As more organizations allow their employees to work from home indefinitely, demand for corporate VPN services from companies like Cogent Communications could fall as businesses will likely need less commercial office space.
As reported by Fierce Telecom, the company's CEO and Chairman David Schaeffer raised these concerns recently while announcing Cogent's second quarter earnings results.
The pandemic has led to less demand for corporate VPNs during Q2 as millions of employees continued to work remotely. Most of Cogent's customers are located in large multi-tenant buildings and the company warned that corporate customers could reduce the number of these locations “due to adverse economic conditions or new working configurations”.
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Schaeffer provided further details on how demand for its VPN services have decreased during the pandemic in the company's earnings call, saying:
"Roughly half of our corporate customers take a second product, a virtual private network to connect offices running either SD-WAN or VPLS over that connection. Because many of our customers have shuttered their remote locations, those offices sit empty, and there's no need for VPN concentration in those offices, we've seen a reduction in the sale of our VPN services.”
Corporate VPNs
While Cogent Communications is selling less VPNs that it did six months ago, Schaeffer believes that this is a temporary trend and not a permanent one. As global conditions improve, remote offices will be reopened and businesses will once again need to use a VPN for additional security and privacy.
The company's customers are also exercising a higher level of caution due to the pandemic when it comes to making buying decisions, hence the slowdown in VPN sales.
Although Cogent's earnings call only gives us insight into what one corporate VPN provider experienced during Q2, it's safe to assume that other businesses that provide VPN solutions for offices have also seen a decrease in the number of installations and sales they've made since employees have started working remotely.
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Via Fierce Telecom
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