On-Site or Hosted PBX: Which Is Best For Your Business?

When buying a VoIP system there are two choices: a premises-based option or a hosted option. With the premises-based option a company will be required to purchase all the hardware required for the system to work. This will include complex and expensive hardware that is usually kept with the computer servers. A hosted solution does not require you to buy any of this expensive equipment as it connects to a remote host via your internet connection.

Initial Costs

The initial costs involved with buying an on-site PBX system can be extremely expensive. A large amount of hardware is required when setting up one of these systems. For this reason a hosted solution is especially attractive for small to medium businesses that may not have access to a large amount of capital all at once. This also means that total cost of ownership is lower as there are fewer IT employees needed. That being said, monthly subscription fees for hosted services could potentially end up costing more if your business is a larger one.


The same range of features is available for both on-site and hosted solutions. The difference is that hosted PBX providers will usually sell features as part of a bundled package. This may result in you paying for some features that you have no need for. However, if you’re using all the available functions such as voicemail, fax, conference calls, call auditing and touchtone menus buying a bundled package often proves cost effective.

Changing Scale

With today’ economy nobody can predict when a business will rapidly grow or when it will need to downscale. If your company goes through a period of rapid growth it will probably become necessary for you to buy a new on-site PBX system. Again, this is a costly purchase. On the other hand, if your business starts going through tough times and you need to downscale, you could end up with a very expensive PBX system that you’re only using for 10 people. In cases like these, a hosted system is a better choice because it is easy to add and remove users.

Call Quality

Many people will question the call quality of a hosted system. We’ve all had problems with Skype calls cutting out or only being able to hear every second word. This type of problem arises when data connections are too slow. So long as your internet connection is of a high quality you should not encounter these problems.

Off-Site Offices

With on-site services your employees are limited to the length of the phone cord. If for any reason they need to be in contact with the office from a remote location such as their homes it will incur a cost for them. On the other hand, with a hosted solution employees can access the PBX from anywhere with a good internet connection. This is also useful in case of any type of disaster at the office – work can continue on-site even if there’s a burst water pipe flooding the building.

Choosing between an on-site or hosted PBX depends on many factors. Access to the initial capital required, what features you need to use, whether you have employees working from home and the size of your business are all factors that come into the decision.