Cloud Meetings and Team Collaboration Services Market, 2020

Source: Frost & Sullivan

Strategic Imperative: Rejuvenating Growth in the Midst of a Crisis

• Global gross domestic product (GDP) is estimated to decrease to (5.2) percent in 2020.

• COVID-19 social distancing mandates have increased multi-fold the number of telecommuters from an estimated 30.0 million individuals working from home regularly in 2019 to an estimated 270.0 million work from home (WFH) professionals globally since the outbreak.

• Until the majority of the industrial world's population is vaccinated, social distancing due to coronavirus pandemic will continue well into 2021.

• Remote work will no longer be a privilege. Post-pandemic, the number of remote workers will be 6x greater compared to the pre-pandemic number.

• Digital communications and collaboration technologies have been in the highest demand ever in 2020 and will continue to be so in the coming years to keep workers connected.

• Cloud meetings will be a de facto expectation for remote business communications. COVID-19 has been a critical tipping point for cloud meetings, which has been waiting in the wings for years, to go mainstream. People who may have previously been video-shy are now accustomed to turning on their cameras and joining video meetings.

• Growth in cloud meetings will not only come from remote work, but also from other video interaction scenarios such as remote learning, tele-health, and customer service, among others.

• Travel will be time-consuming and cumbersome, prompting more virtual meetings and events.

• Team collaboration has also exploded as a new way to interact, learn and work with colleagues.

• Businesses, in general, are expected to increase their technology budgets in the coming years, particularly for cloud communications and collaboration services.

Growth Environment Analysis

• In 2020, the global cloud meetings and team collaboration service market is expected to at least double its size in revenue, reaching $11.43 billion, and increase 2.7x in installed paid licenses to 201.5 million.

• COVID-19 pandemic and new WFH realities have set unprecedented levels of demand for cloud meetings and team collaboration services.

• Major cloud meeting providers have reported 3x-4x growth in usage in the months since the pandemic’s onset. The same applies to team collaboration providers, adding millions of daily active users during the pandemic.

• Use of virtual events has exploded during the pandemic as organizations need ways to maintain communication and business continuity – interactivity, scale, and reach have become critical capabilities.

• In terms of innovation, years of digital transformation have been squeezed into just a few months to cater to the demand of hundreds of millions of individuals working from home and distance learning.

• With the number of post-pandemic WFH individuals estimated to settle at 4.5x the pre-pandemic levels, remote work will no longer be considered a privilege. Technology is ripe for disruptive innovation with the objective of elevating the user experience and addressing user behavior challenges.

• Technology innovation is expected to help many of the 2.70 billion frontline workers around the globe with mobile- first solutions and capabilities that are tailored to address specific workflows. Cloud meetings and team collaboration providers have a vested interest in arming frontline workers and various vertical industries with specific tools to simplify and optimize their workflows.

• Technology innovation will help businesses and programmers to embed real-time communications within user applications, without installing any additional products or managing separate log-ins. SDKs and APIs are expected to democratize audio and video.

• Revenue growth will be impacted by a confluence of factors including extension of free services and free-to-paid conversion. Freemium conversion rates for software-as-a-service (SaaS) communications in the past have typically been in the single digits. The viral growth in technology adoption during the COVID-19 pandemic will lead to higher-than-average conversion rates over the mid-to-long term.

Strategic Insights

• COVID-19 pandemic has been a disruptive catalyst across the UCC industry. Cloud meetings and team collaboration services became deeply entrenched in business workflows as a consequence of the collaboration services and became deeply entrenched in business workflows as a consequence of the emergence of proximity restrictions and the spread of remote working. To ensure continuity, businesses, educational institutions, and health care facilities adopted video conferencing, group chat, and content collaboration tools at an unprecedented scale leading to exponential market growth.

• Rampant free offerings during the pandemic will generate an immense base of free users, and the opportunity to convert them to paid accounts in future. The ability to gracefully wean users off of free services into a paid engagement will ultimately determine if providers will see a sustained revenue impact from the upsurge in user demand.

• Successful cloud meetings and team collaboration services must move beyond standard features and capabilities. Differentiated solutions must offer exceptional experiences that effectively replicate or augment human interaction, creating a direct impact on user performance and satisfaction levels; target key business requirements, including achieving overall organization success, security, compliance, performance, and scalability; and allow IT professionals to easily provision, manage, monitor, and gain insights from the products.