According to IHS, the worldwide network functions virtualisation (NFV) hardware, software and services market is expected to grow from $2.3 billion in 2015 to $11.6 billion in 2019.

NFV software will comprise over 80 per cent of the $11.6 billion total NFV revenues in 2019. The investment in software will be larger investment than the server, storage and switch hardware, representing about $4 of every $5 spent on NFV.

IHS underlines that telecom service providers are still at the nascent stage of transforming their existing infrastructure to virtualised networks. Leading telecom equipment makers are inking deals with service providers to help them make their networks NFV and software defined networking (SDN) ready. Recently, Alcatel-Lucent announced a $1.3 billion NFV and SDN deal with China Mobile and China Unicom. Meanwhile, for both Huawei and ZTE, investments in NFV innovation are part of their long-term strategy to grow the telecom carrier business.

The research firm concludes that revenue from outsourced services for NFV projects is projected to grow at a 71 per cent compound annual growth rate from 2014 to 2019. Further, revenue from software-only video content delivery network functions for managing and distributing data is forecast to grow 30-fold from 2015 to 2019.