According to a website survey, implementing a virtual PBX system can save a firm up to 90% on international call costs, 75% on operating costs, 40% on local bills, and 30% on phone bills. The same survey also concluded that the worldwide VoIP (Voice over Internet Protocol) market would reach $183.7 billion by 2027. Aren’t these facts enough to persuade you that you must invest in a hosted PBX for your business right away?

Cloud PBX Platform


However, if you are unsure whether or not to invest in this technology because you are new to it or have limited knowledge of it, this blog is the perfect read to clear all your doubts! In this comprehensive beginner’s guide to Virtual PBX, we will provide you with all of the fundamental information regarding virtual PBX so that you can be informed of this cutting-edge technology and make a sound decision.

So, let’s get started with learning what a virtual PBX is.

What Is A Virtual PBX?

A virtual PBX is a cloud-based business phone system or technology that allows you to transmit voice and multimedia content via the internet rather than a traditional phone line. Moreover, virtual PBX, where PBX stands for Private Branch Exchange, is also an ideal replacement for traditional PBX and Public Switched Telephone Network (PSTN) systems, which require hardware and human support.

Compared to traditional PBX or on-premise PBX systems, virtual PBX provides a range of advantages, including advanced features, a cost-effective solution, interactive voice response (IVR) support, and exceptional portability, among others. All of these elements combine to make hosted PBX the most sought-after business phone solution favored by businesses. But what exactly is PBX virtualization? What makes it special? Let’s find out in the following section.

What Is PBX Virtualization?

People often get confused between hosted PBX and Virtual PBX. Although the two terms appear to be pretty similar, there are significant differences between them. By PBX virtualization, we mean a method or a process by which a system or software is used to establish a one-stop server for multiple applications and tools used by the organization.

What is hosted PBX


Sounds confusing? Let us look at an example to grasp it better. Assume you have a dedicated server for each activity, such as one to store employee data, one for customer data, one for call records and voicemail, and so on. As expected, managing all of these servers individually is not only time-consuming but also expensive.

This is where PBX virtualization will come in handy. Using virtualization, you may consolidate all data on a single server, lowering management costs and streamlining the process. Overall, “virtual PBX” refers to a component of a hosted phone system, whereas “virtualization” refers to the process by which on-premise phone systems condense resources to a single server. 

Now, let’s look at how a virtual PBX works.

How Does A Virtual PBX Work?

The primary distinction between a traditional PBX system and a virtual PBX phone system is how they function. On the one hand, whereas traditional phone systems or on-premise PBXs rely on telephone lines and hardware to operate, a hosted PBX does the same task more effectively by utilizing cloud-based software, the internet connection, and a VoIP system.

How virtual PBX works

( Source: )

Moreover, the cloud technology eliminates the need to deploy a physical PBX box or private branch exchange in your office. Overall, the operation of a virtual PBX is nearly identical to that of a traditional PBX, albeit in a more sophisticated and cloud-based approach. However, this minor modification in functioning makes a significant impact and allows the hosted PBX phone system to provide several benefits.

In the next section, we’ll look at the differences between on-premise or traditional PBX and virtual PBX.

On-premise PBX Vs Virtual PBX: 4 Key Differences

The 4 primary differences between a traditional PBX system and a hosted PBX system are as follows. Let’s take a brief look at all of them.

1. Setup costs 

The first significant difference between these two PBX technologies is the cost of installation. On-premise PBX has a higher initial setup cost because you must purchase all the hardware, server, and other equipment required to set up the system. On the other hand, virtual PBX is relatively inexpensive to set up because it does not require purchasing any form of server or hardware. All you need is a PBX phone, internet connection, and a VoIP service subscription.

2. Maintenance costs

In the case of on-premise PBX, not only is the setup cost higher, but the maintenance cost is also more than that of virtual PBX. The reason is– since you own all of the hardware and equipment, you are also responsible for their maintenance. Whereas, in the case of hosted PBX, as you don’t own any hardware or equipment other than a PBX phone, there is almost zero or minimal maintenance expense.

Pros and Cons


3. The Need for Qualified Staff

As there is multiple hardware and equipment to maintain, you will need a permanent employee to handle all of those assets to ensure seamless service. However, when you pick virtual PBX, all of the equipment except desk phones is maintained by Hosted PBX service providers, requiring almost little maintenance and no qualified professionals on your end.

4. Functionalities

The key elements that have made virtual PBX so popular among enterprises are its advanced and exceptional functionalities. For example, in contrast to traditional PBX, which only allows businesses to make and receive calls, hosted PBX enables companies to do a variety of other functions in addition to making and receiving calls, such as call queuing, call forwarding, auto-attendant, email to voicemail, and so on.

Want to learn more about the best features of the hosted PBX? Check out the following segment.

Top 5 Features of Virtual PBX Phone Systems

The top 5 functionalities of the hosted PBX phone system that make it the most popular enterprise phone system among organizations are as follows. Let us learn a little bit about each of them.

1. Auto Attendants

Auto Attendants



An auto attendant is a menu system that uses voice prompts to direct callers to the appropriate department or a representative. This virtual PBX feature segregates inbound calls based on their topic and routes them to the relevant customer representative who is trained to handle those types of queries, ensuring a shorter call handling time and a higher First Call Resolution (FCR) rate. For instance, if a customer has a question about price or plans, the call will be routed to the sales team.

