I am seeing more and more of my clients using video interviews as a step to improve their interview process as well as to lower costs. Once a client decides that they have interest in a candidate, an initial phone interview is very appropriate to screen the candidate. The phone interview can generally take place during work hours since most candidates use their cell phones and can step outside either during the day or at lunch.
After a successful phone interview, the client will generally schedule an onsite interview for local candidates. However, if the candidate is out-of-town, most of the clients are now choosing to conduct a video interview before incurring the expense of bringing the candidate in (cost of flights, lodging, meals, etc.) While a video interview generally does not replace an onsite interview (which is usually required before a company makes an offer), it serves to greatly increase the success rate of the onsite interviews.
The timing of video interviews is somewhat tricky because most candidates cannot do them during the day without taking off work. Video interviews may be done early in the day before a candidate goes to work or later in the day after the candidate returns from work. Video interviews can be done in a panel setting (multiple company interviewers at the same time) or several interviews speaking with the candidate in say 30 minute sessions.
In short, my recommendation to clients, who are considering out-of-town candidates, is to follow the phone interview, video interview, and then onsite interview process. This process proves to be a very streamlined, effective, and cost-efficient method of hiring.