Businesses keep turning towards telecom outsourcing

More businesses are expected to outsource their telecom expense management (TEM) needs over the next two years, according to a report by consulting firm Gartner.

Businesses are expected to jump on the TEM bandwagon in the hope that it will help them better manage one of the biggests expenses for most companies: telecom. Gartner says businesses will spend US$400 million on TEM software and services this year, with the spending growing to $1.5 billion by 2010.

Besides spending more, Gartner predicts that companies will select outsourcing rather than buying software and managing it on their own. The report, which was released last month, says 50 per cent of businesses that buy TEM products and services will do so from a systems integrator or outsourcer by 2008.

Eric Goodness and Phil Redman, the Gartner analysts who authored the report, say that the TEM market is overcrowded with more than 100 vendors in North America alone. It’s difficult for business users to differentiate between companies, they say.

With that in mind, the analysts attempt to rank 23 TEM vendors using a series of criteria that include evaluating the business model, innovation, products and services and customer experience.

The rankings are strong negative, caution, promising, positive, and strong positive. Of the 23 vendors, none was ranked in the strong negative column. But three stood out and were included in the strong positive ranking.

Those companies are Invoice Insight, ProfitLine and Tangoe. And all three play in the TEM market a little differently. Invoice Insight is a software-as-a-service (SaaS) company. ProfitLine is a Business Process Outsourcer and Tangoe licenses its software and also has a SaaS business.

The analyst firm points to Invoice Insight’s success in the federal and civilian government sectors as one of the reasons why it received such a positive rating. It also supports companies of all sizes, not just the very largest companies as many TEM vendors do.

Gartner says that ProfitLine is the biggest TEM BPO in the industry and “is one of the few really strong providers that can support both wireline and wireless solutions in all of its offerings.”

Goodness and Redman say that Tangoe has shown the most growth in the TEM market in 2006. One of the more notable customer wins was with a large financial firm, which also represented the largest customer win in the TEM market this year, Gartner says.

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