The global Unified Communications as a Service (UCaaS) market is projected to exceed 131 million users by the end of 2028, expanding at a compound annual growth rate (CAGR) of 10.3% over the next five years.
This forecast comes from research by Cavell, a specialist research and consulting firm serving the telecommunications industry.
Cavell’s 2024 Cloud Comms Market Reports surveyed more than 100 service providers across the UK, Europe, and the US. The research highlights growing importance of mobile UCaaS offerings, which now represent over 15% of the market.
Despite growth in users, the total available market is narrowing because a significant portion of on-premise PBX (private branch exchange) customers are not transitioning to cloud PBX solutions. Instead, many organizations are moving employees to collaboration-only licenses that omit external PSTN (public switched telephone network) calling functionality.
Other key findings from Cavell’s Cloud Comms Market Reports, a resource relied upon by the telecoms industry for over 17 years, include:
- 62% of providers are diversifying their offerings to improve resilience and adaptability in their telecommunications businesses
- 48% are integrating AI features into their products to reduce operational costs and increase efficiency
- Approximately one-third (33%) of users are expected to have Microsoft Teams voice enabled by the end of 2028
Cavell also notes a decline in margins and revenue from traditional cloud communications and UCaaS services that has persisted for more than three years. Over 40% of respondents reported decreases in UCaaS revenue in the latest survey.
Dominic Black, Director of Research Services at Cavell, explains: “Historically, providers grew by migrating customers from on-premise solutions. As the market matures and fewer on-premise deployments remain, that source of new customers has dried up. This shift increases competition, forces providers to find ways to differentiate, and may prompt pricing consolidation.”
Black adds that customer acquisition from competing UCaaS providers has risen steadily. Cavell’s research shows that nearly half (49%) of cloud communications providers now win the majority of their customers from competitors—matching the share of customers historically acquired through migration from on-premise systems.
The research further shows that Microsoft Teams is increasingly important in the enterprise segment, with a notable portion of the market enabling voice services within Teams. While Direct Routing remains the most widely adopted Teams voice approach today, Operator Connect is gaining traction and is expected to grow in significance. Teams Phone Mobile is still nascent in many regions, with only a few operators having launched mobile voice services integrated with Teams.
Black noted the accelerating convergence of communications, IT, and productivity tools driven by modern collaboration platforms like Microsoft Teams. These solutions now combine capabilities that once belonged to distinct technology areas, creating overlap between traditional communications partners and IT service providers. As adoption expands globally, vendors and partners from both sides are encountering new competitive and collaboration dynamics.
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