Cloud Vs OnPrem

Hosted PBX vs VoIP PBX (On Premise)

The world of business communications has evolved significantly over the years, with technology playing a key role in transforming how companies communicate internally and externally. 

One significant advancement in this space has been the shift from traditional phone systems to more modern and flexible options such as Hosted PBX and VoIP PBX. 

These two solutions have gained popularity due to their cost-effectiveness, scalability, and flexibility, but they do have some differences that businesses need to consider when choosing the right option for their communication needs.

In this blog post, we will compare Hosted PBX and VoIP PBX to help you understand the key differences between the two and make an informed decision for your business.


Difference Between Hosted PBX and VoIP PBX

Hosted PBX

Hosted PBX, also known as cloud-based PBX, is a phone system that is hosted and maintained by a third-party service provider. 

The PBX (Private Branch Exchange) is a telephony system that allows businesses to manage their internal and external calls efficiently. 

With Hosted PBX, the entire system is operated and maintained by the service provider, and businesses access the system through an internet connection.

Pros of Hosted PBX:

1. Cost-effective

Hosted PBX eliminates the need for costly on-premises hardware, as the system is hosted in the cloud. Businesses do not have to worry about upfront capital expenditures, as the service is typically offered on a subscription basis, allowing for predictable monthly costs.

2. Scalability

Hosted PBX offers high scalability, allowing businesses to easily add or remove users and features as their communication needs change. This flexibility is especially beneficial for growing businesses that require the ability to scale up or down as their operations evolve.

3. Maintenance and updates

With Hosted PBX, the service provider is responsible for system maintenance, upgrades, and security, reducing the burden on businesses to manage and maintain their phone system. This frees up IT resources and ensures that the system is always up-to-date with the latest features and security patches.

Cons of Hosted PBX:

1. Dependence on internet connection

Hosted PBX relies on a stable internet connection for communication, and any disruptions or outages in the internet service can impact call quality and reliability.

2. Limited customization

As Hosted PBX is managed by a third-party service provider, businesses may have limited customization options compared to an on-premises solution. Customization options may be limited to the features and integrations offered by the service provider.

3. Data security concerns

Hosted PBX involves transmitting voice data over the internet, which may raise concerns about data security and privacy. It’s crucial to choose a reliable service provider with robust security measures in place to protect sensitive business communications.

VoIP PBX (or an on premise setup)

VoIP PBX, also known as an on-premises PBX, is a phone system that is installed and operated on the business’s premises. VoIP (Voice over Internet Protocol) technology allows businesses to make voice calls over the internet, using their existing data network.

Pros of VoIP PBX:

1. Enhanced control and customisation

VoIP PBX offers businesses greater control and customisation options compared to Hosted PBX. As the system is installed on the premises, businesses have more flexibility to customise features, integrations, and call routing according to their specific requirements.

2. Reliability

VoIP PBX does not rely solely on the internet connection for communication, as it uses the business’s data network. This can offer greater call quality and reliability compared to Hosted PBX, especially in areas with unreliable internet service.

3. Data privacy

As VoIP PBX is operated on the business’s premises, businesses have more control over their voice data and can implement their own security measures to protect sensitive communications.

Cons of VoIP PBX:

1. Higher upfront costs

Unlike Hosted PBX, VoIP PBX requires upfront capital expenditures for hardware, software, and installation. This can be a significant investment for small or budget-conscious businesses.

2. Maintenance and updates

With VoIP PBX, businesses are responsible for system maintenance, upgrades, and security. This can add to the IT workload and require ongoing resources and expertise to ensure the system is properly maintained and updated.

3. Limited scalability

VoIP PBX may have limitations in terms of scalability, as businesses need to invest in additional hardware or licenses to accommodate growth. This can be a potential drawback for businesses with fluctuating communication needs or plans for rapid expansion.



Both Hosted PBX and VoIP PBX offer modern and flexible communication solutions for businesses, but they have key differences that businesses need to consider. 

Hosted PBX is a cloud-based solution that offers cost-effectiveness, scalability, and low maintenance, but may have limitations in customization and data privacy. 

On the other hand, VoIP PBX offers enhanced control, reliability, and data privacy, but requires higher upfront costs and maintenance responsibilities.

When choosing between Hosted PBX and VoIP PBX, businesses need to carefully evaluate their communication needs, budget, and IT resources

Small or growing businesses with limited IT resources and a need for scalability may find Hosted PBX more suitable, while larger businesses with specific customisation requirements and higher budget may prefer VoIP PBX. 

It’s essential to thoroughly research and select a reputable service provider for either option, ensuring they offer reliable service, robust security measures, and excellent customer support.

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