This research highlight explores the promising growth potential of Extended Detection and Response (XDR) solutions tailored for the telecommunications sector, with projections indicating revenue nearing US$570 million by 2029. The report summary emphasizes the critical role of Generative Artificial Intelligence (Gen AI) in driving XDR growth and highlights the unique requirements that telco operators have for effective threat detection and response. With the industry facing a significant skills shortage, XDR solutions that cater to these specialized needs are becoming increasingly essential. For further insights, unlock this premium resource.
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Market Outlook for XDR in Telecommunications
The Extended Detection and Response (XDR) market is experiencing a promising trajectory, beginning from a low penetration within the telecommunications sector. ABI Research projects the market to expand at an impressive Compound Annual Growth Rate (CAGR) of 35% until 2029. XDR solutions tailored for telco operators are anticipated to achieve revenue nearing US$570 million by the end of that period. This growth forecast is considered conservative, mainly because it does not fully encompass the transformative effects of Generative Artificial Intelligence (Gen AI) on the industry.
Gen AI is expected to witness robust growth, projected at a CAGR of 430% in the telecommunications domain by 2029. While a significant share of this initial revenue surge is likely to come from Business Support Systems (BSSs) and operational tools—primarily due to inherent skepticism and stringent regulatory demands within the 5G security landscape—the security applications of Gen AI are anticipated to catch up swiftly.
“Whether XDR solution vendors achieve the much steeper growth curve of Gen AI-enabled tools is dependent on how effectively they tailor Gen AI to solving the most pressing needs of telco customers, such as staffing shortages and compliance, and how effectively they can build trust in a historically cautious segment.” – Georgia Cooke, Research Analyst at ABI Research
Why XDR Is Important for Telcos
Currently, telecommunications operators are not receiving the attention they deserve within the XDR solution space. The core concept of XDR in 5G networks revolves around its ability to aggregate data from various sources. Yet, many vendors fail to highlight how effectively XDR aligns with the evolving needs of network providers. Effective threat correlation is crucial in intricate network environments, especially for security teams grappling with alert fatigue caused by duplicated or false threat notifications.
XDR technology is designed to prioritize user-friendliness, presenting a minimal barrier to entry in terms of the expertise and fine-tuning time required. Numerous vendors offer managed deployment options to further reduce the burden on network personnel, which is particularly beneficial in an industry facing a talent shortage.
Gen AI Catalyzing Growth for XDR
The integration of Gen AI in a “copilot” capacity is emerging as a vital driver for the expansion of XDR. Incorporating Large Language Model (LLM)-powered playbooks provides security analysts with essential support during threat response and recovery. This automated and context-aware assistance empowers Security Operations Centers (SOCs) to onboard more entry-level employees, addressing the significant skills gap present in the industry. Estimates suggest that the demand for security experts exceeds the available supply by 70%.
This gap is particularly pronounced in telecommunications, where analysts skilled in both security and 5G network architecture are in short supply. Allowing analysts to interact using natural language instead of complex Structured Query Language (SQL) not only lowers the entry barrier for newcomers, but also conserves valuable time for experienced professionals. Furthermore, providing telecommunications-specific threat response playbooks ensures that remediation steps can be effectively implemented, even by analysts without extensive expertise in 5G networks.
Related Report: The Role of AI in 5G Security
Tailoring XDR Solutions for the Telecoms Sector
Despite the favorable outlook for XDR in the telecommunications sector, it is essential to recognize the unique characteristics of this market. XDR solutions must possess specific functionalities to effectively meet the demands of telco operators. In addition to requiring specialized response playbooks, an XDR system must adeptly manage User Equipment (UE) detection and access control, which is crucial for networks with a diverse array of end-user devices.
Mobile operators are increasingly becoming targets of cyberthreats, particularly during periods of geopolitical instability. The attacks they face are often sophisticated and tailored specifically to their infrastructure, necessitating accurate identification for effective mitigation.
Moreover, the operational priorities of telecoms networks differ significantly from those in other sectors. Continuous monitoring, analysis, and orchestration can be resource-intensive and may conflict with the critical need for uninterrupted service reliability. Some 5G XDR vendors offer distinctive runtime characteristics—such as operating in kernel space, rather than user space—ensuring that XDR does not compete with network operations for vital resources. Therefore, from the standpoint of Mobile Network Operators (MNOs), the effectiveness of XDR solutions can vary significantly, making it imperative to select options that align closely with their specific needs.
Key Market Players
Conclusion
The XDR market within the telecommunications sector is set for substantial growth, driven by the integration of advanced technologies such as Gen AI. As telco operators increasingly recognize the necessity for efficient threat detection and response mechanisms, XDR solutions that cater to their distinct requirements will play a crucial role.
For those seeking deeper insights into the XDR landscape and its implications for the telecommunications industry, additional information can be found in ABI Research’s XDR for 5G: The Telecommunications XDR Opportunity application analysis.
