When it comes to cheap long distance calls, Skype delivers. So why are large corporations staying away?
By Martin Slofstra
Using Skype to conduct video-based interviews with promising overseas candidates is one way Moo.com is hiring new people while keeping a lid on costs. Using Skype to make phone calls to one of 140 countries it ships to costs considerably less than calls made on regular phones.
“It’s essential to keep costs as low as possible in a start-up business,” says Richard Moross, CEO of the firm, a UK-based printing company with operations in the Europe and the US. “Skype calls allow us to keep costs to a minimum without compromising on quality.”
Creative teams in the UK and US regularly collaborate via video calls, meaning more time is spent doing the work instead of travelling. The company also sends files instantly over Skype which beats waiting for emails. When MOO employees do have to travel, they keep in touch with the office via Skype.
But is Skype the answer to everyone’s business needs? Not so fast, say industry analysts. MOO is not a typical Skype customer in the sense that it is a business, whereas Skype catapulted to fame mostly by appealing to consumers.
Skype is fundamentally a software application that allows users to make phone calls over the Internet. The Skype hype likely reached its zenith when acquired by eBay in September 2005 for $2.6 billion.
Its biggest appeal is its low cost. Typical calling rates with Skype between Canada, the US and UK vary between one and two cents a minute. Packages for unlimited international calling are also available for as low as $12.95/month.
“Skype, from a technology perspective, is pretty impressive. It can deliver a high-quality, low cost long distance service to the individual or a business,” says Jayanth Angl, an analyst with technology research firm InfoTech in Toronto, Canada.
But there are concerns around the service that are not easily overlooked. Chief among these is security. Says Angl: “You are basically looking at another potential threat for malware.
“The other concern is that there aren’t really any guarantees provided with the Skype service. There is minimal to no customer support.”
In August 2007, a software fault knocked out Skype for a few days. “That single incident would be enough to scare most businesses away,” says Angl.
Regardless, Skype continues to grow. For fiscal year 2008, revenue hit $550 million with an estimated 400 million registered users. Most enterprises will not be jumping in any time soon. Some have outright banned Skype, and similar Voice-Over-Internet offerings from Google (Google Voice debuted in April 2009), Microsoft and Yahoo.
Typically, firms feel more comfortable with a global service provider such as AT&T in the US, Bell in Canada or British Telecom in the UK.
At the other end of the scale, for example, is Jenny Craig Inc. In July 2007, the chain of weight-loss clinics signed a two-year $3 million contract for local and long distance voice services to more than 600 Jenny Craig locations in the US and Canada.
AT&T has helped Jenny Craig consolidate its local carriers and integrate voice services into a single offering, while using its voice networking services to help streamline operations.
But it’s not just about costs, it’s about service and it’s access to features. AT&T combined the company’s traditional voice services with a number of advanced features such as a custom store-locator application for Jenny Craig that helped route its customer call traffic. The service has provided the company with better call-handling capabilities and a better customer experience for its callers.
Last month, British Telecom (BT) announced it had signed an agreement to connect the global offices of Nestle, using a high-definition video conferencing system consisting of a Cisco TelePresence system running on BT’s global network.
The key to such agreements are service, the BT-Nestle deal includes complete ongoing support from BT, and price becomes a secondary consideration.
Most corporations cannot afford even a few minutes of downtime, and the service component is an essential piece in the enterprise market. And while Skype and Google services may be getting the lion share of attention, large enterprises tend not to be swayed by the buzz around cheap long distance phone services.
Info-Tech’s Angl cautions that businesses will be very cautious about moving to the Skype’s and Google’s of the world, suggesting these services might fit better in the small business market.
His cautionary words to Skype or any service providing cheap or free long-distance? “When it comes to the enterprise space, a lot of activity and interest do not necessarily translate into a lot of opportunity,” says Angl.