Voice over Internet Protocol (VoIP) Market Size, Share & Industry Analysis, By Service (SIP Trunking, Hosted IP PBX, and Managed IP PBX), By Enterprise Type (Small and Medium Enterprises (SMEs) and Large Enterprises), By End-user (Residential and Industrial/Commercial), and Regional Forecast, 2024 – 2032

The global Voice over Internet Protocol (VoIP) market size was valued at USD 132.47 billion in 2023. The market is projected to grow from USD 144.77 billion in 2024 to USD 326.27 billion by 2032, exhibiting a CAGR of 10.8% during the forecast period. North America dominated the voice over internet protocol (VoIP) market with a market share of 46.11% in 2023.

The growth of VoIP technology and improvements in communication infrastructure play a significant role in expanding the new telecommunication services that are gaining popularity among both businesses and consumers. The rise of mobile VoIP, which enables voice calls over the internet instead of traditional phone networks, has been a key factor in this trend.

• According to a research study, businesses switching to VoIP phone services are able to reduce their telecommunications costs by up to 50%. This financial release allows organizations to allocate resources to other areas, such as customer service and reduction in the cost of expensive hardware upgrades.

The convenience and affordability of mobile VoIP services have made them a popular alternative to traditional landline phone connections. The advancements in mobile applications, cloud-based communication systems, and data encryption are set to boost the market growth over the forecast period.

Leading industry participants are adopting various strategic steps such as investments and collaborations to consolidate their positions and increase their Voice over Internet Protocol market share.

The global market was significantly influenced by the COVID-19 pandemic. With movement restrictions in place, numerous companies transitioned to remote work setups, heavily relying on mobile VoIP services for their communication needs. This shift is due to the convenience and security provided by mobile VoIP services, eliminating the necessity for in-person meetings. Moreover, the pandemic increased the demand for mobile VoIP services by pushing more individuals to work from home. This surge in users has, in turn, boosted the revenues of mobile VoIP services. Additionally, as businesses seek cost-effective ways to communicate, mobile Voice over Internet Protocol services have emerged as a preferred choice.

IMPACT OF GENERATIVE AI

Gen AI-Powered VoIP Solutions to Streamline Business Communication Services to Fuel Market Growth

Gen AI-powered VoIP solutions aim to offer numerous benefits and lead to improved enterprise business performance. The growing usage of gen AI-integrated VoIP software helps streamline business operations' adaptability and efficiency and enhance overall organizational performance. This integration also provides a personalized customer experience, helps revolutionize the performance of virtual agents with real-time noise reduction features, and minimizes operational costs to deliver a better user experience.

• For instance, in July 2024, Vonage developed Generative AI-powered SIP trunking services specifically designed for Vonage’s SIP Trunking customers to deliver enhanced customer experience.

Gen-AI-based VoIP is changing the way businesses communicate by integrating generative AI with internet phone systems to provide automated and advanced customer support services.

• According to a survey of 4,000 IT professionals in 2023, 86% of IT experts believe that the integration of generative AI will significantly help to improve business performance and enable enhanced user experience in the next few years.

Furthermore, the integration of Natural Language Processing (NLP) and Machine Learning (ML) technologies with VoIP solutions helps to reduce overall costs, reduce the wait time, and enable the provision of 24/7 customer support to fulfill the growing needs of customers. Hence, these factors help to drive the demand for gen AI-powered VoIP solutions to boost response time and data protection services.

VOICE OVER INTERNET PROTOCOL MARKET TRENDS

Integration of VoIP Solutions and Services with IoT Technology to Drive Market Growth

The integration of VoIP services with the Internet of Things (IoT) aims to deliver a smarter and better world, as many IoT devices use the Internet Protocol (IP) to deliver deep-data insights and functionality for providing a better customer experience. This combination helps to improve data collection and connectivity and boost voice communication into the IoT ecosystem used across different industry verticals.

• According to a research survey in 2023, there will be 16.6 billion connected IoT devices by the end of 2023, and there will be 18.8 billion by the end of 2024. This increase in IoT devices results in the deployment of automation to deliver automated communication services across different industries. 

