Publication date:

12 Sep 2023
Author(s):
Stephen Myers, Principal Analyst, Strategy & Regulation;

AI productivity gains for

CSPs: Assessing the AI
opportunity across
business functions

Brought to you by Informa Tech

 AI productivity gains for CSPs: Assessing the AI 01
opportunity across business functions

Table of Contents :
Summary...................................................................................................................................02
Recommendations....................................................................................................................03
Identifying the AI opportunity ..................................................................................................03
Current AI use in the telecom sector........................................................................................06
Drivers of more AI adoption .....................................................................................................09
The future of AI in telecoms .....................................................................................................09
Appendix...................................................................................................................................10

Table of Figures :
Figure 1: AI industry effects across 250 sectors – Telecoms in red ..............................................04
Figure 2: AI occupation effects by telecom business function ........................................................05
Figure 3: AI occupation effect by telecom business function..........................................................06
Figure 4: Service provider AI contract by function..........................................................................08
Figure 4: TM Forum’s Autonomous Network framework ............................................................08

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 AI productivity gains for CSPs: Assessing the AI 02
opportunity across business functions

Summary
Catalyst
The arrival of generative AI has opened new opportunities for service providers looking to drive
productivity. The ability to go beyond the automation of routine tasks and produce outputs that had
previously required tacit or specialist knowledge has seen opportunities for AI to augment the work of
knowledge workers. Indeed, BT’s CEO, Philip Jansen, suggested that introducing AI across its business could
eliminate about 10,000 roles, a reduction equivalent to around 7.5% of the current global workforce
(including contractors) by the end of the decade.
By taking insights from studies into the potential impact of AI on workforce roles and applying them to the
telecom sector, a ranking of AI opportunities, both at the functional level and in terms of and job position,
has been developed to support management’s prioritization of AI opportunities. This report leverages
research published by Edward Felten (Princeton University), Manav Raj, and Robert Seamans (NYU Stern
School of Business) and data from the US Bureau of Labor Statistics (See Further reading for citations and
links to the full methodology).

Omdia view
AI has arrived and needs management’s focus to ensure productivity opportunities can be captured and
appropriate implementations are carried out. This includes the selective use of both internally and
externally developed capabilities and the adoption of robust compliance frameworks to manage emerging
regulatory requirements.
AI is a productivity tool that can augment staff's daily activities and optimize key processes. Much attention
is directed towards the automation of network functions, but the scope of AI adoption extends across the
organization, with only field workforce roles having little exposure to AI addressable tasks.
AI solutions are not solely directed towards workforce replacement but should be viewed as productivity
tools available to large parts of the workforce. Organizations adopting a broadly scoped AI strategy will
need to focus on encouraging staff to identify opportunities where AI can improve their performance and
build the skills for implementing these opportunities. AI has the potential to be disruptive to the existing
workforce and skill requirements. This will require managing both the technological capabilities and
expectations for workforce evolution.

Key messages
• Most workforce functions within a service provider enterprise will benefit from adopting AI
solutions, with IT, customer service, management, and financial administration offering the
most opportunities.
• AI efforts have largely been focused on network automation and enhancing customer service. In
the case of network automation, a roadmap for AI adoption to enable full network orchestration
will be necessary.

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 AI productivity gains for CSPs: Assessing the AI 03
opportunity across business functions

• AI will have an increasing impact over the coming five years, necessitating the development of a
strategy to evaluate and implement these solutions to ensure the organization is not left behind.

Recommendations
• Prioritize – As AI offers opportunities across many parts of the organization, CSPs should
prioritize activity around roles within each business function where AI productivity benefits
intersect with payroll contribution. This includes roles such as finance managers and
accountants within the finance function, software developers and IT managers within the IT
function, sales and customer service representatives within sales, and market research analysts
and marketing specialists within marketing.
• Invest – Service providers must continue to invest in their AI capabilities through hardware and
software partnerships. Early identification of preferred solutions (whether supported by existing
or new vendors, from integration partners, or developed in-house) must also be supported by
investment in workforce skills and structured and AI-accessible data assets.
• Security and compliance – Trust in AI will be key, with service providers needing to work closely
with AI vendors to ensure security and compliance controls in an increasingly regulated
environment. As highlighted in Omdia’s recent report, AI Regulations, Policies, and Strategies:
Analysis – 2023, governments and regulators are accelerating efforts to establish appropriate
regulator settings in a fast-moving field.
• Orchestration roadmap – Service providers should develop a roadmap for the development of
orchestration capabilities as networks become amalgamations of best-of-breed vendor
products.
• Productize capability - Driving a digital strategy and leveraging digital technologies is the most
critical business priority for CxOs, and AI is one way service providers can be a key part of these
initiatives.

