Which VoIP system do I choose? A Hosted VoIP, which offers convenience and flexibility or On-Premise VoIP, which gives you full control. Let’s find that out.
What is Hosted VoIP?
Hosted VoIP is a cloud-based system where your service provider manages all the hardware, software and maintenance of your VoIP connectivity, leaving you to focus on your business.
How does Hosted VoIP work?
Calls are routed over the internet using your provider’s servers instead of traditional phone lines or on-site PBX systems. You can make and receive calls from anywhere using devices like laptops and VoIP phones.
It’s a favourite for many businesses in the UK because it’s simple, flexible and cost-effective. For example, if you have a small design agency in Manchester, instead of investing heavily in hardware or IT staff, you can opt for a hosted VoIP setup to keep your team connected, whether in the office or working remotely.
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What is On-Premise VoIP?
Unlike cloud-based solutions, On-Premise VoIP gives your business full control over the system’s hardware and software, which is installed and maintained at your location.
How does On-Premise VoIP work?
With On-Premise VoIP, a PBX server is installed on-site, which connects your internal network to VoIP services over the internet. All calls and data flow through this in-house system and allow your business to configure and manage their communication setup independently.
According to PR Newswire, The UK VoIP market is expected to grow by £4.3 billion from 2024 to 2028.
Hosted VoIP vs On-Premise VoIP: The differences
Deciding between Hosted VoIP and On-Premises VoIP is a bit like choosing between renting a fully furnished home or building one yourself. Each option has its own unique perks and fits different needs. Let’s take a closer look to help you figure out which one suits your business best.
Ownership
In a Hosted VoIP setup, the service provider owns and manages all the infrastructure. This includes servers, updates and maintenance. This “hands-off” approach is perfect if you don’t want to know about the technical nitty-gritty.
In On-Premise VoIP, the business owns and manages all hardware instead. This gives you complete control over system configurations and security protocols.
Infrastructure requirements
In the case of Hosted VoIP, the service provider manages all the heavy lifting, including maintaining servers, handling software updates and ensuring the system runs smoothly. All you need is:
- A stable internet connection with sufficient bandwidth to support VoIP calls.
- VoIP-compatible devices like desk phones and headsets for VoIP texting, calling and other features.
- A VoIP subscription.
This is one of the biggest benefits of this system.
In contrast, On-Premise VoIP requires a significant upfront investment in infrastructure. You need to install the necessary hardware and equipment needed for VoIP functionality, like:
- PBX servers: They are used for maintaining internal and external calls.
- Cabling and networking equipment: For example, switches and routers.
- Backup power systems: This includes generators or uninterruptible power supplies (UPS).
Of course, you get complete ownership in On-Premise VoIP but it comes at the cost of higher responsibility. You have to manage everything yourself and will require a dedicated IT staff for it.
Scalability
Hosted VoIP excels in scalability. Since the entire system is cloud-based and managed by the provider, adding or removing users is as simple as updating your subscription plan. Whether your business grows steadily or experiences seasonal spikes, Hosted VoIP allows you to adjust capacity without worrying about hardware limitations or technical upgrades.
On-Premises VoIP isn’t the most flexible option when it comes to scaling. If you need to add users or increase capacity, you’ll have to invest in additional hardware like PBX servers and licenses. This can take time, add extra costs, and even disrupt your business operations during the setup process.
Cost structure
One of the biggest advantages of Hosted VoIP is its low initial cost. There’s no need to purchase expensive hardware as it’s managed by the provider in the cloud. You just have to pay a monthly subscription fee, which ranges from £10 to £40 per user, depending on the features. This covers everything, including system updates and support.
On-Premises VoIP comes with a big upfront cost for hardware, installation, and setup. However, once everything is up and running, it can save you money in the long run since there are no ongoing subscription fees like with Hosted VoIP. That said, you’ll still need to factor in maintenance, upgrades, and IT staff salaries, which can add to your overall expenses.
Find out about the full cost breakdown of a VoIP system here.
Reliability
Is a VoIP setup reliable? Yes, it is, but since we are talking about 2 different types here, the levels will vary.
