'Video Conferencing Is Mainly Targeted At Executive Level Meetings'

In an interview with Biztech2.com, Pranabesh Nath, industry analyst from Frost & Sullivan reveals how the video conferencing market in India is growing and lists the factors fuelling this growth.

What are the recent developments in the video conferencing industry?

The video conferencing industry has changed dramatically in the last few years in terms of products, services, and how video conferencing vendors go-to-market in different countries in Asia-Pacific. The products these days are more user-friendly, more immersive, and available at varying price points depending on the needs of the customer. Vendors are also offering video conferencing in a variety of ways that do not require a large capital investment, such as via hosted and managed services, to attract more customers during these recessionary times.

How has recession helped the video conferencing industry in India? What is the growth rate and where does the country stand in terms of the global market?

The global recession overall has not had as adverse an impact on the Indian economy as compared to other regions such as North America and Europe, so that is certainly in India’s advantage. However, many multinationals and large local enterprises in India have cut back or delayed the deployment of video conferencing infrastructure and endpoints for their regional offices. This had affected the growth somewhat in 2008, and we expect 2009 also to have a lower growth, especially in video conferencing infrastructure deployments.

The overall growth rate for the Indian market was 25.1 percent in 2008, and is expected to be approximately 18 percent in 2009. The global market for video conferencing endpoints and infrastructure was worth more than $1.6 billion in 2008, and India contributes approximately two percent to that total, i.e. approximately $35.8 million.

Which are the sectors witnessing the maximum growth?

The young nature of the Indian video conferencing market means that most major sectors showed positive growth. The corporate and government sectors were the top adopters. Technology-intensive verticals such as telecom, IT and IT services, and banking, financial services and insurance (BFSI), were the major adopters in the corporate sector. We estimate these segments to comprise approximately 75 percent of the total market in India in 2009, and this isn’t expected to change dramatically in the next three to five years.

Has the growth given birth to some kind of new trend in the industry? Has it resulted in the development of new technologies?

Even though the market is growing strongly, it is too early to expect the overall work culture to change in India as video conferencing usage is still in its infancy. Globally, the increased usage of video conferencing in corporate offices has led to lower need for travel, and this has been evident in India on a smaller scale.

Has the growth of the video conferencing industry affected the travel industry, as companies are cutting down on their travel budgets?

Yes, we have seen that in India as well as mentioned above. The recession has forced many companies to revise their budgets and cut costs, and corporate travel has taken a hit due to the same. In India, travel fares have also gone up over the past couple of years, so all of these factors are contributing towards a more favourable environment where videoconferencing is being given a more serious look.

Besides, segments such as the government sector are making video conferencing a part of their long-term strategy towards improving administration and efficiency.

So while there are cuts on corporate/ official travel due to increased video conferencing usage, we however don’t see them as significant enough to have a major impact on the travel industry in India yet.

Are there any job portals or companies deploying video conferencing solutions largely to conduct job interviews for overseas recruitment?

We believe the IT and IT services and BPO segments have a higher proportion of companies using video conferencing for recruitment, and we expect industry leaders such as Infosys, Wipro, and TCS to be using the same.

In the present situation, when options like WebEx and virtual platforms like Second Life are available, what according to you is drawing companies toward video conferencing?

Web collaboration platforms such as WebEx are a great way for globally distributed project teams to collaborate and share data, but they do not have the capability for immersive and life-like meetings that top executives require, as an alternative to physically meeting their clients and partners – this is where the value proposition of video conferencing and telepresence products lies. So while Web collaboration tools are meant for larger, organisation-wide usage for data collaboration, video conferencing at this stage of evolution is largely targeted towards executive level meetings.

How do you see the video conferencing industry moving ahead in terms of the Indian market?

The collaboration and conferencing industry overall wasn’t affected by the recession to a large extent, and some segments even benefited from it. The market for video conferencing in India is at a nascent stage, but the potential is vast, as market penetration in India is one of the lowest worldwide. If you compare the Indian market to other relatively more mature and growing markets such as China for example, you will see that the market is more than six times larger as compared to India. Most large and small global vendors are increasing their activity in India to tap into this potential.

We expect the Indian market to be driven in the next three to five years by the government sector as it seeks to expand its pan-India administrative network, and by the corporate sector as it seeks to improve productivity and cut costs. While general meetings are expected to remain as the single largest application, others such as training, recruitment, e-learning and tele-justice are expected to contribute to the growth of the Indian video conferencing market till 2014.

What is your opinion on video conferencing standards? Do you think open standard is the key to successful interoperability?

A set of universally-accepted standards is very important towards achieving a high-level of customer adoption and satisfaction in any market. Video conferencing vendors have recognised this and have been continuously improving their product interoperability with rival companies.

The real issue though lies in the complexity of internal networks between two businesses that need to be connected. All significant network devices need to work together in such instances, including video conferencing multi-point control units, gateways and other devices. They all need to be compatible with each other in order to ensure a consistent and high quality experience. This is what we see as a major challenge towards interoperability among vendor solutions, and is more apparent in the telepresence products of some vendors.