Identifying the AI opportunity

Comparison to other sectors
Felten et al.’s 2021 research applied their analysis to 250 sectors defined in the North American Industry
Classification System (NAICS). The AI Industry Effect (AIIE) looks to measure the exposure of each industry
by aggregating the exposure of the occupations that comprise each industry to AI.

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 AI productivity gains for CSPs: Assessing the AI 04
opportunity across business functions

1. Figure 1: AI industry effects across 250 sectors – Telecoms in red

Source: Omdia

The analysis, illustrated in Figure 1, suggests the telecom sector has a modestly higher exposure to AI than
the aggregate economy (which is given a neutral value of 0). With an AIIE of 0.25, telecoms has a similar
exposure to AI as the electric power generation, transmission and distribution, clothing stores, and medical
equipment and supplies manufacturing sectors.
This industry-level finding suggests that AI will be prominent but selectively adopted rather than universally
applicable. There is more scope of AI to impact the industry than the broader economy as a whole, but not
to the extent that it will fundamentally reshape the sector.

Functional exposure to AI
Derived by combining the Artificial Intelligence Occupation Exposure (AIOE) scores with the US Bureau of
Labor Statistics workforce composition and average annual pay rate data, functional exposure to AI can
guide management to the opportunity for AI to play a role in different parts of the business.
Within the telecommunications sector, the business functions that are most exposed to AI are
• IT (Computer and Mathematical Occupations)
• Customer service (Personal Care and Service Occupations)
• Management (Management Occupations)
• Financial administration (Business and Financial Operations Occupations)

This ranking has been derived by combining the AIOE scores with the US Bureau of Labor Statistics
workforce composition and average annual pay rate data.
These four functions represent approximately 50% of the workforce and 60% of total payroll.

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 AI productivity gains for CSPs: Assessing the AI 05
opportunity across business functions

The sales function, which has already been subject to substantial digitalization, ranks fifth.
2. Figure 2: AI occupation effects by telecom business function

Source: Omdia

Construction, while representing over one quarter of the sector’s payroll, offers a relatively low opportunity
for AI implementation.

Role exposure to AI
Within each function, there can be large variances in the degree to which AI can be used to raise
productivity. For example, within the IT function, software developers have a relatively high AI exposure
(AIOE score of 1.2), with generative AI now being widely used to draft code and data scientists (AIOE score
of 1.52) using AI and machine learning to deliver optimizations and new solutions. This compares to
relatively low exposure for network architects and network administrators (AIOE score of 0.79).
Within the telecom sector, the roles with the highest AIOE are illustrated in Figure 3.

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 AI productivity gains for CSPs: Assessing the AI 06
opportunity across business functions

3. Figure 3: AI occupation effect by telecom business function

Source: Omdia

There are few roles with low or negative AIOE and meaningful contributions to the workforce or payroll
numbers. The most notable exceptions to AI exposure is the radio, cellular, and tower equipment installers
and repairers occupation group, with an AIOE score of -0.6.

Impact of generative AI
This year (2023) has seen the explosion of generative AI capabilities. Further research undertaken by Felten
et al., published in April 2023, considered occupational exposure to generative AI language modeling and
image generation capabilities and tested the robustness of the previously developed AIOE scores given
these new developments.
The research found that the original AIOE scores correlated highly with Language Modeling AI Occupational
Exposure (correlation coefficient: 0.979) and Image Generation AI Occupational Exposure (correlation
coefficient: 0.853). This suggests the insights derived above will continue to hold with the arrival of these
generative AI capabilities.

Current AI use in the telecom sector

As tracked by Omdia’s AI adoption dashboard: 2023, the telecom sector’s AI adoption is broadly in line with
the global enterprise sector. While there is clearly enthusiasm for AI’s potential among senior leadership,
this is not being supported by budget allocations in all cases.

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 AI productivity gains for CSPs: Assessing the AI 07
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Table 1: AI adoption dashboard 2023 – Telecoms

Telecoms Global

Percentage scaling AI 17% 19%

AI championed at the highest level (senior 51% 43%

management, departmental/operational heads)

Percentage with AI budget of $1m+ 49% 42%

Largest AI deployment strategy Commercial options Commercial options

only 43% only 39%

AI data management and governance program in place 40% 33%

Biggest barrier to AI adoption in the organization Lack of budget 26% Complexity/

integration 20%

Very confident AI will deliver positive results toward 40% 41%

business goals within 12–24 months
Source: Omdia’s AI Market Maturity 2023 report

As tracked by Omdia’s Telco AI Contracts Tracker, the number of AI partnerships and contracts that service
providers have entered into has steadily increased. As illustrated by Figure 4, the focus of these deals has
been network operations and customer service. In most cases, this reflects the implementation of vendor
solutions.

