Why tail spend is telecom’s biggest untapped advantage

This Industry Viewpoint was authored by Nick Petheram, Founder, Chairman, and CEO at Nomia

Telecom operators are navigating one of the most complex market landscapes in decades. Across the industry, teams are managing the rollout of 5G and edge computing, adapting to tightening regulations, responding to increasing ESG requirements, while also working to improve margins and deliver competitive customer service. Against this backdrop, tail spend remains an area with significant untapped potential.

Tail spend typically accounts for around 20% of total third-party spend but can represent as much as 80% of transactions. This includes thousands of smaller, low-value purchases made across subsidiaries, departments, and geographies, often outside the visibility of core procurement systems. Historically treated as an administrative burden, some operators are beginning to view this area differently. When managed effectively, tail spend has the potential to support cost control, strengthen compliance, and enable faster innovation.

The risk and opportunity that comes with tail spend

Tail spend is increasingly being recognised as a pressure point for many telecom operators. It touches almost every part of the business, from innovation pilots to local subcontractor services, and is often where procurement blind spots emerge. Limited visibility can contribute to compliance gaps, supplier duplication, and uncontrolled costs that are difficult to track. In some cases, this may also allow non-compliant or ESG-exposed vendors to go unnoticed, increasing the risk of audit or reputational challenges.

There is also a clear operational burden. Procurement teams can spend a disproportionate amount of time managing tail transactions that offer limited strategic value. This can reduce their capacity to focus on higher-value initiatives such as strategic sourcing, supplier innovation, or sustainability programmes.

At the same time, many operators are beginning to explore how more structured approaches to tail spend management could support resilience and competitiveness. Improving control in this area may help simplify supplier bases, strengthen audit readiness, and accelerate vendor onboarding. Just as importantly, it can free procurement teams to focus on more strategic priorities. 

Rethinking tail spend through a blended approach

Many telecom operators are exploring Artificial Intelligence (AI) as a way to gain greater visibility into tail spend. AI can analyse large volumes of transactions, identify patterns, flag potential risks, and automate time-consuming tasks. For organisations managing thousands of low-value purchases, this can represent a meaningful step forward.

At the same time, experience across procurement suggests that AI on its own is rarely sufficient. Teams seeing the most progress tend to combine AI-driven speed and scale with the contextual understanding, judgement, and negotiation skills of experienced procurement professionals. This blended approach is particularly relevant in telecoms, where even small procurement oversights can have operational or compliance implications.

For example, an AI system may highlight the lowest-cost supplier, while a procurement professional may be aware of delivery reliability issues, regulatory concerns, or recent ESG audit failures that are not immediately visible in transaction data. Together, AI and human expertise help teams balance efficiency with risk awareness.

This hybrid model can also offer greater flexibility. When supply chains are disrupted or regulatory expectations change, human oversight allows procurement teams to adapt strategies and supplier engagement more quickly. AI helps surface risks and opportunities at speed, while human judgement supports informed and appropriate decision-making.

Driving compliance and ESG at scale

Telecom operators manage critical national infrastructure and operate under high regulatory expectations. These standards apply not only to strategic suppliers, but across the entire supplier ecosystem, including the long tail of lower-value vendors.

Because of its volume and fragmentation, tail spend is often where compliance and ESG risks are hardest to identify. Many suppliers in this category are small or local businesses that may not naturally operate to telecom-grade compliance standards without additional oversight. Limited visibility in this part of the supply chain can increase exposure to reputational, financial, and legal risk.

A growing number of operators are therefore exploring whether  a combination of AI and human oversight could help bring greater consistency to due diligence, ESG monitoring, and supplier governance across tail spend. Improving structure and visibility in this area can support audit readiness and reduce regulatory exposure, while reinforcing responsible procurement practices.

Tail spend visibility is also becoming more important as ESG reporting requirements evolve, including Scope 3 emissions and supplier diversity measures. Procurement teams that can demonstrate traceability, ethical sourcing, and engagement with local suppliers at scale may find it easier to meet investor and regulatory expectations.

Unlocking innovation through supplier diversity

Tail spend can present meaningful opportunities for innovation, particularly through the range of suppliers involved. Smaller, specialist vendors often offer niche capabilities, emerging technologies, or local expertise that can enhance customer experience or improve operational efficiency. However, these suppliers are frequently excluded by slow onboarding processes, risk-averse procurement structures, or limited visibility.

By rethinking how tail spend is managed and introducing more flexible, hybrid procurement models, some operators are beginning to reduce these barriers. This can make it easier to engage agile specialists and bring new solutions to market more quickly, while maintaining appropriate levels of risk management and compliance oversight.

Delivering tangible ROI

More structured approaches to tail spend management are increasingly linked to measurable financial impact. Industry benchmarks suggest that, in some cases, improved control can unlock savings in the region of 5% to 15% of tail spend, depending on organisational maturity. For context, in a telecom organisation with approximately $10 billion in external spend, even incremental improvements in how the tail is managed could release around $300 million. That capital could  then be redeployed into priorities such as network investment, product innovation, or enhancements to customer experience.

The benefits often extend beyond direct cost savings. As operators modernise their spend management practices, many see improvements in data quality, stronger contract compliance, greater supplier stability, and faster procurement cycles. Over time, these operational gains can support more informed decision-making across the organisation, including finance, operations, and ESG functions.

The future of telecom procurement

Telecom operators are operating in an environment defined by rising complexity, tighter margins, and sustained pressure to deliver more with fewer resources. As a result, procurement functions across the industry are continuing to adapt, with tail spend increasingly being viewed as a strategic consideration rather than an administrative afterthought.

In this context, operating models that combine Artificial Intelligence with human expertise are gaining attention. When applied pragmatically, a blended AI and human-led approach can help improve visibility, resilience, and decision-making across a traditionally fragmented area of spend.

As competition intensifies and expectations around speed, compliance, and accountability continue to rise, how effectively tail spend is managed may become an important point of differentiation. For many telecom operators, re-examining this part of the spend landscape could play a meaningful role in supporting long-term performance and adaptability.

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