When recession is good for business

It is hard to believe, but crumbling profits resulting from the current economic situation might actually be good for some companies. As the pressure mounts and profits plummet, many companies are looking for new ways to save money. Often, this results in layoffs and outsourcing, but contracts are also under review, and savvy businesses are looking in places that they haven’t looked for years – such as their telephone bill.

We asked telecom industry consultant Charles Lomond why VoIP and SIP sales are growing so quickly. “What many businesses have right now is a clogged financial drain with pressure building up behind it. Companies are getting backed up with bills and are just starting to look for new ways to free up the cash flow to keep their operations going. At some point, they have to take action. A lot of companies are cutting back on inventory and salaries, which can hurt their ability to bring in new revenues. But many haven’t looked at their phone bills for years and years. And a lot has changed since then. It is possible for a company to save 40 or even 60% on their phone bills by switching from traditional telephone service to VoIP. While that may not be enough to unclog the drain, it can be enough to keep a business alive long enough to survive the current economic conditions. Smart Telecom agents are starting to go out and offer to overhaul the telephone systems and contracts for these companies. I haven’t been this busy in years.”

Switching phone systems is a scary thought. It wasn’t uncommon for a company to pay half a million or more on a phone switch just 5 years ago. But new VoIP switches can cost just a few thousand dollars and allow for more flexibility, reporting, and integration. What’s more, they can often be run by the existing IT department instead of a dedicated Telecom department. Open source switches such as FreeSwitch and Asterisks not only allow business to get a lot of features for very little money, they allow companies to sign up for cheap SIP trunking contracts which replace their expensive TDM service and high maintenance phone switches. Though, more expensive options are still available, the sour economy is encouraging many companies to take a closer look at cheaper telecom solutions.

VoIP carriers, such as AireSpring and Bandwidth Extreme, are reporting rapid increases in sales of Business VoIP (mostly SIP Trunking). Business VoIP is a tough market, margins are smaller than with traditional TDM, and most of the major carriers are just starting to get into the swing of things. But the consensus in the industry is that everything will eventually be VoIP. The bad economy is just speeding up that process.  We’ll certainly see more business VoIP services and offerings as the major carriers figure out how to make a business out of it.  But until then Packet8, XO, AireSpring, Bandwidth Extreme, and others will be all too happy to take care of all the new customers.


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