Mumbai: Sandeep Hegde, the 25-year-old founder of dotCORD IT Solutions Pvt. Ltd, runs an eight-people company in Belgaum, Karnataka, which is focused on building applications on the Internet. Being a start-up, Hegde did not want to invest too much money in infrastructure, so “I replaced my office landline with a telephone number from Exotel, a cloud telephony services provider, and I did not have to pay any upfront cost."

Hegde is one of the hundreds of users who are taking advantage of cloud telephony, a solution which allows businesses to opt for a telephone number on a system that is rented out by a services provider. Hegde, for instance, pays around 500 as monthly rental for a single phone and is charged on a per call basis by Exotel. His phone, among other things, is capable of being used for SMS applications, forwarding calls, keeping logs of callers and missed calls, playing back recorded messages, greeting customers with an interactive voice response or IVR facility, receiving faxes, sending emails, making conference calls and even routing calls internally within teams.

Cloud refers to IT services delivered over a network such as the Internet. Cloud telephony solutions, depending on the budget, can also be used to manage customers on inbound voice and SMS without setting up call centres, also known as contact centres. A cloud telephony system is akin to a virtual business phone system that can replace the traditional electronic private automatic branch exchange (EPABX) systems.

“MSMEs do not have big IT budgets that large enterprises enjoy. They can save money and concentrate on their businesses using the opex (operating expenditure) model and allowing companies like ours to take care of their telephony requirements," said Vijay Sharma, co-founder of Exotel.

Exotel’s customers, according to its website, include companies such as which uses a hosted call centre solution to allow customers to compare cab rates from vendors while uses a s

“In today’s competitive market, a missed business call is a missed business opportunity—be it a call related to inbound sales lead or addressing customer issue to build loyalty/satisfaction," said C.S.N. Murthy, founder and chief executive officer of Ozonetel Systems. “Our solutions help MSMEs save on hardware and telephony costs while enhancing productivity."

For instance,, part of Supermarket Grocery Supplies Pvt. Ltd, uses an Ozonetel cloud telephony solution to run its call centres in different cities., a Mumbai-based chain of dental clinics, uses Ozonetel to analyze the work of its tele callers, according to the Ozonetel website. Analysts and industry experts say while big companies such as Cisco Systems India Pvt. Ltd, Avaya India Pvt. Ltd and Microsoft Corp. India (Pvt) Ltd do offer cloud telephony and unified communications solutions, they cater primarily to mid-size and large enterprises since the cost of the solutions runs into lakhs of rupees.

“It (cloud telephony) makes sense for SMEs that typically do not have the in-house information technology (IT) and telecom manpower to maintain telephony services. By not incurring upfront capex (capital expenditure), it especially helps those businesses that do not know how much time they will need to scale up," said Sanish K.B., research analyst at IT research firm, Gartner Inc.

According to Alok Shende, principal analyst and founder of Ascentius Consulting, “While the enterprise markets are rigid in adopting newfangled technologies, mid-market companies are fairly open to adopt as long as the benefit-to-cost ratio remains attractive."

Intuit Inc. said in a 7 August study that “the cloud’s potential is tremendous but the 26 million strong MSME customers are not yet convinced of its benefits, and that may be because it is not well-defined among India’s micro and small businesses or those who are providing the solutions."

It estimated that manufacturing businesses can reduce hardware costs by 33-70% and maintenance costs by 50% by moving to a cloud-based model. Support costs can drop by 33% and floor space requirements by 33–50%, the study said.