In 2023, 50 percent of businesses leveraged a CPaaS platform. By 2028, Gartner expects that to rise to 90 percent.
There are several trends supporting that prediction. For instance, telcos are pumping money into the space, new customer communication channels are emerging, and AI is accelerating enterprise innovation.
On that last point, Gartner also predicted that 80 percent of businesses will be using CPaaS to bring generative AI (GenAI) into their CX strategies by 2028.
Why? Because CPaaS bridges CX platforms with broader enterprise systems and enables workflows to run between them. From there, companies can run GenAI – and now agentic AI – over the top for automation.
As such, brands can innovate fast and lower traditional development costs.
Given all this, it’s no surprise that the CPaaS market is surging. But, reports vary as to its current growth trajectory.
The CPaaS Market Size: The Current Growth Trajectory
As Gartner mentioned in its 2024 Magic Quadrant report, demand for CPaaS slowed a little in 2023, but – in 2024 – the space started to heat up once again.
After a wave of out-of-the-box GenAI solutions first hit the market, developers are now becoming more experimental, extending their toolkits, and creating customized experiences with CPaaS.
As this trend accelerates, most market analysts expect the space to surge. Here are some standout predictions of the CPaaS market’s value and compound annual growth rate (CAGR).
- Markets & Markets forecasts that the CPaaS market will grow from a value of $12.5 billion in 2022 to $45.3 billion by 2027 (CAGR of approximately 29.4 percent).
- Grand View Research estimates that the CPaaS market to grow from a value of $21.31 billion in 2025 to $86.26 billion by 2030 (CAGR of approximately 28.7 percent).
- Future Market Insights Global and Consulting expects the CPaaS market to grow from a value of $12.3 billion in 2024 to $121 billion by 2034 (CAGR of approximately 25.6 percent)
While these estimates vary, all three analysts agree that the annual growth rate of the CPaaS market will exceed 25 percent over the coming years.
North America is the region that has invested the most in CPaaS so far, thanks to its focus on early-tech adoption and high cloud adoption rates.
Plus, the US is home to many major CPaaS providers, innovators, and research labs, giving it a lot of room for growth.
However, expansion is happening just about everywhere. The Asia-Pacific region is considered one of the top zones for rapid CPaaS adoption as tech-savvy enterprises implement new communication channels and AI.
Elsewhere, in some regions, demand for specific APIs is growing.
For instance, in Europe, companies are embracing CPaaS for highly regulated industries (tapping into security and privacy APIs).
Meanwhile, in Latin America, companies are investing in over-the-top messaging APIs.
Top Trends Driving the CPaaS Market Forward
Most analysts attribute the growth of the CPaaS market to the continued push to digital transformation and increased cloud adoption, as organizations focus more heavily on scalability and agility.
However, there’s much more to it, as highlighted in the CX Today article: 7 CPaaS Trends Disrupting the Market.
Here’s a sneak peek of some of those helping to drive growth across the CPaaS space.
CPaaS as an AI Enabler
Think of everything a CPaaS platform offers: APIs, communication channels, and workflow creation.
So, with such a solution, brands can connect systems and build workflows across them.
Think of these workflows as an infrastructure. Run agentic AI over the top of it, and it’s possible to automate many business processes.
Add communications, and employees – as well as customers – may receive alerts when these processes go wrong.
As businesses act on the new opportunity for workflow automation, CPaaS platforms will thrive.
CPaaS Unifies with CCaaS
Contact centers can benefit from CPaaS solutions in various ways. For instance, they can replicate complex on-premise customizations in the cloud and create proactive customer service workflows.
As such, many CCaaS vendors are leveraging CPaaS on the back-end of their platforms, including Cisco, Twilio, and Vonage.
When their contact center customers start to experiment more with blending modalities, AI, and live agents, expect their usage of CPaaS to rise.
Industry-Specific Innovation
More CPaaS providers are shifting away from a focus on core APIs to consider specific segments of the CPaaS market and the journeys they want to build.
In doing so, they not only accelerate the DevOps cycle but can also lower the bar for entry with pre-built components.
CM.com is an excellent example of a CPaaS player that does this well, targeting the events market with a portfolio that supports the entire event lifecycle.
The Rise of Network APIs
Telecom operators are quickly exploring new ways to monetize their infrastructures by partnering with CPaaS vendors.
These companies are opening access to these infrastructures and developing network APIs.
Such APIs empower developers with new functionalities for call routing, real-time bandwidth allocation, and latency reduction.
Emerging Communications Channels
Voice and SMS APIs are staples of CPaaS solutions. Yet, companies are increasingly assessing new ways to interact with customers and increase engagement.
Demand for OTT channels like WhatsApp and Viber is growing, alongside a focus on RCS as a long-term replacement for RCS.
Plus, businesses are also experimenting with video streaming solutions, particularly for things like technical troubleshooting and (know your customer) KYC compliance requirements.
Additional Factors Affecting the CPaaS Market
After evaluating several of the latest CPaaS market reports, several other factors are seemingly supporting the space’s growth.
For instance, the focus on security and authentication APIs is increasing as businesses grapple with evolving compliance standards and strive to keep data safe in the age of AI.
Meanwhile, more CPaaS providers and partnering with vendors in adjacent markets. Alongside CCaaS, those include the UCaaS, CRM, and CDP spaces.
Then, there’s the rise of vendor-agnostic offerings that allow developers to blend best-of-breed APIs from various vendors. Bandwidth is perhaps the most prominent brand doing this.
Yet, there are challenges to overcome, too. CPaaS vendors are still struggling to address the concerns companies have about cloud-based systems and security limitations across channels.
Additionally, while many vendors are offering more user-friendly, pre-packaged solutions and integrations, some still require companies to invest heavily in developer support to connect the dots in their CPaaS stack.
The CPaaS Market: Looking Ahead
CPaaS is no longer an afterthought in the cloud communications landscape. It’s transforming how businesses communicate and innovate on a massive scale.
Indeed, many enterprises now see CPaaS as a mechanism for delivering much more than phone calls or message blasts.
Now, they may use it to connect systems, integrate AI, and proactively support customers (and employees!).
There are still hurdles to overcome, but the overwhelming consensus suggests that the CPaaS market will experience explosive growth in just the next few years.
Read this CPaaS guide for a more comprehensive view of the use cases, providers, and opportunities driving CPaaS forward.
