May 1, 2022

    Hosted PBX Vs Onsite PBX: The Key Differences

    Hosted PBX vs Onsite PBX The Key Differences

    For the organization looking to move away from its existing telephone system, there are many considerations to be made. In most cases, the company that will be making the change will have come to the decision that they want a VoIP system in their office. This of course makes perfect business sense for the modern enterprise, as the benefits of VoIP are many, the features are plentiful, and the cost savings can be huge.

    In fact, the decision to move to VoIP is practically a no-brainer. The more difficult choice comes when deciding whether a premise-based solution or a cloud phone system will be best for the business.

    Related: What Does VoIP Stand For?

    The Key Difference Between Hosted PBX Vs Onsite PBX

    Onsite PBX

    A premise-based solution – or onsite PBX – will mean that the hardware appliances that enable your VoIP telephone system to work will be stored onsite in your office building, most likely in your server closet.

    Hosted PBX

    The cloud-based PBX solution – commonly known as hosted PBX – means that the hardware appliances are kept offsite at the host’s cloud data center. Your phones will connect to this offsite server via an internet connection.

    Pros and Cons of Hosted PBX Vs. Onsite PBX In Summary

    Pros and Cons of Hosted PBX vs Onsite PBX

    Hosted PBX Pros

    • Low setup costs
    • No maintenance costs
    • Provider carries the risk
    • Service is scalable at will with no long term commitment for expansion
    • Additional features will be low-cost

    Onsite PBX Pros

    • Potentially lower ongoing costs
    • Fees will never unexpectedly increase
    • Complete control over the precise scaling measures
    • Complete control over additional features – you will have control to source them from any provider you wish

    The Key Decisions Hosted PBX Vs. Onsite PBX

    Choosing Hosted PBX Vs Onsite PBX for your business will of course be at the fore of your decision, whether or not you opt for onsite or hosted PBX in the end. But this indeed is not an entirely separate consideration. Factoring in exactly how your new PBX system can be integrated into your organization’s existing IT and business practices, whilst at the same time planning and making allowances for future growth and expansion, will all be determining influences on your final decision.

    For some businesses, it will come down to the key functionalities and features that the various options offer that will drive the decision. However, if it’s a legacy phone system that the business is moving away from, then the features and functionality offered by all vendors will so far exceed the business’s current capabilities that the decision will more be taken over basic operational issues.

    Indeed, it is these operational issues that will be very much at the fore when deciding whether to have Hosted PBX Vs Onsite PBX - PBX system physically on your organization’s premises, or whether to have your PBX hosted externally by a service provider.

    It may be the case that your business is governed by an underlying yet fundamental philosophy where you outsource all functions that are not directly critical to core business operations. In this circumstance, then you will of course be going for the hosted PBX system regardless.

    For the rest of you, however, we have put together a list of the most important pros and cons that surround Hosted PBX Vs Onsite PBX. The factors that come into play are inevitably cost, scalability, flexibility, control, features, and implementation considerations. Let’s take a look at what you can expect.


    Initially, the set up costs for hosted PBX are absolutely minimal when compared to what the business would have to fork out to implement an on-premises set-up. The problem is that there are many variables that will have to be taken into consideration.

    These include: the lifetime and maintenance costs of in-house equipment compared to the monthly fees as imposed by a hosted provider; how quickly onsite equipment will out-date as technological advances occur; how costly it will be to scale the in-house system as your business grows, as compared to expansion costs with a hosted provider.


    Every enterprise will of course want to grow, and this indeed will prove to be a decisive factor when determining whether hosted or onsite PBX will be best suited for your business. Now, both solutions will leave the SME with room for expansion, and indeed, when the time comes, both will result in additional costs.

    But one major attraction of hosted PBX in terms of enterprise phone system scalability, however, comes when you factor in risk. With hosted PBX you can increase and decrease your service at will without any long term commitment – whereas if you own your own equipment and choose to expand it, then you take on the long term risk of the investment (i.e. if your business doesn’t end up growing as fast you expected).


    When you own your own equipment, you will of course have complete control and flexibility with it, meaning that you can add any amount of VoIP features and functionality that your small business phone service needs – though of course the prices for these added features will mount up. With the hosted PBX solution, on the other hand, the costs of additional features will potentially be spread across hundreds, if not thousands of different customers, meaning that you will be able to access a greater range of features at a lower cost.

    However, what really matters when it comes to features is whether your business requires them or not. In this regard – and depending on how critical those desired features are to your ongoing business plan – what’s on offer from an individual solution may be more crucial than whether the solution is onsite or hosted.

    net2phone is a leading provider of a variety of different communications tools, including hosted PBX solutions. We want to help you communicate better with all aspects of your business. Get started by having a conversation with one of our business communication experts.

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