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Hosted vs. On-Premise VoIP: Key Differences

Weighing hosted vs. on-premise VoIP can be daunting for any business owner. Both setups offer various features that can make your company more productive. However, with each setup having its merits, how do you determine the right option?

In this article, we will take a closer look at the pros and cons of hosted and on-premise VoIP, highlighting the key differences between the two.

Hosted VoIP

Hosted VoIP is a cloud-based phone system that allows you to make calls through an internet connection a VoIP hosted PBX provider manages.

Instead of forwarding your calls to a network within your business’s infrastructure, a hosted VoIP system passes them through the internet. Doing so allows you to make calls anywhere with an internet connection.

Furthermore, since the service provider handles all the system management, hosted VoIP is very hands-off.

On-Premise VoIP

With on-premise VoIP, all your VoIP hardware is located at your organization’s physical office. You simply buy or lease the software and server hardware, which your IT team or telecom provider will install on your premises.

Calls will go through the on-premise server that transmits them over a dedicated voice network connection.

Your telecom provider or in-house IT team will be responsible for maintenance, user support, arranging configuration, system upgrades, and ongoing servicing.

Hosted vs. On-Premise VoIP: Key Difference

The main difference between on-premise and hosted VoIP is how you deploy the two. While a VoIP provider manages a hosted VoIP, on-premise VoIP runs on your company’s infrastructure. This difference gives each setup unique features.

For instance, on-premise VoIP gives you complete control of the network, but it also significantly increases maintenance costs.

The right option will depend on your needs and preferences. As such, the best way to determine which option is ideal for you is to pit hosted vs. on-premise VoIP and uncover their pros and cons.

Benefits and Disadvantages of Hosted VoIP

Benefits of a Hosted VoIP System

Despite the lack of complete control, this setup offers plenty of benefits that make it ideal for many small and medium-sized companies. Some of these advantages include:

  • A hosted system will not drain your company’s in-house bandwidth.
  • Installation is quick and affordable.
  • It’s easy for you to scale the network to meet your company's needs.
  • A hosted system doesn’t require you to have an in-house staff to maintain and manage it.
  • Since the service provider handles everything, a hosted VoIP doesn't have maintenance fees.
  • The system is great for businesses with remote employees because anyone can access it from anywhere and at any time.

Disadvantages of Hosted VoIP

As beneficial as a hosted VoIP system might be, it still comes with certain drawbacks, such as:

  • Businesses don’t have full control or any customization abilities.
  • A bad connection can lead to reduced call quality.
  • You have to depend on your service provider for disaster recovery.

Benefits and Disadvantages of On-Premise VoIP

Benefits of On-Premise VoIP Systems

Some of the advantages your business stands to enjoy with this setup include:

  • The setup doesn't require a monthly subscription fee.
  • On-premise VoIP systems offer complete control and full customization capabilities.
  • Having all the hardware on your business premises frees you from worrying about potential price hikes from your VoIP provider.

Disadvantages of On-Premise Systems

In addition to these benefits, you will also have to contend with certain drawbacks, such as:

  • Since the system is limited to an office location, it is not ideal for companies with remote workers.
  • The setup has certain physical requirements, including a temperature-controlled room that can house the hardware.
  • On-premise VoIP systems have high initial costs.
  • With maintenance up to you, you will need an in-house IT department and extensive additional resources.

What to Consider When Choosing Your VoIP System’s Deployment

Considering the differences between hosted vs. on-premise VoIP, it is vital to choose the right system to deploy. As daunting as this might seem, certain factors will help streamline the decision-making process.


If speed and reliability are a primary concern, then an on-premise VoIP might be the better option for you.

Disaster Recovery

Uptime is essential for all businesses. As such, you must consider the system’s resiliency and redundancy. Resiliency describes your system’s ability to manage an internet service failure, while redundancy deals with physical hardware failure.

In most cases, hosted VoIP systems offer enhanced disaster recovery options that help keep you connected 24/7.


Which business isn’t interested in growth?

The flexibility a hosted system offers can be beneficial if your establishment has a dynamic staffing environment. You can easily add new users or scale back as needed. Additionally, if you are to move or open another location, a hosted VoIP setup offers quick and seamless transitions.

Total Ownership Costs

Installing any VoIP telephone system requires investment. Some businesses might look at the upfront costs of on-premise systems and opt for the alternative. However, though purchasing an on-premise system demands a larger investment, it can be more cost-effective.

That is why you should look at the total ownership cost when considering which option to go for. Remember that hosting fees can quickly add up, especially if you have many users. In some cases, you are better off with a large, one-time investment.

Reliable Hosted VoIP PBX Service

Every business is unique. As such, it is essential to find solutions that are suited to your goals and needs.

That said, the nature of a hosted VoIP system and the benefits it offers give it an edge over its counterpart. Investing in a hosted VoIP PBX system promises to help your business optimize communications while reducing costs.

Are you interested in learning more? Do you need help weighing hosted vs. on-premise VoIP? Reach out to TelcoSolutions today and access personalized solutions that we guarantee will streamline and scale communications.

Thanks to our top-notch security measures, you won’t have to worry about VoIP hacking or other threats.

Contact TelcoSolutions today at 800-546-9810 to schedule a consultation and let our knowledgeable team help you determine the better option between hosted vs. on-premise VoIP.

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