VoIP can be considered as an advanced version of traditional Public Switched Telephone Networks (PSTNs). Hence, they are easy to integrate with IoT and aim to facilitate automation and remote device control activities. Thus, the combination of IoT with VoIP telephony solutions helps to accelerate the development across smart offices, smart homes, and smarter telecommunications solutions to enhance digital intelligence.

MARKET DYNAMICS

Market Drivers

Rising Adoption of 5G Technology to Deliver Uninterrupted Communication Services to Propel Market Growth

The integration of 5G technology with VoIP services helps to enhance call quality by reducing call latency and enhancing bandwidth capabilities to improve voice clarity and reliability. This factor led to a boost in the demand for mobile VoIP phones to support a larger number of simultaneous connections. It significantly allows more users to access VoIP services.

The Voice over Internet Protocol market is projected to grow with an increase in bandwidth capacity and speed. With the widespread deployment of 5G, there is hope for reduced network latency and improved global coverage. The usage of integrated 5G technology is expected to dramatically change the mobile website loading speed, increasing it from the current average of 1 GB per second to over 20 GB per second. It delivers seamless connectivity and uninterrupted communication and aims to deliver a better customer experience.

Furthermore, high network latency and phone call interruptions due to 4G network congestion can be a significant issue. However, those using broadband connections using fiber-optic technology integrated 5G with VoIP are able to boost the demand for VoIP mobile phones on a large scale.

Market Restraints

Limited Availability of Broadband Services in Uncapped Areas May Restrict Market Growth

The limited availability of broadband services in certain parts of the world has a direct impact on the adoption and usage of VoIP services. The availability of the necessary infrastructure also limits the reach and coverage of these services. The services need a reliable network connection to deliver quality communication services.

Many areas lack the necessary infrastructure to provide reliable and affordable broadband services. This has resulted in a limited reach for VoIP services in certain parts of the world. Thus, the lack of an adequate network infrastructure restricts the reach and coverage of VoIP services and solutions.

Market Opportunities

Increasing Demand for Cloud-based Communication Solutions to Provide Reliable Communication Capabilities Boost Market Growth

The rise in cloud-based technologies is a key factor driving the Voice over Internet Protocol industry. Cloud platforms provide the ability to scale and save money, enabling both businesses and individuals to facilitate sophisticated VoIP capabilities without the need for expensive in-house infrastructure. There is an increasing adoption of cloud-based infrastructure and rising demand for reliable and high-quality communication services to remote working employees, along with employees working from offices present across different industry verticals.

• According to an analyst survey in 2024, 87% of startup companies are using or planning to use VoIP phone systems and overcome the traditional landline phone system by VoIP to enhance business performance.

By using cloud, users can enjoy improved features and adaptability and the ability to increase capacity to meet the rising communication demand easily. This factor helps to accelerate the growth of the market and make complex communication tools more accessible to a broader audience.

SEGMENTATION ANALYSIS

By Service

Growing Demand for Hosted IP PBX to Reduce Hardware Costs to Drive Market Growth

By service, the market is divided into (Session Initiation Protocol) SIP Trunking, hosted IP PBX, and managed IP PBX.

Among these, the hosted IP PBX segment is expected to grow at the fastest rate over the forecast period. This is due to its lower initial costs, ease of use, and the need for less on-site hardware.  Smooth integration with other communication tools is another factor set to drive the growth of the hosted IP PBX segment over the forecast period.

The SIP trunking segment held the largest market share in 2023 as companies can link their existing and past telephone systems to VoIP technology through call routing protocols. This could replace their current telephone networks with a new voice over internet protocol gateway or merge call routing protocols with their existing telephone systems.

• For instance, businesses that use unified communications solutions are able to boost productivity by 20-25%. The company facilitates the connection of a Private Branch Exchange (PBX) to the internet and aims to enable efficient data and voice communication over an IP network.

