Telco cloud infrastructure software market to grow to $27 billion in 2027

International Data Corporation (IDC) sees cloud-native deployment of telco network workloads accelerating in 2024. IDC forecasts worldwide revenue for telco cloud infrastructure software, including virtual network functions (VNFs), cloud-native network functions (CNFs), and network functions virtualization infrastructure (NFVI), across four market subsegments (core transport, mobile infrastructure, mobile backhaul, access networks and virtual CPE), will grow from $12.9 billion in 2022 to $27.3 billion in 2027. This represents a compound annual growth rate (CAGR) of 16.1% over the 2022-2027 forecast period.

Most current telco workloads continue to leverage VNFs; however, as wireless, wireline, and other service providers turn their attention to cloud-native workloads, we expect the CNF market to grow rapidly. In making this year’s forecast, IDC has accounted for the recent emergence and growing initiative to deploy cloud-native, container-based telco workloads across the telco cloud. Accordingly, the forecast breaks out cloud-native network functions as a separate line item.

In addition, with the inclusion and discrete breakout of cloud-native network functions, IDC recognizes the impact on NFVI and underlying shifts toward container-as-a-service (CaaS) offerings that include container-based infrastructure management such as Kubernetes, or even hybrid deployment models in which containers are deployed on bare metal or virtual machines (VMs). In addition, in a cloud-native world, the impetus is on comms service providers to deploy network functions across edge sites while continuing to manage a mix of core and edge sites on horizontal telco cloud platforms based on a common software foundation.

“Adoption of cloud-native network functions is gaining momentum, with CNFs being deployed alongside virtual network functions across comms service providers’ cloud-based digital infrastructure for service agility, lower cost of ownership, and elastic scaling of the network,” said Ajeet Das, research director, Telecom Network Infrastructure at IDC. “However, these operators face a range of daunting challenges, including lack of in-house expertise in cloud-native orchestration and infrastructure, difficulty defining and implementing comprehensive security, and operational complexity of managing on-premises, cloud, and multi-cloud networks.” IDC