5G emerges as fastest-growing segment of engineering services market, with 30% annual growth rate forecast for the next four to five years.
Both telecom companies and other enterprises are gearing up for 5G, which is driving a growth boom in the 5G engineering services industry as well, according to Everest Group. Investment in 5G engineering, a nascent and fast-growing market, reached US$12.0 to 12.2 billion in 2021, with 80% of overall spend allocated in house and 20% outsourced. Engineering services spend is expected to show a 30% annual growth rate for the next four to five years, with the outsourcing growth rate stabilizing at approximately 45% by 2022.
5G, the latest in mobile network technology, offers high data transfer speeds and ultra-low latency. Not only are telecommunication entities spending significantly in 5G engineering and deployment, but also enterprises in non-telecom segments are expressing interest in how 5G can be applied to solve industry-specific challenges. Potential use cases span a variety of sectors and include the following:
- Industrial: Process automation, IIoT systems, remote monitoring, predictive analytics, collaborative robots
- Consumer electronics: IoT devices and sensors, connected products, wearables technology, edge-enabled devices
- Automotive: V2X, Autonomous driving, vehicle edge computing, traffic management, HD mapping
- Public sector: Smart cities and infrastructure, public networks, defense networks, enhanced surveillance, autonomous public transport
- Media and entertainment: HD and distributed content, remote production, Metaverse and AR/VR, hyper-personalized advertising
- Energy and utilities: remote critical process control, supply chain monitoring, asset diagnostics, predictive maintenance, field services
- Healthcare and Others: medical devices, virtual health, remote surgery, education and training, retail and ecommerce
North America, which is home to a high percentage of the large telecom companies participating in 5G, is the largest and most mature market for 5G engineering spend, representing 35-40% of the global market. Europe is the second largest market (30-35%) and is as mature as North America. Asia Pacific, representing 15-20% of the market, is gaining ground quickly.
These findings and more are detailed in Everest Group’s recently published report, “Envisioning the Connected Future – 5G Engineering Services State of the Market Report 2022.” This report assesses the global 5G engineering services market and the trends that are emerging as a result of the increasing number of use cases. The report addresses enterprise expectations, challenges for service providers, the market for 5G engineering services outsourcing, and the investments being made by enterprises and service providers.
“Telecommunications companies and other enterprises recognize the potential of 5G, and 5G has already become the fastest growing market segment within the global engineering services market,” said Akshat Vaid, vice president and lead of Engineering Services research and advisory at Everest Group. “This is opening up a new dimension of engineering services outsourcing, where engineering service providers are helping enterprises and telcos with conceptualization and scaling of various use cases across industries. The opportunities in 5G will boom over the next several years, particularly as enabling technologies advance, private networks expand, and partners collaborate to explore the full potential of 5G applications.”
Additional Market Highlights
- The overall enterprise spend (comprising telecom and other industries) for 5G engineering services has been increasing steadily year by year; however, COVID-19 caused a slight dip in growth rate during contract year 2020.
- The major roadblocks to adoption include high setup costs, complex use cases, and the regulatory landscape around 5G.
- The private network market for 5G is growing fast; and given the benefits that it offers as compared with 4G, enterprise adoption and associated engineering services will also observe strong growth momentum.
- A variety of 5G-driven use cases have led to collaboration between an ecosystem of network participants for developing solutions and providing services to an ever-growing market.
- Telecom Service Providers (TSPs) and Network Equipment Providers (NEPs) are driving more than 70% of the outsourced services spend in 5G engineering. The remaining investment comes from other enterprises and technology companies looking to build specific use cases, such as IIoT, private 5G, and network assurance and testing activities.
- Service providers need to develop capabilities in assistive technologies, such as Multi-access Edge Compute (MEC), Software-defined Networking (SDN), and cloud, which are enabling the world of 5G.
- Service providers are investing heavily in developing strong partnerships, infrastructure, talent, and IPs to cater to the 5G market.
About Everest Group
Everest Group is a research firm focused on strategic IT, business services, engineering services, and sourcing. Our research also covers the technologies that power those processes and functions and the related talent trends and strategies. Our clients include leading global companies, service and technology providers, and investors. Clients use our services to guide their journeys to maximize operational and financial performance, transform experiences, and realize high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.