2. Call Queuing

Call queuing is a function that allows inbound calls to be placed on hold if all of the agents are busy or unavailable for whatever reason. This virtual PBX feature also notifies customers who are on hold about the expected wait time. Moreover, businesses can use this feature to market their products, services, and offers in the form of commercials while customers are on hold. The ultimate goal of the call queuing is to keep on-hold customers engaged while keeping them from disconnecting the call.

3. Voicemail To Email

Although you can provide 24×7 customer support to your customers by using a virtual PBX, there may be times when you are unable to accept inbound calls for any reason. In such scenarios, the voicemail to email feature comes to the rescue. This feature will send voicemail messages left by customers to your email box, ensuring that you do not miss them. In addition, an advanced VoIP (Voice over Internet Protocol) or PBX provider, such as CallHippo, also offers a voicemail to transcript function.

4. Interactive Voice Response (IVR)

Call Center Management

As the name implies, Interactive Voice Response (IVR) is a feature of an automated enterprise phone system that allows customers to engage with a computer system and provide information relating to their queries using voice or DTMF tones input via a keypad. Using IVR, Businesses can speed up incoming calls, route callers correctly, and even schedule call back.

5. Find Me/Follow Me

Find Me or Follow Me is a virtual PBX function that allows organizations to route incoming calls to different locations or phones. For example, if your primary number, say– your desk phone, is not answered after a few seconds or rings, the call will be forwarded to your residential phone. Similarly, if your residential phone is not answered, the call will be forwarded to your personal phone. The procedure will be repeated until the last point of contact is reached.

These are the 5 key features of a VoIP business phone system or virtual PBX. As we’ve seen, each has its own relevance and is required to simplify and improve your customer communication channel. Now, let’s move on to the next section of the blog: the benefits of a virtual PBX system.

The Benefits of Virtual Hosted PBX System

The 5 key benefits of a hosted PBX system are listed below. Let’s take a quick look at each one.

1. On-Demand Scalability

Easy scalability is critical to the success of any organization. A virtual PBX service will enable you to scale the infrastructure as needed, empowering you to provide timely and effective customer service. Moreover, this will also assist you in avoiding unnecessary expenses. For example, you don’t have to set up full-fledged infrastructure from the start; instead, you can scale it as the organization expands.

2. High-Quality Voice Calls

Due to signal disturbances, voice quality is relatively poor in the case of on-premise PBX. In contrast, since virtual PBX communicates via the internet, it offers a higher voice call quality without data loss or noise interruption. Ultimately, this will allow you to fully comprehend your customers’ issues and deliver the best solution.

3. Unbeatable Mobility

Hosted PBX Provider


Another reason to invest in and buy a virtual PBX is mobility. Being available for your consumers 24X7 is not possible with an on-premise or traditional phone system. Besides, this could be a major issue if you travel frequently. Nevertheless, this location barrier can be overcome with the help of a hosted PBX. This hosted PBX system enables you to give service from any location at any time. All you’ll need is a good internet connection.

4. Real-Time Monitoring & Analysis

Another notable advantage of virtual PBX is the ability to monitor and analyze calls in real-time. For example, with the help of a hosted PBX, you may see how many inbound calls you are receiving at any given moment, how many of them are entertained, how many are in the queue, how many callers are repeat callers, how many are first-time callers, and so on. This information will eventually help you in identifying flaws in your process and strengthening your strategy.

5. Cost-effective Business Phone Solution

A virtual PBX system is way less expensive than an on-premises PBX system. For example, as previously stated, it has lower setup and maintenance costs. Moreover, call rates in virtual PBX are significantly lower than that of on-premise PBX. Besides, hosted PBX being a SaaS (Software as a Service) approach, you don’t have to invest in any equipment other than the headsets or desk phones and merely pay based on usage.

All of these hosted PBX benefits illustrate how it might be your ideal business phone system and how much you can gain from implementing it.

Let us now move to the final section of this Virtual PBX Guide– how to set up virtual PBX?

How Do I Setup A Virtual PBX (Private Branch Exchange)?

CallHippo Pricing

Setting up a virtual PBX for your business is much easier than you think! All you have to do is follow these 5 easy steps described below.

Step 1: Sign up with a reputed PBX Provider–  CallHippo.

Step 2: Log in with the username and password, and this will take you to the dashboard.

Step 3: Click on ‘Add Number’ and select the US or any other countries you want to target in the ‘Country’ column. After that, you can filter the numbers as per your choice and select a number from the number pool.

Step 4: Make payment.

Step 5: Once you’ve established a centralized virtual phone number for your business, you’ll need to add the rest of your team members.

Following that, you must link your phone number with the virtual number. This allows you to dial and receive calls from the country whose phone number you have selected. 

That’s all! However, keep in mind that the users receiving the calls must first be enrolled in the system.

The Bottom Line: Virtual PBX has become a much more critical business communication technology than one might believe. Its remarkable features and benefits not only assist enterprises but also customers in getting a quick solution in the minimum time. Moreover, it is less expensive than traditional PBX, which often limits your customer support operations and thus your business growth.

Updated : September 6, 2021


Read The Most Well Researched & Insightful Articles From CallHippo Team

Request a Demo


Get Started Now!

Share This