Executive Summary: ISG Provider Lens® Telecom - Managed and Next-gen IT Services - EMEA 2025
05 Feb 2026
by Yash Jethani
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EMEA telcos pivot to AI-native, cloudfirst TechCo models with compliant 5G monetization
Purpose and context of the report
This report evaluates the state of telecom IT services in EMEA, reflecting how service providers are enabling operators’ transition into AI-native, cloud-first and open ecosystem TechCo models. It synthesizes findings from all provider materials shared, examines market maturity and identifies the evolving priorities of EMEA telecom buyers across operations support systems (OSS)/business support systems (BSS) modernization, network cloudification, 5G monetization, AIOps, automation and GenAI-enabled operations.
The EMEA telecom market faces a significant legacy burden, strict regulatory requirements [GDPR and Network and Information Security Directive 2 (NIS2)], flat average revenue per user (ARPU) and a slow yet steady 5G monetization path. Operators prioritize cost optimization, cloud-native modernization, compliance-aligned transformation and network and IT convergence. Providers in EMEA demonstrate a strong focus on cloud-native OSS/BSS modernization, microservicesbased digital stacks, and AIOps- and GenAIled automation for observability, assurance and NOC transformation. They are also prioritizing sovereign cloud and compliant data architectures, Open Radio Access Network (O-RAN) and network cloud engineering, and B2B2X enablement for manufacturing, transport and the public sector.
Market overview and trends snapshot with opportunities (for providers)
Cloud-native OSS/BSS is becoming the EMEA baseline:
Leaders demonstrate strong alignment with TM Forum (TMF) and Open Digital Architecture (ODA), supported by microservices-based designs and API-first integration frameworks. Providers use their proprietary platform accelerators to modernize legacy stacks. Hence, OSS/BSS simplification and telco-wide cloud modernization become a clear opportunity for providers.
AIOps and GenAI dominate operational transformation:
Providers emphasize autonomous assurance, noise reduction, intent-driven closed loops and predictive operations. AIOps and GenAIenabled autonomous operations represent the next major opportunity for the industry.
Compliance and sovereignty steer investments:
GDPR, NIS2 and multicountry data localization requirements drive traction for Capgemini, Atos, HCLTech, Infosys, and others. Providers highlight security, policy automation and auditability (zero trust, NIST and advanced threat analytics). Hence, multicountry transformation governance emerges as a key priority for providers.
Network cloudification is accelerating:
HCLTech (CTG acquisition), Tech Mahindra [O-RAN and multiaccess edge computing (MEC], Tata Elxsi (NEURON™) and Prodapt [software defined networking (SDN)/network function virtualization (NFV)] reveal strong engineering depth in the area of network cloudification. Network-IT fusion becomes a clear EMEA operator priority.
The following two opportunities arise for providers:
• 5G enterprise and private MEC rollout support
• Network APIs and network-as-a-service (NaaS) monetization frameworks
Monetization focus shifts to B2B2X:
Enterprises demand private 5G, edge-native services, connected operations and exposure to NaaS APIs. Tech Mahindra, Capgemini, Infosys, HCLTech and TCS shape emerging strategies around marketplaces, network slicing, identity management and API-led monetization. Data platforms for customer insights, billing accuracy and margin uplift present a clear opportunity for providers.
Some providers consistently exhibit broad transformation capabilities, AI-native operations, cloud-native BSS and compliance depth. Others demonstrate solid engineering strength but require stronger GTM scale or more consulting-led transformation models, while a few others excel in niche capabilities (O-RAN, fiber build and API monetization) and deliver segment-specific integration (API, BSS microservices and AIOps-led NOC).
Despite the varying provider capabilities, several pain points persist. These include deep technical debt, scattered BSS/OSS estates, limited cross-domain data integration, and talent shortages in cloud-native, O-RAN and AIOps. Providers also face compliance overhead from multicountry regulations, pilotto- production challenges in GenAI or agentic AI use cases and high TCO of multivendor legacy operations.
ROI highlights and value KPIs:
• AIOps-driven mean time to repair (MTTR) reduction of 30-70 percent
• Legacy modernization efficiency, delivering 20-40 percent TCO optimization across tier 1 system integrators (SIs)
• Automation gains, including 25-50 percent ticket deflection or auto-remediation potential
• Cloud transformation benefits, enabling up to 65 percent faster onboarding and 30-40 percent cost savings
• Network engineering productivity improvements of 20-30 percent in fiber and 5G rollout
• GenAI-led efficiencies, resulting in 15-25 percent price reduction in managed services
Additional data-driven KPIs include SLA compliance improvements, high percentage of zero touch tickets, automated root cause analysis (RCA) rates, order fallout reductions, service uptime improvements and network fault prediction accuracy.
