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Hosted vs On-Site VoIP? Make Your Choice!

Hosted vs On-Site VoiP
Hosted vs On-Site VoiP

Now that you've decided that VoIP is a viable alternative to a traditional phone system for your business, you have one more important decision to make: hosted VoIP or on-site VoIP. What's the difference? Here's a quick rundown on hosted versus on-site VoIP.

First, let's look at the two options:

  • What is On-Site VoIP? With on-site VoIP, the hardware used to power your phone system is stored at your location (usually in the same closet as your server, routers, and other computer hardware). Like a traditional office phone system, you'll have phones scattered throughout the office such as at each employee's desk and in the warehouse. These phones connect to your computer network which connects to the on-site hardware which connects to the Internet to route your calls.
  • What is Hosted VoIP? With hosted VoIP, there is no hardware installed at your location (other than the individual phones). Each phone connects to your computer network which connects to your service provider's off-site data center.

While both on-site and hosted VoIP offer numerous advantages over traditional phone systems, it's not always an easy choice between on-site and hosted VoIP. What's right for one business may be wrong for another. Therefore, it's important to understand the advantages of each before you make a final decision as to what's right for you.

Hosted VoIP has a few advantages you'll want to consider. For example, the total cost of ownership is quite low because there's no equipment (other than the phones) to buy or maintain. The upfront cost is minimal, and you'll pay a low monthly fee (typically on a per user basis). Hosted VoIP is also highly scalable. If you add an employee -- or a large team of seasonal employees -- you can quickly add new users. The same is true when employees leave; you can quickly remove users.

On-site VoIP has a higher upfront cost as you'll need an on-site server. However, once that's taken care of, you won't be subject to monthly fees or per user fees. If you have a small business and expect it to stay relatively small over time, a hosted solution may be the more affordable choice. On the other hand, if you have a larger or rapidly growing business, it may be more cost-effective to go with an on-site VoIP system.

What if you have an existing phone system? In many cases, you can integrate a legacy phone system with either on-site or hosted VoIP. According to, "IP Trunking not only takes advantage of your legacy telephone system but also brings powerful and reliable features, tremendous cost savings and more control over your existing telecommunications services." Converting a legacy phone system to VoIP is tricky (you may need to invest in telephony interface cards, for example), but it could pay off in the long run.

Which option is best for you? On-site VoIP or hosted VoIP? Work with a qualified VoIP services provider and make the best choice for your business.


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