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 AI productivity gains for CSPs: Assessing the AI 08
opportunity across business functions

4. Figure 4: Service provider AI contract by function

Source: Omdia

This does not reflect all the AI efforts with in-house solution development and adoption of off-the-shelf
capabilities also underway. A combination of these approaches is needed to fully address the breadth of AI
opportunities.
Much focus has been directed towards bringing AI to the network. Service providers have the Autonomous
Network (Figure 5) proposed by TM Forum as a framework in which it can develop its network evolution.
Autonomous networks are expected to emerge with:
• Maturity of AI techniques
• Near full-stack virtualization
• Increasing degree of network heterogeneity

5. Figure 4: TM Forum’s Autonomous Network framework

Notes: P: Personnel; S: Systems

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 AI productivity gains for CSPs: Assessing the AI 09
opportunity across business functions

Source: TM Forum
Most service providers are currently considered around L2, with the possibility of moving to L3, leaving
plenty of further progress through AI and automation.

Drivers of more AI adoption

Omdia expects there will be four key drivers of future AI adoption:

Sustainability
• Service providers have imperatives to reduce carbon footprint
• This includes solutions that automatically disable cells and cloud resources and wake them up
when required
• AI can significantly improve the accuracy of capacity forecasting, both in the short and long term

Network heterogeneity
• Cellular networks are becoming increasingly complex and hard to manage through manual
intervention
• AI can be used to provide near real-time, accurate recommendations to operators

Data-driven business insights

• Real-time customer insights for profiling and sales
• Real-time insights for business decision-making
• Monetizing data for new service creation

Futureproofing
• Emerging applications are expected to need a strong AI foundation
• AI is expected to play a large role in the adoption of applications across the metaverse, digital
twins, large-scale simulation, and more

The future of AI in telecoms

Omdia suggests AI development will affect the sector within the timeframes outlined in Table 2.
Table 2: Impact of AI adoption over next five years

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 AI productivity gains for CSPs: Assessing the AI 10
opportunity across business functions

Timeframe 0–1 years (2023–24) 2–3 years (2025–26) 3–5 years (2026–28)

Global Demand for better Regulatory frameworks to Workforce and customer

network performance be stabilized and AI acceptance of embedded AI
and cost optimization integration into rises, and successful
to intensify applications become implementations deliver
common competitive advantage

Network AI to play bigger role Large portion of current AI-driven orchestration

in network function network functions to be solutions begin to emerge
automation fully automated

Customer Generative AI trialed AI used to enhance Customer service to become

service to enhance sales and personalization of sales more automated and pre-
customer service and service processes emptive
interactions

Business AI for desktop Sophisticated AI decision AI begins to redefine key

operations applications begins to support systems improve business operation roles
become widespread

CSP Telcos working with Telcos need to start rolling Telcos should consider
response partners to integrate out dedicated hardware developing proprietary
and scale AI-enabled and software for AI, at generative AI models
functions. both cloud and edge
Source: Omdia

Appendix
Methodology
This analysis is based on academic research insights (see further reading), industry, media releases,
briefings, and Omdia’s market analysis and data.

Further reading
Felten, E. W., Raj, M., & Seamans, R. (2021). Occupational, industry, and geographic exposure to artificial
intelligence: A novel dataset and its potential uses, Strategic Management Journal,.
https://doi.org/10.1002/smj.3286
Felten, E. W., Raj, M., & Seamans, R. (2023). Occupational Heterogeneity in Exposure to Generative AI,
http://dx.doi.org/10.2139/ssrn.4414065
Felten, E. W., Raj, M., & Seamans, R. (2019). The Occupational Impact of Artificial Intelligence: Labor, Skills,
and Polarization, NYU Stern School of Business, http://dx.doi.org/10.2139/ssrn.3368605
Artificial Intelligence (AI) Regulations, Policies, and Strategies: Analysis – 2023 (August 2023)

© 2023 Omdia. All rights reserved. Unauthorized reproduction prohibited.

 AI productivity gains for CSPs: Assessing the AI 11
opportunity across business functions

Artificial Intelligence (AI) Regulations, Policies, and Strategies: Case Studies – 2023 (August 2023)
AI Market Maturity 2023 (April 2023)
AI Viewpoint: Enter the AI Skills Tracker (May 2023)

Author
Stephen Myers, Principal Analysis, Service Provider Strategy and Regulation
askananalyst@omdia.com

© 2023 Omdia. All rights reserved. Unauthorized reproduction prohibited.

 12

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