This January, telecommunications company Avaya filed for Chapter 11 bankruptcy in order to reduce some of its $6.3 billion debt. Though the company tried to sell its call center business last year, Avaya representatives have said that it has no plans to sell this part of the business right now. Avaya’s bankruptcy is significant for the telecommunications industry because it is indicative of a common struggle that many telecom businesses face as they shift from a hardware to software and service based business model.
About Avaya’s Bankruptcy
Avaya is well known in the telecommunications space. This multinational company has been a market leader in the telecom industry offering its contact center, internet telephony, wireless data communications, and CRM software services. However, Avaya was late entering the cloud space, which was part of why the company began to struggle and eventually file for Chapter 11 bankruptcy.
Though Avaya offers software and service-based solutions, the company’s business model did not account for the transition away from hardware. In 2016, the company made 75 percent of its revenue from software and services. However, their capital structure was put into place to support a hardware-focused business model, which could not accommodate the business transition to cloud-based solutions.
Now that the company has filed for bankruptcy, it will have a chance to reduce debt and reinvest resources to better account for the big shift toward cloud-based telecom solutions. Though Avaya’s decision to file for bankruptcy may have come as a surprise to some in the industry, the event reveals a growing issue in the telecom space – some companies are not able to keep up with the transition away from the older, hardware-based business model.
What This Means for the Telecom Industry
Avaya’s decision to file for bankruptcy brings light to an important trend in the telecom industry. More and more businesses are looking for flexible, cloud-based solutions that can accommodate their changing business communication needs. Though many large companies are still using on premise telecom solutions like contact centers, it’s clear that telecom companies need to be more flexible in their offerings if they want to be able to support the growing communication needs of many modern businesses.
Business owners should look for telecom solutions that are not only able to solve their current communication challenges but also those that they may face in the future. As the business world becomes increasingly more digital and more businesses begin to offer their products and services internationally, business communication needs will continue to transform. Forward-thinking telecom service providers are those that can offer a range of flexible, cloud-based solutions that can keep up with changes in the marketplace.
Whether you are an Avaya customer or not, this bankruptcy decision may have you wondering how you can find the right telecom solutions for your business. Take this opportunity to explore your options and find a telecom provider that is able to meet your growing and changing business communication needs. We would love to talk to you more about what telecom challenges you may face and what your business needs to succeed. Contact us today to find the right solutions for your current and future business needs.