Frost & Sullivan has released a new report showing that, despite the recession, the videoconferencing market continues to grow at a healthy pace.

The market research firm’s “North American CSP (News - Alert)-based Videoconferencing Services Market” report finds that the market earned revenues of more than $265.4 million in 2008, an increase of 11 percent over 2007.

According to the report, the videoconferencing CSP-based managed services market reached $151.3 million in 2008 and is expected to reach $375.5 million by 2014, growing at a compound annual growth rate of 16.4 percent.

"Several market forces are merging to create a market that is ripe for change," said Frost & Sullivan (News - Alert) Principal Analyst Roopam Jain in a release. "Now is the inflection point for large-scale videoconferencing technology adoption."

The report finds that although the economic slump is causing many organizations to cut their IT budgets, they are also, at the same time, cutting their business travel budgets, and this in turn is leading to increased adoption of Web-based videoconferencing services. Companies are increasingly using audio, Web and videoconferencing to facilitate “live” meetings with partners, customer and prospects. In addition, internal teams can use these solutions to improve collaboration and boost productivity.

These solutions are particularly useful to larger organizations that have multiple, geographically dispersed locations and/or multiple departments or divisions that are spread across different locales. As organizations become more global and their workforces become more mobile, the demand for Web-based videoconferencing services will only grow, the report finds.

In addition, the growing focus on “green” initiatives is expected to become a significant driver for the market. With the impending arrival of green mandates over the next few years, videoconferencing will be vital for businesses in reducing their carbon footprint, the report finds. Many companies are now adopting work at home programs and videoconferencing is playing a key role in these initiatives.

What’s more, many organizations are discovering that videoconferencing can actually help reduce operating costs in the long run. As such, many of them are incorporating videoconferencing in with their unified communications strategy (if they so happen to have one at this time).

Service providers have been benefitting from the trend as well – many are finding that managed services contracts are very lucrative. This, in turn, is leading some vendors to add new features and capabilities to their systems that in turn will help the service providers differentiate themselves in the marketplace.

Interestingly, the report finds that managed videoconferencing services will dominate the market over the next few years for two reasons: One reason for this is companies don’t have the money to spend on expensive in-house systems, including desktop videoconferencing systems, mainly because of the cost of the hardware and network infrastructure. But another problem is that on-premises systems tend to be complicated for the end user – and thus require additional IT support. The report points out that in the managed services market, the CSP handles all support, management and maintenance of the system -- thus lifting that load off the company IT department.

“Demand for managed videoconferencing services will grow with enterprises focusing on core competencies and attempting to reduce internal management costs,” the report states.

 

Frost & Sullivan’s “North American CSP-based Videoconferencing Services Market” report is part of its “Conferencing & Collaboration Growth Partnership Services” program, which also includes research in the videoconferencing endpoints market, videoconferencing infrastructure systems market, audio conferencing bridge markets, audio conferencing services market, telepresence markets, web conferencing software markets, and web conferencing services markets.