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By Enterprise Type

Adoption of VoIP Software in SMEs to Grow at a Rapid Rate Due to Lower Maintenance Cost

By enterprise type, the market is divided into Small and Medium Enterprises (SMEs) and Large Enterprises.

Among these, the Small and Medium Enterprises (SMEs) segment is projected to grow at the highest growth rate during the forecast period. The increased spending of SMEs on enhancing the performance of communication channels, along with growing digital transformation across companies' infrastructure, increases the demand for VoIP services. This factor led to reduced additional hardware investment and maintenance costs.

• According to a researchers’ survey in 2024, the shift of businesses from traditional communication services to voice over internet protocol services helps to save telecommunication costs by 60%. It aims to deliver seamless communication solutions and services to employees across the globe.

The large enterprises segment accounted for the largest market share in 2023. The growing usage of various online communication channels such as Google Hangout, Skype, WeChat, and Google Duo across large enterprises helps to improve the mobility of virtual phone systems. It also helps to manage business communication efficiently and effectively from anywhere with a secured internet connection.

• For instance, companies such as Dialpad and Mitel deliver hassle-free and user-friendly VoIP telephony services to enhance the conferencing and collaboration capabilities of different communication channels.

By End-user Analysis

Residential Sector to Be Leading User Owing to Cost Friendly and Unlimited Calling Features of Residential VoIP Services

By end-user, the market is divided into residential and industrial/commercial.

Among these, the residential segment is estimated to grow at the highest CAGR over the forecast period. Voice over Internet Protocol for consumers is gaining popularity due to its affordability and broader range of features compared to traditional landlines, which is expected to drive its growth at a quicker pace than other alternatives. This is due to unlimited calling options and additional features such as call forwarding, call waiting, and caller ID provided by residential VoIP services. These features are not always available with traditional landlines. As a result, many residential customers are moving away from traditional landlines to VoIP services.

In the industrial/commercial sector, the IT & telecom sector held the largest market share in 2023. This is due to the growing demand for seamless communication and collaboration among remote teams, the increasing use of cloud-based services, and the need for reliable and cost-effective communication solutions to support digital transformation efforts in the IT & telecom sectors. Furthermore, the BFSI industry is estimated to experience the highest growth rate due to the increased use of VoIP solutions by financial institutions to improve communication efficiency, cut operational expenses, and ensure secure and dependable communication for important financial transactions and customer interactions.

VOICE OVER INTERNET PROTOCOL MARKET REGIONAL OUTLOOK

North America

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North America accounted for the largest voice over internet protocol market share in 2023. This is due to the expanding penetration of high-speed internet and the integration of advanced technologies such as 5G. The growing demand for unified communication solutions is also propelling the North America market. This demand is driven by the need for businesses to enhance their customer service and collaboration capabilities.

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Similarly, key players across the region mainly focus on enhancing the performance of communication channels and collaborating with startups. In addition, companies are focused on bringing advancements to boost their internal and external communication processes.

The U.S. accounts for the largest market share among other countries present across the North American market. The growing number of VoIP users present in the U.S. boosts the usage of VoIP solutions and services to deliver effective and efficient communication services.

• According to a researchers’ survey in 2023, the number of voice over internet protocol users in the U.S. is projected to reach 46 million by 2024 and aims to take advantage of VoIP systems.

South America

Technological developments in the region and increasing government investments in infrastructure development across South America drive the growth of the market. Furthermore, the presence of a large youth population in the region tends to embrace new technologies, which is another factor pushing the market expansion over the forecast period.

Europe

The market in Europe is estimated to witness significant growth, driven by the presence of large organizations across the U.K, Germany, and France, which are increasingly adopting VoIP technology. Furthermore, the increasing collaboration of large enterprises with VoIP service providers to satisfy the growing needs of their customers with cost-effective communication options is a key factor that fuels the Voice over Internet Protocol market growth.

Middle East & Africa

The VoIP market in the Middle East & Africa (MEA) is also witnessing rapid expansion. This is attributed to the area's growing demand for sophisticated communication services, along with the ample availability of high-speed internet connections. The region is considered a hub for numerous businesses and organizations that depend on VoIP services for their communication requirements. This has led to an increase in the number of VoIP service providers across the region, offering a broad selection of options to consumers. These are the factors that propel the demand for voice over internet solutions across the region over the forecast period.