Vertical-specific insights and recommendations
Tier 1 communication service providers (CSPs), including Vodafone, BT, DT, Orange and Telefónica, prioritize OSS/BSS consolidation, AIOps-led observability, compliance assurance, and network cloud. They also lead in co-innovation labs with partners such as HCLTech, Infosys and Capgemini to address multicountry transformation needs. Tier 2 CSPs need modular, cost-optimized modernizations and depict strong interest in O-RAN, AI-led assurance and cloud-managed services. Fiber operators require engineering-intensive support, which is ideally delivered by India-based SIs.
Technology adoption and regulatory implications
Client success snapshots include an Indian SI that has supported a major European operator for 18 years in ADM and testing as part of a large modernization program. Another Indian SI offered a live demonstration of network APIs at MWC25 in collaboration with Telefonica, Orange and T-Mobile. A third Indian SI partnered with Verizon to secure numerous telco network deals in the region. Additionally, a digital engineering niche Indian SI developed POCs for autonomous networks with European telcos using its proprietary platform, while another niche provider delivered significant OpEx improvements for fiber deployments.
The telecom industry in EMEA is undergoing a significant transformation driven by AI adoption, cloud migration and 5G deployment. Enterprises are leveraging AI for customer service, content recommendations and network optimization while accelerating their shift to multicloud architectures and edge computing. The rollout of 5G standalone networks and the rise of content super-aggregator platforms are reshaping service delivery models.
These technological advancements are unfolding against a backdrop of new EU regulations, including the Digital Services Act, AI Act, Digital Markets Act, NIS2, ePrivacy Directive, Strong Customer Authentication and the European Media Freedom Act. These regulations are introducing stricter requirements around content quotas, payments, data protection, anti-competition and algorithmic transparency. The European Commission’s Digital Markets Act and Media Freedom Act significantly influenced industry strategies, while concerns regarding energy costs and infrastructure investment challenge operators’ profitability. The European Commission has also allocated €865 million to improve digital connectivity and support digital innovation in EU member states through 5G, fiber and quantum communication projects.
Legislators’ Connective Collaborative Computing narrative positions telecom providers and cloud hyperscalers in the same converged landscape from a regulatory standpoint. However, significant differences exist between the two groups in terms of data egress costs, vendor lock-ins and multivendor strategies. According to ISG, coopetition represents the best way forward, as it emphasizes leveraging providers’ strengths, enhancing efficiency through AI and autonomous systems, and strengthening interconnectivity among cloud-to-cloud, cloudto- edge and edge-to-edge environments.
Industry outlook
Key actions that providers can implement in the next 6-12 months include introducing AIOps for fault prediction and RCA automation, initiating microservices-led OSS/BSS decoupling, deploying GenAI-assisted field operations/ workforce enablement, launching cloud FinOps for cost stabilization and strengthening compliance and data sovereignty frameworks. They also need to assess technical debt, data sovereignty and cloud readiness; stabilize operations using AIOps and observability stack; modernize OSS/BSS with phased microservices; automate NOC/SOC with GenAI pipelines; and ultimately monetize via APIs, slicing and B2B2X.
The next-stage transformation pathways for 2025-2027 include targeting autonomous Level 3/4 operations, weaving AI-native orchestration (from intent to action), unifying data fabric across IT and network, providing O-RAN assurance supported by cloud RAN analytics and enabling AI-led monetization of enterprise 5G services. Key trends to watch include the number of telecom GenAI copilots and autonomous NOCs that deliver measurable ROI in client projects, along with the verification of event-driven network operations within a sovereign edge and private MEC deployments to support a marketplace-led 5G monetization model.
CXO priorities
Linking these pathways to CxO priorities will require a balanced focus on growth (for B2B2X frameworks, enterprise 5G and API monetization), cost (with AIOps, cloud FinOps and network automation), CX [including GenAIled care and proactive net promoter score (NPS) improvement] and risk (embedding GDPR, NIS2, sovereignty and auditability into client deliveries). These priorities will need alignment with enterprise transformation for securing telco-to-TechCo transition, platformizing OSS/ BSS/CX (ISG includes a separate Integrated OSS/BSS/CX Platform Solutions quadrant as part of its global study in 2025, building open ecosystems and accelerating digital experience for enterprise customers.
Call to action
Telecom IT in EMEA is undergoing a decisive shift toward AI-native, cloud-first and compliance-secure ODAs. Providers must help operators navigate legacy-to-modern transitions while enabling new enterprise revenue models.
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