Unified Communications as a Service (UCaaS) stands as one of the fastest-growing markets. These technologies underpin the voice and messaging infrastructure used by millions of people daily. Unified Communications has become the norm for small, medium, and large enterprises alike. Accordingly, the market size has grown significantly, and continues to grow with every year.

Many companies are switching to UCaaS and never going back. The subscription model of UCaaS has definitely had an impact on its global market growth. On-premises solutions can’t compete against fully integrated cloud phone systems like ours. Thus, company leaders are starting to see that they can gain unprecedented flexibility with a UC solutions, and they also tend to be more cost-effective.

In this blog post we’ll take a closer look at UCaaS market growth, key industries, and top features.

What is UCaaS?

UCaaS is one of the many “as a service” models growing alongside cloud computing. Through the cloud, UCaaS simplifies the deployment and management of communication strategies. There’s no need for a large in-house IT team to get started, as all of your support comes from the back-end. With CallHarbor’s UCaaS solution, you don’t even have to worry about a monthly service fee. UCaaS unlocks the opportunity to integrate multiple communication strategies through a single, simplified cloud system. You can connect everything from your video conferencing to your enterprise voicemail. In addition, you can also make sure that everyone in your team has access to the same tools. Regardless of where they are at, employees can easily and flexibly access your entire communication suite. UCaaS offers scalability and flexibility in a world that demands companies to be agile.

How UCaaS differs from VoIP

UCaaS sets itself apart from Voice over Internet Protocol (VoIP) in two notable ways.

VoIP provides voice connectivity using the internet, rather than copper phone lines. VoIP itself is a standalone phone service that functions over the internet. UCaaS includes VoIP and interconnected messaging services that relate to customers and employees. Essential functions include phone, SMS, conferencing, video, and team presence. Firms leverage these capabilities to enhance business interactions among staff and customers.

VoIP fits under the UCaaS umbrella, but so do other cloud services. CallHarbor is a UCaaS provider, with VoIP being one of our specialties. Below is a table comparing VoIP and UCaaS features by component.

UCaaS vs. VoIP Comparison

VoiceA digital phone service that functions over the internet to complete calls. Typical feature set includes voicemail, call forwarding, call analytics, and more.YY
UC telephonyEnterprise-grade voice capabilities that often include support for IP phones and unified desktop and mobile applications.YY
Meeting solutionsMeet with others using audio conferences, video conferencing, and screen sharing.NY
Unified messagingBlends content across different media such as voice, email, and mobile. Example: voicemail transcription and voicemail to email.NY
Presence and instant messagingSend messages to individuals or groups in real time. Presence displays the status of other employees.NY
Cloud deliveryProvisioning occurs over a hosted infrastructure instead of needing on-premises hardware and servers. NY
Communications-enabled business processesAdvances business goals with unified communications. Examples include advanced business analytics, and artificial intelligence (AI).NY
Performance dashboardsDisplay the volume and business outcomes of customer and team interactions. Dashboards may refer to users, departments, and locations.NY

Where is UCaaS growing?

The $46 billion UCaaS market is growing worldwide. Analysts from IDC and Gartner show similar figures in the rapid growth of UCaaS.

Gartner expects the unified communications market share to more than double from 17% in 2018 to 35% in 2023. Also, the firm published a report in April noting that the market share had already risen to 24%.

UCaaS pulled ahead of the entire business software industry, according to extensive global market research reports. Research methodology varies, but they are based on public data and privileged conversations among many key players throughout the UCaaS market. Also, forecast periods have to be taken in context with regard to data obtained before or after the global pandemic.

Market growth

One metric to track growth is the compound annual growth rate (CAGR). It reveals the rate of return over a given period, smoothing out short-term spikes of demand. Many analysts have seen a double-digit CAGR for customer service software worldwide. Gartner sees a 10.9% growth for Customer Relationship Management (CRM) software between 2018 and 2024. IDC observed 12.2% for Customer Service Applications between 2018 and 2023.

