Hosted telecom services see uptick as SMBs cut costs

Small businesses are rapidly reacting to the current economic downturn by cutting their overhead costs, including their offices and traditional telecom services, according to Ring Central, a company that targets SMBs with hosted telecom services. The company is reporting record sales in recent weeks, and its survey of incoming customers shows distinctive trends, said Praful Shah, vice president of strategy for Ring Central.

“We had a record number of new customers come to Ring Central in the last four weeks – it’s the highest four-week number we’ve ever had,” Shah said. “Customers are coming from every part of the country and from all kinds of industries – real estate, financial, retail. Because of the new business we were seeing, we wanted to know what was in the minds of our customers and what was happening out there across the country among small businesses. In the process, we collected a lot of good data.”

Among the new customers signing up with Ring Central, 75% said they had been negatively impacted by the economic downturn and 72% said they are reducing overhead costs as a result. Nearly one quarter said they are eliminating physical office space as part of their cutbacks.

The data also show that Ring Central’s hosted service, which enables small business to tie together many separate locations into a virtual office via phone lines, appeals to companies that don’t have centralized facilities. Only 16% of the small businesses coming to Ring Central have staff centralized in one physical office; 72% work from a home office, either fulltime or on occasion; 29% have staff in multiple locations and 18% call themselves “road warriors.”

“Businesses are asking themselves whether they really need a physical office space,” Shah said. “Maybe the business has three people but they could work out of home offices.”

The other thing businesses are considering is cutting the landline cord, and Ring Central is accommodating that by enabling a business to have a virtual hosted service and ties mobile phones together, or home office lines, through its hosted service, making a business number ring at multiple places or in a sequence so that dispersed workers can appear to be centrally located.

“It’s easier if the company has one telephone number and are able to reach any of the people involved,” Shah said. “In tough economic times, they may be getting rid of their landlines, and the mobile needs to be integrated together into a business-type system.”