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What is Hosted PBX?

A hosted PBX is a Private Branch Exchange (PBX) hosted entirely by a cloud service provider. The structure enables companies to be free from the expenses or space limitations associated with on-site PBX telephone systems.

How Does Hosted PBX Work?

Hosted PBX providers transfer your calls to a reliable VoIP system. The VoIP desk phone will replace your company’s regular landlines.

Calls take place securely over the same network. Information that travels to cloud-hosted PBX via IP networks reaches scalable data centers. The company will need to access an online voice portal in their web browser to adjust various settings and other advanced call features.
The diagram below illustrates how a hosted PBX system works:

Hosted PBX - Network Illustration

What is the difference between Hosted PBX vs. Traditional PBX?

Traditional PBXHosted PBX
High maintenance costsLow maintenance & Operational cost
Requires multiple phone linesRequires internet
Slow and complex deploymentFast and easy implementation
Good for larger businessGreat for SMEs
Offers less flexibilityThe scalability is superior

Before investing in a PBX system, companies need to get an idea of hosted PBX and traditional PBX to make a better decision

A hosted PBX system requires no maintenance and troubleshooting from the company’s end, as the service provider handles everything. Moreover, the operational costs are managed by the service provider. A traditional PBX, on the other hand, has higher initial and setup charges. The company also needs to bear the maintenance costs.

A hosted PBX is easy to install. It has specific training on the product laid out as a guide for easy access to the database, operational tasks, and overall implementation. On the other hand, an on-premises PBX has multi-level training for the product and its various sub-parts. Moreover, the installation process is complex and takes a long time.

A hosted PBX is easy to scale for multiple deployments and locations. It is the best option for companies remotely working from anywhere worldwide. However, a traditional PBX needs additional hardware equipment to meet the growing business needs.

Mid-size, enterprise, and small businesses can utilize the hosted PBX system as it has lower setup and maintenance costs. But, traditional PBX systems are used mainly by larger companies.

Hosted PBX systems have multiple features like automatic call distribution (ACD), on-hold music, interactive voice response (IVR) systems, direct inward dialing (DID), voicemail box, etc. However, a traditional PBX system has limited features.

Hosted PBX Platforms

Cloud PBX

Cloud PBX is a telephony system uses the internet instead of wires to route incoming and outgoing calls. It is hosted and managed by third-party providers and can be run on any device as long as it is connected to the internet.

PBX SIP Trunking

SIP trunks are virtual phone lines. If a company already has an IP PBX, it can receive support from SIP trunking because of its reduced costs and robustness. In this PBX system, the company will keep its existing PBX, but they will need the edge routers for all outside lines.

Tips for Choosing the Right Hosted PBX System for your Business

Here are a few of the features to look for when looking for a Hosted PBX service provider:

  1. Recurring & Initial Costs

Hosted PBX setup costs are usually low or even free, but you will need VoIP software or VoIP phones. Then check their recurring costs and pricing, including their monthly fee and rates, so you do not run into unexpected expenses when setting up. 

Check that your phones and devices are compatible with your hosted PBX provider, so you don’t incur unforeseen charges.

  1. Cloud System Features

PBX systems and VoIP services can offer a wide range of features, but not all offer them, so make sure to ask about the features you need, such as call forwarding or auto-attendant features.

  1. Customer Support Quality

A hosted PBX provider can handle all your maintenance and upkeep, but you must be sure you will receive the support you need. Customer reviews are an excellent way to gauge what level of support you can expect.

  1. Security & Protection

PBX providers control your telecommunications security, so they must have strong security practices and measures. Check whether your potential provider has PCI, FISMA, or HIPAA certifications.

  1. Accessibility

It is important to ensure that your employees and you can use the new system without difficulty if you transition from traditional PBX to hosted PBX and cloud communications. Cloud PBX providers provide various applications and software for managing your business communications.

Benefits of a Hosted PBX System

1. Unconditional Support to Remote Employees

Hosted VoIP lets companies use an app to forward calls to any phone number or system instantly. You can forward your calls to your smartphone or your laptop or even a landline through the VoIP.

2. Easy to set up

Hosted PBX can be set up within a day. Since its implementation does not require any on-site maintenance, the entire system is easier to manage.

Hosted PBX Benefits - Illustration

3. Unparalleled Flexibility

A company can adjust its call settings with the snap of a finger with hosted PBX. Cloud-based PBX solutions make it easy to access and adjust features, including call forwarding, meeting lines, voicemail, and text message, and more, at any given point in time.

4. Unified Communications

Businesses can merge all communication platforms onto a single dashboard that serves as a unified communications platform. For customer support, marketing, and sales teams, this can be a groundbreaking feature.

5. Single VoIP Phone Number

A cloud VoIP phone network makes it easier to establish relationships with VIP customers. With the feature “Find me Follow me,” messages and calls will find the intended individual, wherever they are.

