International Data Corporation (IDC) expects the telecom virtual network functions (VNF) market to grow to $16.4 billion in 2022 at a compound annual growth rate (CAGR) of 45.4 percent. Worldwide revenue for the telco VNF market in 2017 stood at only $2.5 billion.

The forecast comes from IDC’s inaugural report for the global telecom VNF market. It follows the release of IDC's first forecast for network functions virtualization infrastructure (NFVI) in August.

The newest report, Worldwide Telecom Virtual Network Functions Forecast, 2018-2022, says virtualized architectures are likely to pervade all carrier networks in the future, but the market is in its early stages and therefore relatively small today. However, as use cases such as network slicing in 5G and virtual CPE–based services gain steam, IDC expects this market to achieve significant growth in the near term.

In 2018, IDC expects VNF revenue to double as early 5G deployments take shape and as wireline initiatives such as vCPE, Central Office Re-architected as a Data Center (CORD), and Head End Re-architected as a Data Center (HERD) gain further momentum.

Wireless infrastructure is the largest contributor to the VNF forecast today and is expected to continue to be the largest contributor in 2022 followed by routing. 5G will continue to be a big driver of wireless infrastructure VNF growth, while the move to virtual routing in edge and access use cases will drive routing VNF growth more than overall VNF market growth rates.