Hosted VoIP relies heavily on your internet connection and the provider’s infrastructure. If your internet connection is slow or unreliable, call quality can suffer, and in extreme cases, the system could go offline completely.
Anyhow, most Hosted VoIP providers address this concern by offering Service Level Agreement (SLAs) that guarantee a certain level of uptime.
On the other hand, On-Premise VoIP is not dependent on external providers for uptime. Instead, its reliability hinges on the robustness of your internal infrastructure and IT team. If your systems are well maintained, your VoIP system can deliver exceptional reliability. However, hardware failure or lack of technical expertise can lead to unexpected downtime.
Security
Hosted VoIP systems don’t have their own security protocols. They’re taken from the service provider, who typically implements measures like end-to-end encryption and firewalls. The providers in the UK also ensure regular software updates to protect against cyber threats.
Conversely, On-Premise VoIP offers you complete control over your security protocols. You can customise firewalls, enforce encryption and ensure compliance with industry regulations. This level of autonomy is especially appealing if you operate in industries like healthcare and finance where data is sensitive.
Comparison Table: Hosted VoIP vs On-Premise VoIP
| Aspect | VoIP | Cellular |
|---|---|---|
|
Ownership |
Owned and managed by the provider. |
Fully owned and managed by the business. |
|
Infrastructure |
Requires only an internet connection, VoIP-compatible devices, and a subscription. |
Requires PBX servers, cabling, backup power systems, and IT staff for management. |
|
Scalability |
Easily scalable by adjusting subscription plans. |
Scaling requires additional hardware and licenses. |
|
Cost |
Low upfront cost; monthly fees (£10–£40/user). |
High initial investment; lower long-term costs but includes maintenance expenses. |
|
Reliability |
Dependent on internet and provider’s uptime. |
Depends on internal infrastructure. |
|
Security |
Provider manages security with encryption and firewalls. |
Customisable security protocols tailored to business needs. |
How to decide which setup is suitable for me?
Choosing between Hosted VoIP and On-Premise VoIP can be hard, but asking the right questions can help you make the right decision. Here are some key questions.
1. What is my business size and expected growth?
If your business plans to grow quickly, go for Hosted VoIP. For larger organisations with stable growth, On-Premise VoIP might be a better investment.
2. How important is cost predictability?
For businesses with tight budgets or a need for predictable expenses, Hosted VoIP’s subscription model is ideal. If you can handle upfront costs and want lower operational costs in the long run, go for On-Premise VoIP.
3. Do I have reliable, high-speed internet?
Hosted VoIP relies heavily on a strong and stable internet connection. If your internet is spotty or unreliable, On-Premises VoIP might be a better option since it runs on your internal infrastructure, giving you more control and stability.
4. How quickly do I need to set up the system?
Hosted VoIP can be set up and operational within days, while On-Premise VoIP might take weeks due to hardware installation and configuration.
5. How much control do I want over my system?
If you’d rather hand off the responsibility, Hosted VoIP allows the provider to handle everything for you. But if having full control over your system’s setup and configuration is a priority, On-Premises VoIP is the way to go.
If You Want a Reliable VoIP System For Your Business, ComparedBusiness Can Help
At ComparedBusiness, we streamline the process of linking businesses like yours with VoIP service providers. Simply provide your business details in under 2 minutes, and we’ll promptly supply you with quotes from reputable VoIP providers across the UK.
FAQs
The main difference lies in the ownership and management. Hosted VoIP is cloud-based and managed by the provider, requiring minimal infrastructure. On-Premise VoIP involves owning and managing the hardware and software on-site. This offers more control but requires greater technical responsibility.
On-premise VoIP can offer higher security because you have full control over encryption, firewalls and compliance measures. You can customise them according to your needs. Hosted VoIP is also secure, but its security is managed by the provider.
If the internet connection fails, Hosted VoIP systems may experience downtime, as they rely on cloud-based infrastructure. Some providers offer call-forwarding features to redirect calls to mobile numbers or backup systems during outages but you have to check that with your provider.
