PBXs: On-premises vs Hosted Solutions – What’s the Difference?

When it comes to choosing a phone system for your business, there are several options in 2023. The most common question is whether to opt for a hosted PBX solution or an on-premise phone system. Whichever solution you choose to go for, you will be using a PBX (Private Branch Exchange) and the difference between the two solutions, is where the PBX is situated.

What is a Hosted PBX?

Like all things associated with the Cloud, a Cloud PBX, or hosted PBX solution is a phone system situated in the provider’s data centre and delivered to you over the Internet, in the form of an application or via a web browser. These applications are no different from those you’ll currently find on your phone, laptop or desktop PC.

What is an On-premise PBX?

An on-premise PBX resides at your location, whether it be in a server room or the office. The range of features available on on-premise solutions has significantly increased in recent years, with most modern on-premise installations now using many Cloud features.

Factors to consider before choosing a phone system

  • How many users of agents do you have?
  • How many concurrent calls will be taking place?
  • Are the majority of calls inbound or outbound?
  • What % of communication is internal and external?
  • Do you have multiple offices or remote workers?
  • How quickly is this business structure likely to change?

Why choose a Hosted PBX?

A hosted PBX solution system can be viable for small or large organisations. Generally, a vendor will price their PBX per user, per month and there may also be additional charges including set-up fees.

A hosted PBX can handle any number of concurrent calls. It comes into its own if a business has periodic increases or decreases in traffic. In this scenario, a business will be able to add or remove sufficient lines and therefore only pay for what’s needed.

A hosted PBX is better suited to companies that have an ever-changing business environment. For start-ups or businesses that are seeing continuous growth, a hosted PBX provides easy scalability, with the ability to add new users or lines in minutes.

A hosted PBX allows for one system across all locations for businesses that have multiple offices or remote workers. Internal calls will be free and the same policies and structure across the system make internal calls simple.

There’s no need for additional hardware and therefore set-up time is a lot quicker than on-premise solutions that require multiple installations and configurations.

To summarise

The list benefits of a hosted PBX Solutions System will vary from vendor to vendor; however, this should be inclusive of all systems.

  • The low initial cost to set up
  • Installation handled by the vendor
  • Easy to add additional lines and users
  • PBX Maintenance and upgrades are the responsibility of the provider
  • An extensive list of call features
  • A choice of price packages e.g. (basic, standard, premium)
  • Free internal calls
  • New features may be added free of charge
  • Built-in disaster recovery and redundancy.

Why choose an On-premise PBX?

If your business already has the resources, such as servers, a suitable network, bandwidth, and devices such as physical handsets, then an on-premise solution is an easier deployment for those that do not.

With the system being on-premise, the risk is kept in-house and this may suit certain sectors that require higher levels of security and confidentiality. It also gives the business full control over maintenance, software installation, patches, and access to the system.

Modern on-premise systems allow for many of the IP features available in hosted PBXs, however, the configuration is often more complex and may require additional work by a technician.

Third-party support and maintenance can be acquired by the supplier or alternative telecom and managed service providers.

To summarise

  • Security and risk is your own hands rather than a providers
  • Ownership costs reduce over longer periods
  • No need to change the preferred carrier/network
  • Modern systems allow most call features found on hosted phone systems
  • SIP trunking can be used to save on calling costs

There are Pros and Cons to Each PBX

There are some key differences between each of the systems, these should be reviewed and become part of your decision-making process when choosing one or the other.

Making the move to a hosted phone system would be beneficial regardless of which of the two systems is ultimately chosen. Knowing the differences should lead to a better-hosted telephony system and a higher level of satisfaction for all users; the company, employees, and customers.

The Cons of a Hosted PBX

  • The connection and voice quality are dependent on Internet connection and bandwidth
  • Loss of the Internet may lead to the loss of telephone service
  • Bespoke customisations could be slow to be implemented or unavailable due to the supplier
  • Price may increase unexpectedly and cancellation fees may apply

The Cons of an On-premise PBX

  • Higher initial hardware and set-up cost
  • Potentially higher ongoing maintenance costs
  • Managing an on-premise PBX will require an in-house expert or outsourcing to a vendor
  • The manufacturer may go out of business or end-of-life the product unexpectedly
  • A technician may be required for upgrades or security patches
  • Loss of power or a PBX failure may result in loss of communication for that location


Both of these systems are viable options for any size business. Using these pros and cons as a guide your business will need to weigh up which is the best solution based on risk, costs and current resources.

Generally speaking, a hosted phone system will have a lower entry cost and may be suited for small to mid-sized businesses and those without the resources required for an on-premise solution.

An on-premise solution is better suited to a business that requires higher levels of security and already has the resources such as network, staff, and devices at its disposal.

Looking for Advice on a PBX?

in2tel supplies both hosted and on-premise PBX solutions. We have a team of experts who will be more than happy to answer any questions about either solution and which more suitable for your business.

If you would like to ask questions, please speak to our Sales Director over the live chat. Alternatively, you can email sales@in2tel.ie or phone 1800 91 1800.

About in2tel

in2tel is a telecoms carrier and solution provider that’s been operating in Ireland and the UK for 17 years. It provides organisations with an affordable, bespoke design that is often found in large-scale enterprises. in2tel’s services provide communication channels for contact centres, sales and marketing teams and internal departments for a large variety of small businesses and SMEs.