Amdocs taps into its telco heritage to drive growth in new industries

Amdocs, a longtime provider of BSS, OSS, and customer experience products and services for the telco industry, is now focused on growth in new industries. By leveraging its deep software capabilities and expertise in regulated industries, Amdocs is positioning itself as a disruptor across multiple sectors. A big part of this growth effort will be through experience design, data, AI, cloud, digital, and quality engineering services.

Given Amdocs’ software DNA, HFS sees real potential for the company to join the evolution of services for enterprise customers. As CIOs and CTOs look to partners that align their offerings to resolve legacy investments and transition from labor-based services to technology-enabled offerings, we see an opportunity for Amdocs to become a leader in the emerging services-as-software space.

As HFS’ Services Technology 2030 Vision outlines, many services will be accessed through technology, not people. This means numerous services will minimize human engagement and maximize the use of software to automate business experiences and outcomes. Amdocs is growing its services business on top of decades of hardened software capabilities that run on robust, resilient systems, which may enable the company to create significant market disruption and benefits for its clients.

Amdocs is using strategic acquisitions to expand beyond being seen as just a provider of telecom services and software

Amdocs continues its efforts to transform from a BSS/OSS solutions provider to a full-stack service leader by building and buying solutions that enable it to integrate data, AI, cloud, DevOps, and customer experience. While long known for its ability to deliver the solutions telecom firms need to generate long-term revenue opportunities, Amdocs is positioning for growth by leveraging its strong foundation in technology, industry, and data supplemented with strategic acquisitions.

Amdocs has been evolving beyond being the go-to firm for telecom solutions and offers its clients the entire stack of its services, including cloud, DevOps, and customer experience. To succeed across targeted industries, it will leverage its software DNA to accelerate its direct-to-customer service offerings.

Amdocs continues doubling down on inorganic growth (through acquisition) to achieve the critical capabilities it needs.

Exhibit 1: A view of Amdocs’ acquisitions illustrates its efforts to grow beyond telecom

Source: Amdocs Key Acquisitions (Amdocs, 2024)

Amdocs’ acquisitions focus on technology assets and unique cross-vertical services—positioning it as a direct-to-enterprise firm seeking to become less reliant on traditional IT services firms to integrate Amdocs’ solutions into their service offerings. While this strategy improves the relationships between the telcos and Amdocs, it stresses the partner relationships—fueling its business growth.

Though Amdocs’ growth strategy through acquisitions is promising, integrating these new businesses and maintaining its telco heritage may strain resources and partnerships. Enterprise leaders should evaluate how this move impacts long-term service stability and innovation.

Moving from BSS/OSS provider to customer experience leader

Amdocs has made multiple acquisitions over the past decade to extend beyond its core capabilities and enable it to support a family of services from mainframe modernization to digital engineering and a unified customer 360 experience. It is embracing the latest trend of GenAI by offering amAIz, a telco-specific GenAI platform to accelerate GenAI adoption within the telecom sector. amAIz includes GenAI agents tailored for moving telco-specific use cases in customer services, service analytics, and network management to a scalable, attractive solution for its clients.

Investing to grow in the fixed-wireless opportunity

Conversations with Amdocs executives made it clear to HFS that the company aspires to provide packaged services offerings for telcos and other industries, such as banking, manufacturing, and energy, which are eager to monetize their connectivity needs. For telcos, this means providing tailored solutions combining fixed wireless network management, billing, and data processing and optimization. Amdocs is using its solutions as a foundation for building products and services that leverage connectivity and customer experience.

Amdocs’ goal is to partner with its telecom clients to help in their B2B2X efforts of delivering fixed wireless solutions as both primary and secondary high-speed wireless solutions. This will enable these firms to extend high-speed services more effectively to enterprises where fiber may not be available or offer a solution supporting both remote workers as well as client sites in industries that need a combination of fiber, 5G, and fixed wireless to optimize their network capacity, provide data services, and ensure there is a unified data security framework in place.

Amdocs leans on Studios as a growth opportunity for its services

Amdocs has welded seven prior acquisitions into Stellar Elements and is now expanding and rebranding this customer experience capability as Digital Experience and Engineering Studio, one of four Amdocs Studios. Other Studios are Cloud, Data & AI, and Quality Engineering.

The Digital Experience and Engineering Studio will focus on critical business customer priorities, including margin and revenue improvements, market and revenue stream expansions, and ROI acceleration. Integrating Amdocs services capabilities into Amdocs Studio will bring a verticalized offering to the markets, from ideation of customer-focused solutions to design development to hybrid cloud implementation and ongoing run activities.

Exhibit 2: Enterprise customers are looking for partners that can accelerate their transition from people-driven to technology-driven services

Source: HFS Research, 2024

Amdocs Studios is built on a strong technology foundation, including automation, data, AI, generative AI, as well as libraries (templates, data models, process flows, automations, configuration) based on years of Amdocs’ global operations accumulated experience.

If this model succeeds in the traditional telco space it already owns, look for Amdocs to rapidly seek scale and growth opportunities in other industries through further M&A-driven skills and technology acquisitions.

The challenges for Amdocs:

1. Amdocs needs to educate its customers on its role in their ability to provide, provision, and optimize services based on its software. This is a mindset shift from traditional labor-centric services and may require Amdocs to clarify its value proposition across multiple lines of business beyond traditional BSS/OSS services.
2. While Amdocs shows strong, advanced, and robust capabilities in implementing, upgrading, and managing its own products, it will need to prove its differentiated approach to cloud and DevOps when it comes to independent services.
3. The company has some work to do on pricing innovation. Relying on less sophisticated pricing models than its IT services competitors will not land well with experienced IT services customers.

Amdocs states that its telco foundation and services delivery experience are based on providing mission-critical, resilient applications that represent a large addressable market for its solutions and services. While this may be true, having focused on the telecoms industry for four decades, the firm remains considerably smaller than many services firms such as IBM, Infosys, or Accenture.

The Bottom Line: Enterprise leaders should explore opportunities to leverage Amdocs’ strategic acquisitions to enhance their digital capabilities in telco and non-telco markets.

Amdocs’ intent to focus beyond its legacy strengths to offer services-as-software and managed services across other industries positions it as a key partner for enterprises seeking to disrupt their operations through automated systems and customer experience innovations.

For telcos, the focus has long been on buying platforms of services. This is based on a traditional technology-based view of building a telco that delivers reliable connectivity-based solutions. As data, voice, and video have been commoditized, the business side of the telco is less focused on what “new” platform (5G, fiber, BSS/OSS Unified Data, etc.) is needed and instead focus on what innovative solutions are required to deliver its offerings in as seamless and adaptable a manner as possible.