The good news is that it’s never been less essential to belch out tonnes of aviation fuel en route to pressing the flesh of a business contact thanks to giant leaps in video-conferencing technology.

Even better news is that the process has become far more cost-effective – and often free. Skype has just released version 4.0 of its popular internet-communications software and this promises greatly enhanced video quality for conference calls.

Though video conferencing has been around a while, it has been slow to take off because of the outlay required on cumbersome equipment. Jerky pictures, dropped connections and annoying time-delays made things worse. Talking to a contact on the other side of the Atlantic resembled watching a badly lip-synched film.

When times were good, and reducing carbon emissions was barely even on the business agenda, video-conferencing seemed like a poor relation to a personal visit.

Now, as the global recession sinks its teeth into so many firms’ bottom lines, it is an idea whose day has come. This growing necessity has coincided with forward leaps in technology. Faster connections thanks to greater internet bandwidth, better video compression and higher-quality cameras have all helped, along with some neat new technical tricks (see graphic), but the most important change has been the price.

Whether you need to keep in touch with partners and clients based in other countries or people stranded by bad weather, it is now cheap and easy to make a conference call using not expensive specialist equipment but a standard broadband-enabled computer and webcam.

These days you can negotiate mano a mano on your laptop’s screen as you sup a latte in a café that has wi-fi. Thanks to new software, you can even project a fake backdrop onto the image so your contact sees you in a bustling office or against a city skyline. With the click of a mouse, you can swap that industrial estate in Soli-hull for the London Eye.

Tech-savvy firms are employing video-conferencing tools not only to slash back on their travel needs but to create an entirely virtual office.

Karen Hollands runs a global language school from her house in Weybridge, Surrey, using Skype’s free video-conferencing service.

“Our business is entirely virtual. We have over 30 native-speaking language teachers in 14 countries teaching hundreds of people globally,” she said.

Her time-pressed pupils can brush up on their Mandarin Chinese from a teacher who is nearly 6,000 miles from the UK in Guangdong province in China, no matter where they happen to be that day provided they have access to a suitable computer with a decent webcam and a proper broadband connection. The lessons are recorded so students can practise pronunciation later. As the audio and video calls are free, her business overheads are kept to a minimum.

Other innovations include a webcam that lets you and the person you are talking to see each other on-screen in 3-D so long as you both wear coloured, 3-D glasses.

A traditional problem with most video-conferencing set-ups is that because the camera is at the side of the screen you can’t maintain eye-contact and see the person you are talking to at the same time. The EyeCatcher videophone (www.greeniii.com) resolves this conundrum by the cunning use of mirrors. At the moment, the EyeCatcher is a pricy piece of equipment that costs £5,500 per unit and is not portable, but like most innovations will eventually become cheaper and more compact.

According to a recent survey of small and medium-sized businesses by IDC, the analyst, the global video-conferencing market has grown from around $1.1 billion (£7 74m) in 2006 to $2 billion in 2008.

Richard Moross, chief executive of Moo (www.moo.com), a contract-printing business that offers customisable stationery, is convinced.

“Skype video is extraordinarily helpful to our business because we have 40 employees who spend a lot of time on the road visiting clients. We put a laptop with built-in webcam on the table and include people in our weekly meetings.

“The video quality isn’t brilliant but it’s good enough for us, simple to use and very cheap. We often show our international customers our designs over video link as well. And as we deliver to more than 180 countries that’s pretty important.”

Aside from quality, the main drawback of Skype video for businesses is that it is designed for one-to-one communication rather than a full business meeting with several participants. You can also only see one location at a time, whereas rival video-conferencing services, such as Sightspeed and Oovoo, enable you to see several people on screen simultaneously, even though they are in different parts of the globe. Both of these services offer basic video calling for free, though you must pay for advanced features.

The perception among many small businesses is that top-quality video conferencing is exorbitantly expensive, yet the hardware costs have plummeted. For example, Polycom (www.polycom.eu), one of the leaders in video-conferencing technology, sells a system that claims to deliver “DVD-quality” video even at low-broadband connection bandwidth of 256kbps or better for £2,500. This buys you a tilt-and-zoom camera, a fancy microphone and a dedicated computer. All you then need is to add your choice of screen.

If you want to go the whole hog, Cisco, the telecommunications giant, offers Telepresence – a life-size video-conferencing suite that can accommodate up to 16 people in each location and makes it look as if they are sitting opposite you in the room.

Fitting this deluxe service will set your firm back a sobering £125,000 a year, but many serviced offices are equipped with it. You can rent a swish one for a Telepresence video meeting that looks out over the London Eye for between £200 and £600 per hour. For example, Tata Communications (www.tatacommunications.com)has rolled out this type of facility in hotels throughout London and California. Other providers include Intercall Europe(www.intercalleurope.com), which has a database of 9,000 video-conferencing rooms around the world, and Eyenetwork(www.eyenetwork.com), which has 3,500.

The video element is only one aspect of the evolution in the way business is conducted in today’s virtual office. It is easy to find business partners in countries you have never been to and then collaborate on documents that are stored online, no matter where your new colleagues are based. Indeed, you can set up and run a successful international firm with your virtual colleagues without any of you leaving your own postcodes. Just think how you could save on the office Christmas party!

How to set up your virtual office

Get the hardware
For video conferencing you need a computer with a dual-core processor, broadband of at least 400Kbs (2Mbs is better). Most laptops have a built-in webcam and microphone, but it is best to buy a quality package, such as Logitech’s Quickcam Pro 9000 camera and headset, which costs £75.

Get the software Once you have the right hardware, you can download the free video-conferencing software from Skype (www.skype.com), Sightspeed (www.sightspeed.com) and Oovoo (www.oovoo.com). Whichever one you pick, you and all the people you video conference with must register with the same service.

Find cyber employees
You can hire staff to perform office tasks, such as answering phones and receiving post. Virtual Office (www.virtual-office.co.uk) and eReceptionist (www.ereceptionist.co.uk) both offer this service.

Generate customers
Several business networking sites enable you to find customers that are looking for your services or products. Linkedin (www.linkedin.com) and Ecademy (www.ecademy.com) are the best known of these. You can also pitch for a specific contract at Elancer (www.elance.com) to see who bites.

Collaborate online
Some services allow several people in different locations, anywhere in the world, to work on documents at the same time.Try Google Docs (documents.google.com) and Webex (www.webex.co.uk)