Drawbacks of Hosted PBX Systems


Among the disadvantages of a hosted system is poor call quality due to interference from the signal and a delay in the transfer of calls to mobile devices. In addition, cloud-hosted PBX systems depend on the Internet to operate, so if there are any outages, you may experience disruptions of service that are outside the service provider’s control.

Broadband Required

The ability to access the internet is necessary to access all cloud-based services, including hosted PBX. However, your broadband circuit’s quality and stability are even more critical when you plan to layer on your business voice traffic. Of course, you can put hardware of the highest quality in place, but ultimately, the reliability of the connection determines your experience with hosted voice services.

Restrictions of Existent Networks

It’s not a major disadvantage, but it could be quite expensive, depending on your current network infrastructure. Because hosted PBX is IP-based, your network must be capable of handling multiple phones. A router that can segment voice and data traffic is also required for quality purposes if you want to separate voice and data traffic. A hosted PBX solution may include additional hardware if it is not already in place.

How does a PBX system future-proof your business communication

Cloud Hosted PBX System For Business

A third-party provider specializing in the distribution of VoIP services buys, manages, and operates both the software and hardware required for a hosted telephone system.

Hosted PBX solutions allow companies to monitor their phone systems through a user-friendly control panel. They are entirely controlled off-site, resulting in no infrastructure or installation costs.

Start Making & Receiving Calls Instantly With Hosted PBX Solution

  • Offer easy scalability and customized feature packs to customers
  • Get access to call routing and voicemail
  • Enjoy data reliability and build customer loyalty
  • Catalyze revenue campaigns and lower acquisition costs
  • Assess 100% calls in a fraction time
Hosted PBX System
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Advantages Of Hosted PBX Phone System

A hosted PBX system delivers a lot with minimal capital expenditure. With cloud hosted pbx, a company needs to pay for only the features that they choose. This eliminates unnecessary, expensive maintenance procedures.

Migrating to a cloud-based voice system might seem like a complicated process, but in reality, it is a more straightforward transformation that takes less time and is more cost-effective. With a traditional PBX, you end up investing an immense amount of workforce and time to ensure that the company yields effective throughput and depreciation. Cloud telephony delivers the same connectivity but also saves time and resources that you would otherwise spend on a traditional PBX system.

What Infrastructure Do You Need For a PBX System?

To get started with a hosted PBX system, all you need is a computer and a stable internet connection. Additional software or hardware is not required. hosted PBX providers will take care of all the other needs.

What Is The Setup Process Of A Virtual PBX System?

A company has to sign up for the service with a trusted VoIP service provider that usually charges a monthly subscription fee, depending on the package, lines, and other value-added services.

Use Cases of Hosted PBX

After you have gained a better understanding of how hosted PBX works, the platforms it uses, and its benefits, we can discuss when hosted PBX is most useful for businesses. Among the many reasons why a hosted PBX solution is useful to companies, four stand out in particular.

Remote Workers

The cloud PBX system enables call forwarding for remote workers to be as easy and professional as possible. For instance, if someone calls your office looking for a salesperson out on the field, the call can be forwarded directly to their mobile without hassle.

Numerous Offices

Cloud-hosted PBX systems can save you a lot of money if you have multiple offices in different countries, especially in separate locations. You can unify your business communications more easily and conveniently with cloud PBX systems, which provide cost-effective long-distance calls.


Since hosted PBXs are low-cost and can be scaled quickly and inexpensively as needed, startups often use them. The hosted PBX system allows your business to change locations easily without affecting access. You can add and remove lines quickly and cost-effectively.

Call Centers

You can set up a hosted PBX system for a small call center quickly and inexpensively. Your contact center will benefit from all the additional features hosted PBX phone systems have, including IVR, direct routing, and auto attendants. However, if you wish to have a full contact center, consider using a cloud contact center to integrate with the company’s PBX.

Frequently Asked Questions of Hosted PBX

What is the difference between VoIP and hosted PBX?

Although both a hosted PBX system and a VoIP system are business phone solutions, they differ in several ways. For example, where a cloud hosted PBX system relies on landlines and extensions for data transmission, VoIP relies on the internet rather than cables.

What does PBX stand for?

PBX is an abbreviation for Private Branch Exchange. It is a business telephone system that is used within an organization to switch calls between users on local lines. Unlike VoIP phone systems, hosted PBX systems transmit data via cables.

Is hosted PBX a VoIP system?

No, a hosted PBX system is not a VoIP system since there are several differences. For example, in the case of cloud hosted PBX, data is transmitted over cable lines, whereas in the case of VoIP, data is transmitted over the internet.

How long does it take to install a hosted PBX solution?

CallHippo can set up a PBX system within a week in your office once you arrange the VoIP phones or choose to get it delivered from us.
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