The Indian enterprise telephony market is undergoing a major change. TDM based traditional PBX market in the country is stagnating as India is embracing IP Telephony rapidly due to the inherent benefits of this technology

Enterprises are making continued efforts to keep pace with the changing needs of business. The Indian enterprise telephony market is also undergoing major change. TDM based traditional PBX market in the country is stagnating as India is embracing IP Telephony rapidly due to the inherent benefits of this technology like powerful new applications, simplified centralized management, deploying intelligence at one location and the end-user devices at a number of geographically dispersed locations etc. They can scale up operations in a very short time span, bring in the changes to their communication infrastructure at a much quicker pace, help enterprises reduce administrative expenses, boost productivity and extract measurable return on their infrastructure investments and provide full fledged unified communication. Almost all organizations are moving towards IP based intelligent communications.

Market Dynamics

IP telephony in India now accounts for slightly over 60 percent of the Indian voice solutions market while traditional TDM PBX, hybrids, KTS, and others account for the balance market. Avaya consolidated its leadership position in the Indian voice solutions market in 2008-09, followed by Cisco, Siemens, Nortel, Alcatel-Lucent, and Aastra (acquired Ericsson's enterprise business in 2008). Incidentally, the same vendors controlled the IP telephony space as well. Other players in the voice solutions space include Panasonic, NEC, Syntel'The Arivind Mills Ltd., Accord, Matrix, and Coral Telecom, Tadiran Telecom, Intellicon, and Samsung. HCL infosystems also has significant presence in the market as a distributor of Aastra, Tadiran Telecom, and Samsung brands. In the traditional TDM PBX space, vendors such as Matrix, Accord, Syntel'The Arvind Mills Ltd., Intellicon, and Coral Telecom offered each other stiff competition. Accord is has increased its presence through its strategic business alliance with LG-Nortel. On a different front, Enkay Technologies markets NEC products, while NEC also announced Syntel-the Arvind Mills Ltd. as their national channel partner for privare network solutions.

Market and Technology Trends

The maturing of IP-based voice transport has seen the world of telecommunication undergoing a tectonic shift. IP-based voice is today universally regarded as the future of telecommunications. Data previously went over voice networks, as data was a small constituent of the overall telecommunications traffic. Existing circuit-switched networks are not optimized for data and were not efficient.

Enterprises now realize the value of VoIP since it allows them to invest in a single communication pipe that can deliver voice and data communications to the enterprise desktop. Best suited for multi-location industries, VoIP is being deployed in IT services and BPO companies, manufacturing, telecom service providers, banking and financial services companies. The acceptance and adoption of VoIP in India is increasing, and the market is showing signs of maturity.

Today, we use multiple devices for business communication like desk phone in the office, mobile phone, radio, IM, email, etc. While each of these devices have their usefulness, it adds more complexity for users and therefore leads to communication chaos. This complexity can only be resolved when these devices can be integrated together rather than work in silos. New communication standard like "Session Initiation Protocol (SIP)" provide the possibility of integrating these systems from multiple vendors.

Customers are looking at unified communication to solve the communication chaos by integrating their various communication systems with their business applications to improve their business processes. These improved business processes lead to higher productivity for employees and greater customer satisfaction which in turn results in higher revenues and profits. As unified communications applications become more prevalent in the workplace, more organizations are also realizing the associated benefits. Unified communications applications not only facilitate productivity improvements for mobile employees, they can also enhance the way in which all employees communicate.

Growth Drivers

The growth of IP Telephony is spurred by enterprise thrust on converged communication (voice, video, and data running on the same IP Infrastructure) and fall in prices of telecom bandwidth.

The increase of mobile workforce, presence in different locations, and increased thrust in cost control over communication spend are the main reasons for growth of IP technology. Market has seen preference for PRI ISDN based PBX for standalone applications and IP based solution for multi-location requirements. Contact centers form a major chunk of the demand verticals for IP telephony. BPO and call center business is growing, so is the collaborating with overseas partners. The new TRAI de-regulation allowing home-agents on IP will also spur IP telephony growth.

Telcos drove SME and corporate markets in the year 2008-09 offering free PBX with their PRI lines which has led to a major shift from analog PBX to digital PBX in the small to mid range PBX business. Corporates preferred to switch over to private telco players offering free PBX not showing any concern about the brand offered with PRI ISDN lines. Aggressive promotion by the service provider industry is one of the key drivers of the growing PRI usage in the country today. The GSM/CDMA industry is too stepping in trying to capture some of this market space by offering a wireless EPABX on similar grounds.

Demand Verticals

Almost all organizations are seriously considering IP based intelligent communications, especially large multi-locational organizations including large enterprises, government, healthcare, education, retail, manufacturing, BFSI, and IT/ITeS verticals although certain verticals have slowed down their procurement cycle due to the current economic situation. However, today domestic and mid-sized organizations have also realized the value proposition accruing from IP based solutions and are keenly evaluating this technology.

Maximum growth is expected from hospitality, government (specifically defence), contact centers and SMEs, IT/BPO, telecom, services industry verticals as well as Greenfield projects. The volatile economic environment has spurred corporates to maximize operational efficiency by cutting costs. Hence, IP telephony is a boon at this time.

Impact of Slowdown

The economic slowdown has had a crippling effect on certain industries, but the growth in the government sector has compensated for the slowdown in other sectors for the voice solutions market. There was major impact seen as far as corporates and SME segment is concerned particularly in Q4 2008 and Q1 2009. Purchases were stopped or deferred; however, market is showing some signs of recovery and it will start showing reasonable growth. Government has increased its spending and in the run up to the Commonwealth Games 2010, there is a lot of development expected.

The Road Ahead

With the availability of high-speed broadband, inexpensive end terminals, and international long distance carrier options, future growth of VoIP in India is more than just encouraging. Further, increased adoption of unified communication applications, availability of required bandwidth, and increased awareness levels will drive growth of the Indian VoIP market.

The industry is moving toward unification. Enterprise and carrier networks are overlapping in functionality. The way forward in such a scenario is to offer comprehensive solutions catering to different market segments like SOHO, SME, and large enterprises. Extensive customer reach, backed up by high quality service support will be a differentiating factor. Offering solutions for verticals like hospitality, trading etc., will generate a new market segment. IP converged network is a basic requirement of an enterprise now. Real-time IP applications on converged networks will revolutionize the enterprise communication market.

Healthy bottom line, reduced administrative expenses, extended business reach, boost in productivity, and immense returns on their infrastructure investments are some of the key reasons that would encourage enterprises to adopt VoIP in the future. With Indian SME telephony market expected to grow, it is becoming a hot focus area for the solution providers as well.