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In short: Telecom spending has shifted from equipment to software, cloud and outsourced services. Global telecom opex reached USD 1.63 trillion in 2024, and the procurement job has moved from negotiating hardware prices to governing multi-year service contracts. That is where value now leaks: bundled managed-services agreements that hide pricing, SLA credits that are never claimed, missed renewals and unverified price escalators. This article traces the shift, explains why service and software contracts are so hard to control, and shows where operators recover the value, including what's specific to Central and Eastern Europe.
Ask a telecom operator where its money goes today, and the answer is no longer "equipment." Operating costs now dwarf capital spending, and inside both, the balance keeps tipping toward software, cloud and outsourced services. A procurement team that spent the 5G build-out negotiating hardware prices now spends its days governing multi-year service contracts it can barely see inside.
That change reshapes what a good supply chain strategy looks like. The sections below trace the shift in spending, unpack why service and software contracts are so hard to control, and show where operators recover the value that leaks out of them.
The shift is visible in the numbers. Telecom capital expenditure peaked in 2022 and, according to Analysys Mason, is not expected to recover meaningfully this decade. The bigger story is operating expenditure, which runs several times larger than capex and reached USD 1.63 trillion globally in 2024. Inside those budgets, the balance keeps tilting toward software, cloud and outsourced services.
That changes the procurement job entirely. Buying hardware meant unit prices, volume discounts and predictable depreciation. Buying network-as-a-service, virtualized software and cloud capacity means licensing models based on subscribers, sessions or consumption, and managing several vendors at once for what used to be a single purchase. The emphasis has shifted from getting the unit price right to managing contracts and vendors well.
The move to software does not erase the old problem: the market for core network technology is highly concentrated. A handful of vendors dominate, which weakens competitive bidding and pushes operators toward bundled, multi-year agreements. According to the Dell'Oro Group, five suppliers (Huawei, Ericsson, Nokia, ZTE and Samsung) lead the global RAN market, and concentration reached a 10-year high in 2025.
That concentration matters less as a hardware issue now and more as a contracting one. When a few vendors control the technology, they increasingly sell it as a service, wrapped in agreements where the leverage sits firmly on their side. Which brings us to the core challenge of modern telecom procurement.
As networks virtualize and grow past what internal teams can run, operators increasingly outsource to managed service providers. The global telecom managed-services market sits at roughly USD 28-30 billion in 2025 across major estimates, with double-digit growth expected for years, and managed security is the fastest-growing slice as 5G cores widen the attack surface.
The convenience is real, but so is the trap. Providers often sell bundled agreements that lock hardware, software licensing and maintenance into one master contract. The bundling hides individual pricing, so procurement can't benchmark the hardware, judge the software licence on its own, or see the margin on maintenance.
The lock-in runs deeper than price. Long terms, auto-renewals, steep cancellation penalties and uncapped mid-contract escalations are common, and because the vendor runs the environment, the operator loses visibility into system health and real utilization. Changing anything triggers out-of-band "change request" fees, and even extracting your own data at contract end can be penalized. Mature procurement teams push back by demanding line-item transparency at the RFP stage and writing firm exit clauses into the contract.
In telecom, the service-level agreement is supposed to hold vendors accountable. In practice, there is a wide gap between what an SLA pays out and what an outage actually costs.
Downtime has become a boardroom risk. Industry surveys put the cost of an hour above USD 300,000 for most large enterprises, with 41% reporting between USD 1 million and USD 5 million. Yet the remedy for a missed SLA is usually a service credit capped at a fraction of the monthly charge. A two-hour outage that costs millions in lost revenue and churn might yield a token credit. The penalty rarely matches the damage.
On top of that sits contract value leakage. Research by World Commerce & Contracting finds businesses lose roughly 9-11% of contract value a year to poor post-signature management, and the worst performers lose up to 15%. In telecom, that leakage shows up in specific, avoidable ways:
Every one of these is a contract-management failure, not a hardware one, and every one is fixable with the right tooling.
The software layer is where operators now differentiate, and where sourcing gets genuinely complex. The OSS/BSS systems that run everything from network inventory to billing are moving from custom in-house builds to commercial, increasingly cloud-based platforms, with the cloud segment growing fastest as 5G Standalone forces real-time charging.
This creates problems that didn't exist in the hardware era. Licensing metrics no longer line up: legacy software was priced per server, while cloud-native functions are priced by subscribers, sessions or throughput, which makes five-year cost modelling far harder. Cloud also brings hyperscaler dependency, forcing operators into three-way agreements between the software vendor, the cloud provider and a systems integrator.
Managing multi-year MSAs, consumption-based software licences and cloud spend across fragmented regional operating companies is not a spreadsheet job. This is where an integrated source-to-contract platform earns its place, and the returns are well documented.
The reported gains are concrete. Digitizing procurement has been shown to cut invoice processing cost by around 78%, deliver 2-5% structural savings on addressable spend, accelerate contract cycle times by up to 75%, and reduce missed renewals by about 40% through automated contract lifecycle management. Forrester analysis of one platform put ROI well into the hundreds of percent with payback in under six months. For an operator managing billions in opex, even a 2% saving on software and services is tens of millions in margin.
What a platform actually does maps directly onto telecom's pain points:
This is the same integrated, agentic approach behind our work on telecom procurement transformation and telecom sourcing. It treats the supply chain as one managed, auditable system rather than a patchwork of contracts.
Region shapes strategy. The European managed-services market is worth an estimated USD 5.79 billion in 2025 and growing, and operators in Central and Eastern Europe face a few distinct realities. Data-residency rules often keep sensitive subscriber and billing data on-premise or in sovereign clouds, forcing localized or hybrid deployments. EU pressure to limit high-risk vendors pushes procurement toward multi-vendor setups that raise integration cost and demand tighter performance tracking. And as local engineering talent grows scarce, operators lean harder on managed-services contracts, which makes disciplined SLA governance essential. On top of that, state-affiliated entities face strict transparency and auditability requirements, exactly what a source-to-contract platform is built to deliver.
Telecom supply chain strategy has changed shape. The build-out era rewarded operators who bought hardware well. The next decade rewards those who govern services and contracts well, because that is where the spending, the complexity and the leakage now sit. Concentrated vendors, bundled managed-services agreements, SLA penalties that don't match the damage, and 9-11% contract value leakage all point to the same answer: an integrated, auditable procurement platform that gives visibility across every contract and every supplier. With telecom opex measured in trillions and capex under pressure, getting more from each contract is one of the few levers operators have left.
See how Fluenta One supports telecom operators across sourcing, contracts and supplier risk on our telecommunications procurement page.
What is a telecom supply chain strategy today?
Increasingly it means sourcing and governing managed services, software and cloud rather than physical hardware, with the focus on managing multi-year service contracts, licences and supplier risk across a network's life.
Why are managed services agreements so hard to manage?
Providers bundle hardware, software and maintenance into one contract, which hides pricing and makes benchmarking impossible. Long terms, auto-renewals and change-request fees deepen the lock-in. The counter is demanding line-item transparency and firm exit clauses up front.
How does contract value leakage happen in telecom?
Mostly through unclaimed SLA credits that lapse in tight claim windows, missed renewals that lock in old pricing, and unverified price escalators. World Commerce & Contracting estimates businesses lose 9-11% of contract value a year this way.
How much can digital procurement save a telecom operator?
Documented gains include 2-5% savings on addressable spend, invoice costs cut by around 78%, contract cycles up to 75% faster, and about 40% fewer missed renewals. For an operator with billions in opex, a 2% saving on services runs to tens of millions.
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