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Hosted vs On Premise VoIP. Which is right for you?

Updated on December 6, 2013

So your company has decided to make the leap from PSTN to VoIP. Now you must decide whether the organization will go for hosted VoIP services or prefer to have your own equipment on-site. Both solutions have their pros and cons and which one you choose will depend on many factors some of which will be unique to your business environment. There are a few differences between hosted and on premise VoIP:

Hosted vs On Premise VoIP
Hosted vs On Premise VoIP


Hosted VoIP providers usually operate on a subscription basis. You pay for as many users and features as you need, making monthly or annual payments. On-site installation on the other hand, requires an upfront investment which can become quite expensive especially if you want to provide for future growth. However, this option might fit those organizations that already have equipment which is working well.


Many vendors provide plug-and-play solutions which are compatible with most SIP phones. There is little to no administration required to start making calls once you have a subscription plan and IP phones. Installing and maintaining your own equipment means that your IT personnel need to have experience in VoIP deployment. If you do not have the in-house expertise, you may need to hire the required manpower.


Many organizations prefer to have on premise VoIP because it assures them greater control over the network. But this control will not amount to much if your staff does not know how to optimize and implement stringent security protocols for VoIP. Hosted VoIP eliminates this headache since the provider takes care of security on their network.


Enterprises have limited IT resources and few would want to waste theirs on maintaining and upgrading on-premise hardware which could easily be outsourced. The IT department can get bogged down with daily maintenance and delay upgrades which can even result in your network being run on equipment that is no longer supported. Hosted service vendors have a faster upgrade cycle since the cost of upgrading is spread among many customers.


Hosted solutions can scale quickly to accommodate growth in your enterprise and new users can be added quickly with a phone call or an online dashboard. On-site installations usually take longer since new equipment will need to be purchased and configured.

For organizations that have existing equipment and the in house expertise to manage dedicated business VoIP deployments, on premise VoIP will be a better solution. But for many companies, especially small and medium businesses, hosted VoIP is a better option since configuration, security, upgrading etc. is taken care of by experts.


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