Hosted vs. On-Premise VoIP: Why a Hosted Solution Wins


Businesses worldwide are beginning to recognize the advantage of VoIP solutions. As they make the big switch, however, there’s one question they have to answer – should they choose on-premise solutions or opt for hosted services?

A hosted solution (i.e. Hosted VoIP) means a provider is responsible for maintaining the technology and the service. The system runs in the cloud and all the features are handled through the provider’s IP-PBX server. On the other hand, an on-premise VoIP deployment means the whole system will be housed in a location of your choosing. Equipment and software required to run the platform will be housed within your office.

Many will say that choosing between the two boils down to personal preferences. However, as we break down the different advantages and disadvantages, you’ll see exactly why a Hosted solution is the clear winner.


According to, small businesses that switch to VoIP solutions are able to reduce the cost of their local calls by as much as 40%, and international calls by up to 90%. This is the reason that VoIP solutions are so compelling. But by comparing cost savings between hosted and on-premise deployments, you can save even more with a hosted solution. 

On-premise VoIP requires businesses to establish higher setup cost, initially. This usually translates to lower monthly expenses, but in the long term, it means you’ll also be responsible for maintenance costs.

In contrast, Hosted VoIP systems require lower initial equipment and set-up cost. Any upgrades, maintenance, and programming are handled by the provider, which makes it easier for you. To keep the system running, a monthly fee is required. However, the monthly service cost is usually lower. Additionally, if you opt for a provider with simple, straightforward pricing, you can be assured of consistent quality of service and access to upgrades and new features.

Installation and Maintenance

A premise-based deployment means your business is responsible for procuring, installing, and maintaining both the hardware and software of the VoIP system. This gives you more control over the kind of features that you want to add and use for your business. It also means you’re completely responsible for installing and maintaining it, which can be tedious and time-consuming.

For a hosted solution, installation and maintenance are handled by your service provider. All you have to do is indicate the features that you want enabled and they will take care of everything. Of course, this means that you need to have a reliable Hosted VoIP service provider. All maintenance requests have to be channeled through their customer support team and you want to be assured the provider has a responsive and attentive team who can attend to your concerns.


At some point, your business will grow. You'll acquire more clients, add new team members, and expand operations. As this happens, make sure the technology you rely on grows with you! For your communication needs, adding more phones and users is necessary, as well as access to more features.

This is particularly hard to do when you’re using on-premise solutions. Not only is it more costly, but you also have to manage everything yourself. So, as you may have already assumed, this is where a hosted solution shines. Hosted VoIP providers offer a business model that is specifically made to be easily scalable – both in terms of capacity and implementation time.

Businesses today operate with budget as a primary consideration. They also focus on efficiency, growth, and expansion. To that end, it just makes more sense to leverage on new technology and use a platform designed to support it when the need arises. A hosted solution is the right new technology to invest in. 

For a more in-depth comparison between an on premises solution, VoIP, Hosted VoIP, and a hybrid solution, download our free Hosted VoIP Buyer's Guide!