Skip to Content

From Telco to Tech Co.: How the shift to software-driven business is unlocking a new era of innovation in telecoms

Shamik Mishra
May 28, 2024

For the past several decades, telecom operators focused primarily on connectivity, with end-user devices consuming network resources. However, the landscape has since evolved, with a significant amount of content now generated by applications such as over the top media services (OTT), direct-to-consumer platforms, and other media services.

To stay relevant, operators must pivot towards providing value to content creators, which entails offering insights derived from the network to these applications. This shift requires implementing software-defined interfaces and adopting a consumption-based business model.

Further, Telcos’ software strategies extend beyond network virtualization or softwarization. Rather, it encompasses the entire stack, from networks all the way through the customer experience. In taking a more holistic approach, operators can benefit from faster time to market, proactive service provisioning, automation, autonomous networks, precise asset management, and digitization of customer services.

In our most recent research, The art of software: The new route to value creation across industries, we explore the shift from Telco to Tech Co. and the specific role of software in this evolution. In this post, we present three key takeaways from our research, as well as our own expert insights, that highlight how Telco companies can prepare for and lead the way to a software-driven future.

3 ways Telco organizations can prepare for a software-driven future

1. Accelerating the shift to cloud native

To be a software-driven business, Telcos must also be a cloud native business. This point has become non-negotiable as most, if not all, new network elements and equipment demand a cloud native foundation. This means that companies across all subsectors of the industry must possess the capability to develop cloud-native software, implement robust tooling, automation, CI/CD pipelines, and other essential components inherent to the cloud-native model.

The cloud is also a key to developing and scaling software-based services, which is a critical revenue driver in the Telecoms industry. In fact, our research shows that Telco executives, as a group, expect to see the highest increase for the share of total revenue by software by 2030 (39% for telecom vs 29% average). For companies that expect to tap growth lines outside core telco services—be it through cybersecurity, IOT solutions or edge services—they must become cloud native.

2. Leveraging the power of AI to scale.

Current network automation solutions often operate in silos, with custom automation resulting in a “spaghetti integration.” Intelligent inventory management and automation can address this challenge by effectively managing dependencies across network assets.

Adopting a software-driven approach enables telcos to scale and extend automation capabilities, accommodating new generations of connectivity technology seamlessly. This approach offers various benefits, including reduced total cost of ownership (TCO), accelerated innovation, and avoidance of vendor lock-in.

AI is instrumental in realizing this vision, alongside other software-based automation approaches such as rules-based, model-based, and ML-based automation. As such, Telco organizations are not only required to significantly expand their technical workforce but also build teams equipped with a profound understanding of AI, data consumption, and the ability to craft software snippets that facilitate automation.

3. Creating a strong culture of collaboration and transformation

Though it may seem counter-intuitive, at the heart of every successful software-driven business is not simply great technology, but an excellent experience. To deliver on this front, companies need to understand their customers, their needs, their challenges and the context in which they operate.

For some Telcos, shifting to software means becoming a true customer-first business. This involves seamlessly integrating various aspects of the service, from network infrastructure and product development to service and marketing, all orchestrated with the primary goal of delivering an exceptional customer experience. This requires a fundamental reimagining of how teams operate, the talent they attract, retain, and nurture, and an ongoing focus on continuous product development and operation.

Finally, it will be nearly impossible for Telco organizations to make this journey alone. Another key finding of our research is that success requires an ecosystem approach, bringing together multiple stakeholder groups, such as chipset providers, hardware and sensor vendors, cloud and platform providers, connectivity providers, testing and others, to assemble the necessary expertise and capabilities needed to take full advantage of the benefits of software-driven transformation.

Reclaiming the innovation story: How Telcos can kickstart their softwarization journey

While many Telco organizations have significant work ahead to become software-driven companies or build the maturity of their business models, the upshot of our research is that they are hardly alone in the struggle: Only 29 percent of organizations across industries have started to scale and utilize software to drive transformation – with only 5 percent fully scaling identified use cases.

The rest of companies, and likely many Telco organizations, find themselves squarely in the experimentation stage, identifying application areas/use cases or implementing pilots/proofs of concept (PoCs). This means that there is still ample time to start the journey and shape the future.

That said, we must remember that when it comes to technology, the future moves fast. Telco companies have time to act, but not time to wait.

Are you ready to take the next step towards a software-driven future? Download our recent report, The art of software, and schedule a consultation with our authors to start your journey from Telco to Tech Co. today.

TelcoInsights is a series of posts about the latest trends and opportunities in the telecommunications industry – powered by a community of global industry experts and thought leaders.

Meet the author

Shamik Mishra

VP, CTO Connectivity, Capgemini Engineering
Shamik Mishra is the Global CTO for connectivity, Capgemini Engineering. An experienced Technology and Innovation executive driving growth through technology innovation, strategy, roadmap, architecture, research, R&D in telecommunication & software domains. He has a rich experience in wireless, platform software and cloud computing domains, leading offer development & new product introduction for 5G, Edge Computing, Virtualisation, Intelligent network operations.

Karl Bjurström

Global Head of Invent Telecom, Media & Entertainment
Karl Bjurström is a strategy consultant and manager who specializes in strategy formulation, data, and scaling in the technology, media, and telecom industries. He is passionate about helping clients use digital technologies to gain strategic and operational advantages within product development, customer experience, and marketing.