The telecom industry eagerly shifts partnerships, embracing new providers for growth

The telecommunications industry’s ongoing transformation continues to reshape how it approaches its IT services partnerships.

From the data we collected during our research, ~60% of telecom clients have engaged new IT service providers within five years, with almost 40% working with new providers for the past 1-3 years. This demonstrates an industry where loyalty must not be assumed. Telecom companies prioritize adaptability and best-fit solutions over long-term exclusivity. As a capex-heavy industry, the firms prioritize adaptability, and switching service providers demonstrates their willingness to change suppliers as their needs evolve.

Key insights from the shifting landscape:

• Our research shows that telcos usually rely on a specific IT services provider for projects. However, as their needs evolve, emerging technologies emerge, or contracts expire, they are willing to bring in new service provider firms that address their problems.
• The concentration of partnerships in the 1–5-year range reflects telecom companies’ project-centric approach to partnerships rather than an interest in long-term arrangements. Only 11% of telcos maintain relationships with service providers for over a decade, and 33% retain them for 5-10 years. This indicates a preference for flexible, capability-driven partnerships over traditional, lengthy commitments, allowing telcos to be more flexible in response to market forces.
• As telecom companies evolve from traditional connectivity providers to digital service enablers, they actively seek IT services partners with cutting-edge capabilities in AI, 5G monetization, edge computing, and customer experience transformation. This technology evolution cycle naturally creates opportunities for new providers to demonstrate superior capabilities in emerging areas.

Implications for the telecom market as a whole:

This relationship model creates a dynamic marketplace where established and emerging IT services providers can compete effectively. Their success depends on demonstrating clear value in specific technology domains rather than relying on historical relationships or broad service portfolios. Technology is the great leveler, and those who can effectively use it to solve telcos’ business challenges can establish effective, potentially multi-year partnerships.

The Bottom Line: The data reveals an industry that has moved beyond traditional loyalty-based partnerships to a merit-based, project-focused approach.

Telecom companies are willing to work with multiple providers simultaneously and evaluate new partnerships as their needs evolve. This change means that provider selection is driven by the capability fit and innovation potential of the service provider rather than the relationship tenure, creating ongoing opportunities for service provider firms that can demonstrate superior capabilities in helping telecom firms solve their business challenges through technological prowess, domain knowledge, and innovative solutions.