For any business, different communication channels are necessary for individual purposes such as internal interactions, sales, marketing, customer service, and support. Until a decade ago, businesses invested in fixed-line telephones, closed user groups or calling minutes for all forms of business communications. However, with the recent wider adoption of high-speed, bandwidth internet and businesses realizing the cost-effectiveness of using the internet to make/receive calls, there is a shift towards using VoIP as the preferred form of calling. While making the jump, most get stuck on one question: “Choose an on-site system or opt for a hosted service?” It may seem menial, but contrary to the common response of it being personal preferences, either choice has an impact on the business. So if you also reached here searching for the answer, you are in safe hands.

What are Hosted VoIP systems and On-site VoIP systems?
Understanding how the VoIP calling system works can help you understand the difference between hosted and on-site VoIP systems.
The entire VoIP system can be divided into three major categories:

1) The user hardware
2) PBX server
3) The internet line

Any call initiated at the user-end first is converted into data packets and reaches the PBX server. PBX acts as a digital telephone exchange and redirects the data packets to the correct destination over the internet. On the receiver’s end, the data packets are received by a PBX server that converts them back to audio.

An on-site VoIP system is where the hardware and the PBX server are on-premises. Individual IP phones are physically connected to the PBX server using LAN cables and used for making/receiving calls. The business manages the VoIP calling systems’ hosting, maintenance, and operational cost.

Hosted VoIP services are cloud-based phone systems where the entire arrangement is situated in the cloud. Users make a call using a hosted IP phone or using a custom VoIP app, and it is sent to the server of the multi-tenant PBX service provider. The business can only purchase calling credits, and the VoIP service provider manages the operational costs and server maintenance.

Let’s review the pros and cons of each VoIP system.

On-site or Hosted VoIP systems: What are the pros and cons?

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Author's Bio: 

Sandip Patel – BDE
Author works as BDE at Vindaloo Softtech (VSPL) since 2016. Sandip has 10+ years of work experience in VoIP Software Development Industry. VSPL is VoIP software development and solutions provider that offers FreeSWITCH, Kamailio, OpenSIP, WebRTC and Asterisk Development.