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Trends in U.S. Small Business Telecom Services Markets
Frost & Sullivan, March 2005
Opportunities Arise for Telecom Service Providers Even as Small Businesses Work to Cut Operational Costs
Rising operational costs such as energy prices, employee benefit implementation expenses, and business insurance premiums are compelling small businesses to streamline expenditures on a large scale. These expenses are extending a two-fold impact on technology budgets for small organizations. A majority of companies defer information technology (IT) spending to later dates or are forced to work within stringent budgets. However, these mounting overhead costs also provide growth opportunities for telecom service providers. Providers can capitalize on the situation by marketing managed services, which aid in restructuring cost intensive operations and also diversifying product portfolios.
This Frost & Sullivan research service provides vital information on trends in U.S. small business telecom services market and offers insights into spending in various categories. The study includes industry challenges, market drivers and restraints, and even buyer behavior insights to give participants a better understanding of the market. Strategic recommendations are also included to aid in tactical planning for long-term success.
Decrease in Technology and Hardware Prices Set to Boost IT Deployment among Small Organizations
Technology prices have been declining consistently due to varied factors such as intense competition, excessive supply, and growth in outsourcing processes and services. Along with the corresponding drop in telecom services and products, this downswing has had a positive impact, driving IT/Telecom deployment among small businesses. Small enterprise customers are adopting solutions and services such as wireless local area networks (WLANs), disaster recovery, and e-mail.
In addition, telecom providers are offering bundled packages and also reducing the average cost per service, especially for small businesses, observes the analyst of this research.
Price and Quality of Service Vital for Maintaining Low Churn Rates
Despite the positive spending trend among the small businesses, consumer loyalty rates are low, especially owing to the sector’s heightened price sensitivity. Small businesses utilize single or few telecom services making them more susceptible to factors that will cause them to change providers. Provider stability, reliability, and quality of service also hold equal weight for end users.
A careful understanding of business needs is vital for insights into the potential adoption rates for various products by small business customer, explains the analyst. To ensure brand loyalty, service providers must differentiate themselves on customer care, provisioning, simplicity, and ability to offer individualized services.
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