Asia Pacific

Asia Pacific is estimated to experience the highest CAGR during the forecast period. The growing preference for cloud-based voice over internet protocol services by companies present across India, China, Japan, and other ASEAN countries also drives the market growth over the forecast period. This is due to the cost-effectiveness and flexibility of cloud-based VoIP services, which appeal to businesses of all sizes.

• According to an analyst survey in 2022, the growing integration of SIP trunking services in India helps enterprises adopt unified communication services and solutions to enhance the performance of communication architecture. This led to the enhanced usage of flexible and reliable SIP trunking solutions to boost the inoperability of the communication services.

Furthermore, the increasing demand for comprehensive communication solutions is another factor contributing to the market growth across the region.

COMPETITIVE LANDSCAPE

Key Industry Players

Companies Focus on Forming Partnerships and Product Launches to Enhance their Product Portfolios

Companies operating in the market mainly include Microsoft Corporation, Cisco Systems, Inc., RingCentral, Inc., Vonage Holdings Corp., Nextiva, Dialpad, Inc., and Mitel Networks Corp. The key players are focusing on bringing advancements in VoIP services. To bring advancements in their features, the market players are using various strategic methods, such as software launches, acquisitions, investments, and collaborations.

List of Voice over Internet Protocol Companies Profiled:

• Microsoft Corporation (U.S.)
• Cisco Systems, Inc. (U.S.)
• RingCentral, Inc. (U.S.)
• Vonage Holdings Corp. (U.S.)
• Nextiva (U.S.)
• Dialpad, Inc. (U.S.)
• Mitel Networks Corp. (Canada)
• Zoom Video Communications, Inc. (U.S.)
• 8*8 Inc. (U.S.)
• AT&T Intellectual Property (U.S.)
• Grasshopper (U.S.)
• Ooma, Inc. (U.S.)
• Go TO (U.S.)
• Verizon Corporation (U.S.)
• InPhonex LLC (U.S.)
• 3CX (Cyprus)
• Xorcom (U.S.)
• astTECS Communications Pvt. Ltd. (India)
• HoduSoft (India)
• IQ Infotech (India)

KEY INDUSTRY DEVELOPMENTS:

• October 2024: Zoom Video Communications, Inc. developed a new cloud phone feature in India named “Zoom Phone” with Native India phone numbers. This Zoom Phone service is India’s first licensed cloud Private Branch Exchange (PBX) service and helps to consolidate their business communication.
• July 2024: Snom Technology entered a partnership with Cal4Care Group to expand its reach across the Asia Pacific region to sell its VoIP telephones. The parent organization of Snom Technology, VTech, is projected to advance the infrastructure of telecommunication companies across Japan, India, China, Australia, and South Korea.
• May 2024: Tata Communication entered a partnership with Cisco and launched a cloud-based Public Switched Telephone Network (PSTN) Webex Calling solution based on the Tata Communications GlobalRapide platform. The Webex solution scales up the communication infrastructure and helps empower employees' hybrid work experience.
• March 2023: DIDWW, a VoIP communication and SIP trunking service provider delivers its SIP Trunking solution for Genesys AppFoundry, a marketplace solution provider, to deliver enhanced customer experience and aims to fulfill the unique business needs.
• April 2022: Nextiva, a VoIP services provider, launched the NextivaOne partner program to support the implementation of developing technologies for their customers and channel partners and allow them to enhance their service portfolio and improve the performance of their revenue stream.

INVESTMENT ANALYSIS AND OPPORTUNITIES

VoIP enables voice communication over the internet, bypassing traditional telephone networks. The market includes services for both consumer and business communication, cloud PBX, and enterprise-level solutions. Increasing investments in voice over internet protocol services will contribute to the market growth.

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, service types, and leading applications of the services. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

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REPORT SCOPE & SEGMENTATION