This is not an advertisement. This is a true story about saving real money.
In a previous life, I was an IT Manager for a 35-branch staffing agency. We made it through the roughest financial periods by pulling together and figuring out ways to run more efficiently.
Our frugality was not for convenience, it was for survival.
As I was approving monthly technology bills, I couldn’t help but feel like we were getting kicked in the teeth by our POTS phone service provider, AT&T.
Let me break it down. We had:
- 35 remote offices
- Each office had 4 lines (35 branches x 4 lines = 140 total lines)
- Each line cost about $30 per month (140 lines x $30 = $4,200 per month)
- Long distance bills (about $150/mo per branch x 35 branches = $5,250 per month)
- Add those together, $4,200/mo + $5,250/mo = $9,450 per month
That’s $113,400 PER YEAR ON PHONE SERVICE!!!
And to think I had to lay off a really talented programmer.
Something had to be done. A few years prior, Voice-Over-IP, more commonly known as VoIP, was more of a curiosity than something a company like us actually used. Some of our offices were in very remote locations and the internet connection just wasn’t stable enough. Phones need to work all the time.
Fast forward a few years — internet stability and speed had increased tenfold. Even in the remote locations. Now, I thought, is the time to move forward with VoIP as an actual solution.
There were some upfront expenses. New phones had to be purchased. Decent VoIP phones run about $250 brand new. Refurbs work nice, too.
$250 x 140 phones = $35,000
Thirty-five grand is nothing to sneeze at, but when you find out how much money we saved, you will understand.
Secondly, the phone servers had to be purchased. A few machines running a version of Asterisk (open source) would get the job done. Let’s say $6,000 for the hardware.
Lastly, you have to purchase the phone time. This is bought in bulk, and its called “SIP trunking.” You have to purchase a unique “DID” (direct number) for each office so they can be called directly. The cost of 60,000 outbound (unlimited inbound) minutes per month, with 35 unique numbers, will run you about $800 per month.
A huge portion of our long distance bills were branch-to-branch calls. With VoIP, branch-to-branch calls will not count against you because the entire company is on the same system — no matter how far apart they are.
What if you’re not sure about how many minutes you need to buy? The salesman at 8×8.com offered me the first month free so we can find out how many we use. How’s that for awesome?
What about all your old phone numbers? You don’t want to change those! You don’t have to. The service provider can port all of your existing phone numbers for you.
With a VoIP system, all of your phone calls use the same internet connection you currently have for your computers. Remember, however, that your VoIP system is only as stable as your internet connection so don’t skimp here! If you have to upgrade it could cost you an additional $500/mo. Again, chump change when you see how much we saved.
What about your old phone systems? They are not trash, but the resale value on them is very low. Have a fire sale on eBay and be done with it. You might get a couple grand out of it.
I’m leaving out the labor aspect of things, because both solutions require maintenance and support. For the purposes of keeping this article simple, I am considering labor a wash.
Now it’s time to do some math!
Upfront costs: $35,000 (140 phones) + $6,000 (server hardware) = $41,000
Service: $800/mo
Comparisons
| Time | VoIP System | Old Phone System |
| 1st month | $41,800 | $9,450 |
| 3rd month | $43,400 | $28,350 |
| 6th month | $45,800 | $56,700 |
| 1 year | $50,000 | $113,400 |
| 2 years | $60,200 | $226,800 |
As you can see, it only took 6 months to start saving money. Over the course of two years, we saved about $160,000! Obviously the more time passes, the more money you save.
I haven’t even mentioned the increased flexibility with VoIP when it comes to configuration. Want to forward your office phone to your cell phone? Done. You can even connect the system to a database and allow callers to input information, such as a call-off or a phone number/address change.
While there are many different ways you can utilize VoIP, the bottom line is: with VoIP, you will save money and enjoy increased configurability.
So pick up the phone right now and call your IT department. Every phone call that gets made is costing you more than it should, especially for agencies with many branches. The longer you wait, the more money you flush down the proverbial toilet.
{ 4 comments… read them below or add one }
is that a service you can do for other staffing companies, or is it something they should pursue a local provider for? And what is the risk of VOIP squeezing out necessary bandwidth for data?
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For the companies who already have a phone vendor, they should contact their trusted partner. The risk of VoIP using too much data is a real concern. It should require no more than an additional 2Mb fiber (or a T1) if it uses too much of your current connection. It is important to configure Quality of Service (QoS) on your routers to ensure VoIP doesn’t eat up more than it has been allotted.
Paul is absolutely right!!!! We consult with staffing firms and have provided the same results to more than 35 stafffing companies over the past 8 years. Costs can be further reduced by newer technologies by moving the services into the “cloud” – using hosted VoIP services. With proper design, service quality will be excellent. We know, we’ve been using these technologies for 5 years now.
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Paul – can you contact me at the email address provided? I have a staffing industry client that is looking for a reference for a specific type of VoIP PBX.
Thank you
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