Tecnotree is a globally operating supplier of turnkey BSS solutions. The entire industry has typically been examined in a way that BSS and OSS solutions (Operations Support Systems) form one market. Thus, our relevant target market is also justified to be examined through the entire OSS/BSS framework even though we are positioned to a great extent in the BSS world's operator field.
The market consists of actual system investments and related use and support services. According to Allied Market Research and Transparency Market Research, the size of the global OSS/BSS market was slightly over USD 40 billion in 2020. According to commissioned research published by Inderes, the BSS operations are the dominant part of the market over OSS, even though it is hard to divide the market into OSS and BSS market shares. This is because there is a considerable overlap between the markets examined both from the demand and supply side.
By verticals, the telecommunication sector dominates the whole industry as various market research sources (e.g. Allied Market Research and Transparency Market Research) estimate its share to be over 70%. Other significant industry sectors are, for example, the financial and health care sectors.
The supply side of the industry is at the same time quite fragmented and polarized. The spectrum of players is vast as the market includes customers’ own internal IT departments, large global network companies, multinational system integrators, software houses with extensive product portfolios, companies that focus on certain segments but operate internationally, and several small players that only focus on local markets, including IT service houses. The global number of suppliers is high, but the business criticality and switching costs faced by operators mitigates the potential risk.
Tecnotree operates globally and has development and operational support centers in Latin America, Europe, Middle East, Africa, and Asia.
Geographically, net sales are reported from two areas: 1) Europe and Americas, and 2) MEA & APAC. Of these areas, MEA & APAC generated some 80% of net sales in 2021. Within the MEA & APAC area, important segments for us are the Middle East and the more developed parts of Africa. Europe and Americas, in turn, generated some 20% of 2021 net sales. Within this area, our main markets can be found in Central and South America.
Allied Market Research, Global Market Insights and Transparency Market Research have estimated that the annual growth rate for the OSS/BSS market in the next few years will be at a strong level of 10−15% CAGR. Geographically, growth is expected to be fastest in emerging economic areas due to a lower technological baseline and a rapid pace of digitalization.
The growth of the OSS/BSS market is driven by the business model transformation of operators and the cloud transformation of system solutions. In addition, the are several supportive growth drivers, such as urbanization and digitalization (e.g. 5G).
1. Business model transformation of operators
Operators’ business models have been in transformation for several years. Historically, operators’ activities have been driven by traditional and quite standard format communication solutions and the focus of value creation has been largely on the operator’s cost efficiency and on administration and support functions.
In recent years, the competition between operators has tightened and new competition created by internet companies has appeared. In terms of operators’ value creation, this development has led to a more customer-oriented approach and continuous ability to react (incl. faster launch time of new services). Fully digital services have become the core of operational activities. From the viewpoint of BSS solutions, this shift has, in turn, highlighted the agility and flexibility of the system.
2. Cloud transformation of system solutions
Another driver that accelerates OSS/BSS market growth is the progressing cloud transformation of the systems. In addition to being cumbersome and slow, a major problem withthe older on-premises systems has been the high price of tailoring. This has made life cycle costs and switching costs of the systems extremely high and caused direct operational friction in activities because of various system investments in use and their updating rhythms.
The key competitive advantages of cloud-based solutions come from lower life cycle costs and a more flexible basic nature. Both features are quite significant for operators, especially taking into account the ongoing business model transformation, and the factors that will affect the relative position after it (e.g. ability to launch new services faster than the competition).
Due to the fragmented structure of the industry, the competitive field is multifaceted. Thus, Tecnotree’s competition consists of several types of companies, e.g., players that focus purely on OSS/BSS market and mainly on the operator field, global network device suppliers, as well as multinational software houses involved in many industrial verticals.