Research by GlobalData finds that European challenger telecoms companies and their longer-established competitors are focusing on smaller businesses for growth. The leading data and analytics company notes that worldwide, the shifting of global economic trends and supply chains is making telecoms operators targeting the enterprise market think hard about how to secure growth. The basic options consist of expanding geographic coverage, adding new products and services, or looking to grow the customer base (expand/add/grow). Challengers are looking at all three options.

Necessity is the mother of invention; it is also a driver of commercial opportunism. GlobalData’s recent analysis of European challengers clearly identified a move towards Small and Medium-sized Enterprises (SMEs) and Small Office/Home Office businesses (SOHOs) as key target areas, and they fit the expand/add/grow model.

Robert Pritchard, Senior Analyst at GlobalData, comments: “The good news for service providers is that technology is at the core of virtually every small business—more so today than ever before. This can range from a builder needing to be contacted by clients, partners, and suppliers at any time, in any place, to niche brand agencies that need to share media-rich files with clients around the world in real time.”

The other key dynamic is that it is no longer a question of selling basic connectivity, which is commoditizing. With SMEs and SOHOs availing themselves of online payments, banking and accounting, telecoms and IT managed services grow in importance because smaller companies usually lack the necessary skills in-house—so there is a market opportunity in value-added services like training and support for key applications like Microsoft Teams.

Pritchard continues: “Above all, security is a fundamental component of all solutions: protecting systems, data, and communications. The potential damage to brand, customer relations, and profitability, as a result of fines, customer legal proceedings, or broader reputational damage, makes security an essential condition of all ICT activities.”

The final hurdle is possibly the hardest psychologically, but most important commercially. It is about analysing the value/supply chain and identifying where the company sits and can therefore differentiate in a competitive market. The reason why challengers can become successful boils down to a strategic focus on, for example, infrastructure, a specific sub-segment of the market (e.g., a region or a vertical sector), or value-added solutions by becoming the customer’s virtual ICT team.

Pritchard concludes: “The opportunity is huge but trying to be all things to all businesses simply will not work. Service providers should identify their target customers, narrow their focus, hone their proposition, then grow market share and revenues.”