These analysts also predict a downturn affecting on-premises telecom systems. IDC forecasts a -7.9% CAGR for on-prem contact centers and -2.7% for on-site customer service applications. In 2017, Frost & Sullivan predicted a -4.7% for on-premises voice solutions between 2018 and 2022. The upswing of the UCaaS market while the on-premises telecom declines. This dynamic suggests businesses are moving their in-house PBXs to the cloud. Many market drivers are at play, including the COVID-19 impact.

The growth of the UCaaS market has been healthy for well over a decade. Traditional telecom solutions have become much less attractive to manage in recent years. As companies move to the cloud, they rarely go back to analog.

The Americas

Within the Americas, North America shows the most pronounced growth. North America is currently the largest UCaaS market by revenue and the second in users. Frost & Sullivan expects a 25.1% CAGR for cloud communications services. Also, the firm anticipates a decline of 5.4% CAGR for on-premises voice through 2022 in North America.

Still, Gartner predicts healthy growth in Latin America. The company forecasts a 4.5% CAGR between 2018 and 2024 for the enterprise software market. Analysts expect the CRM market to grow by 7.3%.

Why is UCaaS growing?

Unified communications has been growing at a rapid pace over the past 20 years. However, there are a few notable market dynamics that have accelerated it in recent years.

Coronavirus pandemic

Of course, UCaaS has been on a sharp uptick since the start of the pandemic. Utilizing UCaaS for working remotely has accelerated its growth greatly. Businesses are finding that unified communications make it much easier for their employees to work from anywhere, while staying connected and productive.

Whether it is a natural or unnatural disaster, one things stands common: business must go on. Having a plan and be able to prepare is easier to do with a VoIP and UCaaS system. You need to account for all of your employees and stakeholders, and keep communication open and working. Trying to keep things up and running as smoothly as possible is important and necessary.

Leaving on-premise hardware behind

In general, many companies are trying to steer away from traditional phone systems. Since the early 2000s, copper-based lines have seen a huge drop in customers. It’s expected to eclipse $45 billion USD by 2022, per a market report published by Gartner.

There are many reasons companies no longer want expensive on-premise solutions. UCaaS pricing is accessible for every organization size. Cloud-delivery also gives greater scalability, and the features meet the needs of many organizations. There are no expensive maintenance costs, and you can even rent hardware for no upfront purchases.

Check out our blog post on phasing out POTS lines.

Consolidation of communication systems

Though there are many options for remote work platforms, many businesses still rely on multiple tools from multiple vendors. 75% of office workers have used at least two new technology types for work. But employees can’t do their best work when their focus is scattered across several different apps, 22 separate chatroom conversations, and a to-do list that they can never complete. We’re going to take a look at how unified communications can solve this issue.

CallHarbor UCaaS platform transforms any browser into a robust communications workspace. Our platform brings all essential business communications together. It’s a fact that switching between separate communication apps interrupts workflows. This impacts the user’s focus, and can cause less productivity in the workplace. Our fully integrated platform cut out the switching from app to app, so users can communicate and collaborate more fluidly. Your team will be able to quickly move from a chat message, to a phone call, to joining a video meeting smoothly. We make it easy to manage the daily tasks and get more done.

The natural rise of remote work

The pandemic improved the acceptance of working from home. But the switch to flexible working was happening well before COVID-19. With UCaaS, employees can work just as productively (if not more) without the constraints of an office. Cloud-based tools support customer service interactions as well as team engagement.

Working from anywhere is a huge perk. Flexibly being able to work from the comfort of wherever they want gives employees freedom. The two biggest reasons working from anywhere drives productivity and happiness is because employees can work from wherever they feel the most productive. It also gives employees the capability to lead a better balanced life.

UCaaS market predictions

It’s clear that the UCaaS market doesn’t plan on stopping growth anytime soon. Small, medium, and large companies alike want a fully integrated communications platform. They’re seeing that it’s not only possible, but feasible with unified communications platform like CallHarbor’s.

If this year was any indication of where the market is going, it could mean that the global market will rise to over $140 billion by 2025 based on a 25.1% CAGR. So many companies and organizations have made the switch to UCaaS. It’s becoming highly favored over on-premises voice solutions. When companies embrace UC, there’s little desire to switch back.