Explaining the Massive Growth of CPaaS

By Arti Loftus, Special Correspondent  |  December 08, 2022

The global Communication Platform-as-a-Service (CPaaS) Market is projected to grow from $11.03 billion in 2022 to $62.54 billion by 2029 at a CAGR of 28.1 percent. Very few other categories in the real-time communications industry can boast such dramatic and steady growth, and almost all industry analyst firms following and forecasting CPaaS agree the growth is unstoppable.

451 Research’s Workforce Productivity & Collaboration Market Monitor: CPaaS report, “The digitization of the customer (CX) and employee (EX) experiences accelerated with the COVID-19 outbreak, setting the stage for the next leg of CPaaS growth. Total market revenue grew 48% in 2020 and is projected to increase at a CAGR of 28% through 2025.”

We asked Chris Koeneman (News - Alert), Chief Revenue Officer at Kandy, developers of one of the world’s first CPaaS platforms, to shed some light on why the CPaaS market is continuing to grow at a pace that few other categories in telecommunications are growing.

“There are many contributing factors, including the successful implementations we’ve seen over the last few years,” Koeneman said. “The brands that are leveraging embedded, omnichannel and multimedia interactive applications are seeing results and doubling down – and their competitors are taking notice. On the other side, consumer expectations continue to rise as they experience faster, easier, and more intuitive ways to communicate with those brands, whether with fully automated self-service through intelligent bots or to reach a live expert when necessary. When you can reduce costs of customer service while improving customer experience, adopting embedded communications delivered via CPaaS is a no-brainer.”

Kandy (News - Alert) takes a different approach than other CPaaS providers in that it is exclusively focused on serving Tier 1 telcos and Communications Service Providers (CSPs). Kandy’s white-label CPaaS lets service providers leverage Kandy’s APIs to deliver new services to their business customers.

“Since the emergence of cloud computing, the use of the cloud by telecom providers has not grown as it has in other sectors,” said Koeneman. “CSPs and SaaS (News - Alert) companies have grown up independent of telecom providers, rendering the network as an afterthought. The end customer uses whatever network service they have in place, or the SaaS company bundles network connectivity as part of the service. Consequently, the ‘telco cloud’ as a source of revenue growth for telecom providers has been underwhelming. This may be changing due to a more expanded use of CPaaS by telecom service providers”.

“Telecom providers have an inherent advantage in addressing this market because CPaaS involves network services,” continued Koeneman. “Any competitor other than a telecom carrier will have to stack margin on top of network service. Telecom providers can leverage owner economics to deliver not only classic CPaaS types of services but also other API-based services. An important element for success based on Kandy’s evolution as a pioneer in the space is APIs that make it possible for developers to build more advanced, sophisticated solutions, including those which address specific vertical market use cases.”

In a recent blog on kandy.io, Koeneman shared five CPaaS trends they are seeing while serving customers, including AT&T in the U.S. and Etisalat (News - Alert) in UAE.

  1. New combinations of APIs will lead to even more compelling experiences and economics for businesses wishing to deliver personalized services. For example, a retail brand can tap into geospatial data through an API that will allow them to advertise a special deal to customers who have opted in, letting the customer know what they “have in store” when the customer is in the neighborhood.
  1. 5G networks will reduce latency and contribute to an even clearer, stateful video session on mobile devices even as the end-user is on the move. Developers will become far less reluctant to include live interactive video as part of their organization’s customer experience options, confident that as more ultra-broadband cellular networks come online, even in densely populated locations, consumers won’t be disappointed or frustrated.
  1. Mixologists in the CPaaS developer world will build services that bring together human and machine connections, using technologies including WebRTC, which supports both. For example, a patient with a heart condition that needs to be tracked no longer be trapped at home; with 5G connectivity, they can wear their heart monitor outside, synched to their mobile device, and should an incident occur, the Chronic Care Management application powered by APIs can set up an immediate consultation with that patient’s cardiologists office. Both the patient and the provider can be connected at once time, with data from the heart monitor available to both for a remote consult, which could result in sending the patient directly to a hospital if the indications are dire.
  1. Interconnections with Tier 1 telecom operators and multiple mobile operators will become increasingly important to ensure global reach for CPaaS-based offerings so that applications will work anywhere, on any network, and on any device. Large global brands will insist on worldwide reach, given the uptick in travel and their focus on delivering consistent and high-quality experiences regardless of where their customers happen to be and which devices they are using.
  1. Integrations with major CRM, ERP, contact center, UC and collaboration platforms, and e-commerce web services will advance tremendously, especially as developers take advantage of new visual building tools, no-code or low-code capabilities, and the continued adoption of omnichannel and “channel-less” messaging. Large enterprises especially will recognize the value in terms of more productivity, more data, and analytics, allowing them to understand the nature and impact of better CX and the overall reduction of friction in getting work done using internal collaboration solutions.

“Kandy began developing its CPaaS in 2014 and has stayed true to its business focus, which is serving Tier 1 telecom operators and CSPs so they can bring more value to their business customers,” Koeneman said. “We’re very different from the over-the-top CPaaS players, as we don’t compete with our customers – and they do. Our success has come from offering service providers the ability to launch an end-to-end CPaaS platform much more quickly than building it from scratch in-house, together with a complementary global access network and with integration into the service providers billing systems. Kandy helps CSPs complement and broaden the CPaaS-based services and solutions they can bring to their B2B customers across a broad range of industry verticals.”


Arti Loftus is an experienced Information Technology specialist with a demonstrated history of working in the research, writing, and editing industry with many published articles under her belt.

Edited by Erik Linask