PBX Versus Hosted VoIP

PBX Versus Hosted VoIP: Which is better?

VoIP (Voice over Internet Protocol) is s system that converts phone calls into data packet series and transmits calls to a telephone network.

Hosted VoIP is one good way to upgrade your business phone system as it offers your business complete phone service from a VoIP provider over the internet. This hosted solution means that the company providing it is responsible for maintaining the technology and the service. Since the system runs in the cloud, all its features are handled via the provider’s IP-PBX server.

On the other hand, PBX means that the entire phone system is housed in a physical location, including software and hardware. These are traditional phone systems, also called Time Division Multiplexers (TDM), and they have come a long way. They have transformed into a digital system of voice communication and multimedia sessions called VoIP networks.

How does PBX differ from Hosted VoIP?

Many businesses still use analog phones with a dial tone. Nonetheless, the growing trend is eliminating hardware systems and curating the IP communication to be application-oriented. Another trend is the use of hybrid models, i.e., PBXs with both analog and VoIP endpoints. This design helps reduce costs. While many companies still buy IP PBXs for new executives or employees, they still maintain the analog phones, meaning there is still a considerable installed base.


Research shows small businesses can save up to 40% on local calls and 90% on international calls if they switch to VoIP solutions. Therefore, if these businesses opt for hosted VoIP, they can save even more. PBX and On-premise VoIP have a higher setup cost. While the monthly running cost may even be much lower, you will be responsible for the maintenance cost.

By contrast, in Hosted VoIP systems, the initial setup cost and equipment are very minimal. The provider will handle all upgrades, maintenance, and programming, making it easier for you. However, you’ll be required to pay a monthly fee to keep the system running, which is usually low. Some providers have a pretty straightforward pricing system – this assures you consistent, high-quality services alongside access to new features and upgrades.

Installation and Maintenance

A company using PBX takes charge of procuring, installing, and maintaining the hardware and software of the entire telephone system. The advantage of this approach is you choose the features that you intend to use or add to your business. However, you’ll be fully responsible for installing and maintaining the system, which is a time-consuming and tedious process.

For hosted VoIP solutions, the provider handles both installation and maintenance. You only need to tell the service provider the features you want. For better services, you need a reliable service provider.


Acquiring more clients, expanding operations, and adding new teams members indicates that your business has grown. In this case, your communication needs will need to expand. So, choose a technology that can scale up. PBX is more costly as it will require additional equipment than a hosted solution, which is highly scalable both in terms of implementation time and capacity.

Every business owner must know analog systems have limited advantages compared to the VoIP system. For instance, users have no access to simultaneous ringing or call blasts. You can program an IP phone to ring on a mobile phone when receiving an external call but route to voicemail for other calls. Besides, you can also receive a transcribed voicemail in a text message or email. And if you like videos calls, you can chat via videos with clients as well as integrate voice with other business applications.

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