
It seems that 2024 will create the perfect conditions for low-and-no-code development to thrive. As the conditions simply haven't changed much from last year.
A 2022 Deloitte survey of CEOs found that 71% of them said they anticipate skills shortages would be the most sizable business disruptor to business. And all this can cause massive disruptions, just as we saw in the supply chain; we could very well see such an occurrence in the supply chain of developers.
Underpay, overwork, and other factors may contribute to such a shortage, but - the phenomenon is (a very real) and thriving issue. Simply locating the skills to develop complex and multifaceted customer experiences and journeys has become more difficult during the pandemic.
All this creates near-perfect conditions for CPaaS at its core to shine and for the developers of those platforms to ensure low-and-no-code options are plentiful. It will also likely ensure the success and longevity of said CPaaS platforms.
Metrigy also found that 55% of all companies now leverage low-code solutions, compared to 37% leveraging full-code and 28% leveraging no-code software. Furthermore, customer support: at 57%, leverages low-code platforms the most - followed by IT/communications managers, who said they use said platforms; at a rate of 55%.
That's A Wrap
There will undoubtedly be some mergers/acquisitions: along with 'major' announcements from firms leading the way in the space. Vonage, Twilio, and others are the ones to be on the lookout for as they are not only leaders in the space - but what they tend to do - others tend to follow.
As per usual - feel free to let us know your take on the current state of CPaaS and where you think it is heading. There is a lot more to unearth so we hope to continue the conversation on social and in the comments section below. And while you're at it - check out our news site GetVoIP News.
