Skype is a tiny piece of internet telephony software (available for Mac, Linux and Windows) that lets you connect with friends and family across the globe through text chats or audio and video calls.

Create an account on skype.com, then install the free Skype client and you are all set to make telephone calls to those millions of other Skype users for free. Skype has all the features offered by popular instant messengers like Yahoo, Windows Live or Google Talk and few things extra that make it an indispensable communication and collaboration tool for most users including businesses and students.

One of the very popular features of Skype is SkypeOut — you can call any landline or mobile phone in the world through your computer. The calling rates are based on the destination country and start from 2 cents per minute. With SkypeOut, it is also possible to call the toll free numbers in some countries like US, UK, Canada or France for free.

Skype can now be used as a virtual meeting tool and also packs in features for gurus who can offer advice on phone.

Skype can also be used for receiving phone calls from traditional phones to your computer with SkypeIn, a regular phone number provided by Skype. There’s a big cost advantage here. Say your business is based in India but most of the clients are in London, just buy a London SkypeIn number and clients there can reach you without paying any international calling charges as they’ll be dialing a local number of London. (You can buy these Skype services in India either through Paypal or international credit cards.)

Skype last month launched an interesting service called Skype Prime that makes life extremely simple for consultants and experts who offer advice over phone. You may be a tax guru or a Vaastu expert or a business consultant — if people are seeking advice over phone, you can route their calls via Skype Prime and this service will take care that client pay your consulting charges as defined by you (which could be minute based or per call). Skype can be used as a virtual meeting tool (poor man’s WebEx) using free add-ons like Pamela recorder, WhiteBoard meeting and Unyte Desktop sharing. You can collaborate on project documents, deliver presentations to remote teams and also record the audio conversations for sharing with other colleagues who could not be part of that online meeting. And the price for the entire setup is so much affordable — $0.

Skype developers have written several useful extensions for IE, Firefox and Microsoft Office that makes it extremely easy for you who locate and connect with contacts via Skype.

For instance, the browser extensions for Skype will automatically recognise phone numbers and Skype IDs in web pages and let you call them in a single click or transfer their contact details to your Skype Address book. The same functionality is extended to Word Documents and Outlook emails through the Microsoft Office toolbar of Skype.

Another promising Skype feature is Skypecasts, which is like a live discussion forum for upto 100 people. As moderator, you have full control over the session and can easily eject or mute the troublemakers. Skypecasts can be used for online debates and discussions where anyone in the world with a Skype account can participate and speak his mind.

And you do not always require a PC to make or receive calls via Skype. Several reputed vendors like Netgear and Polycom have released hardware devices (read Skype Phones) that connect you to other Skype users through Wi-Fi routers or broadband cables without a computer.

These standalone Skype devices look much the same as traditional phone sets, therefore mom and dad would have no problems calling your younger bro who’s studying in UK.