Hosted PBX vs SIP Trunking: Key differences and which one is better for businesses

Do you want to transform your organization’s traditional telephony system to the cloud and enjoy the significant benefits of VoIP? Yes, but the question is which VoIP service-  hosted PBX or SIP trunking- should go with? We have all the detailed information on our blog about hosted PBX vs SIP trunking. Let’s get started.

What is Hosted PBX?

Hosted PBX (Private Branch Exchange), also referred to as cloud PBX or virtual PBX, is a cloud-based telephony system that delivers a secure and reliable phone service via the Internet. It is run by a third-party Internet Telephony Service Provider (ITSP) and manages and maintains all the necessary technical infrastructure, alleviating the workload of in-house IT teams. Any organization using Hosted PBX does not require extensive setup like physical hardware. Unlike traditional PBX systems, it uses Voice Over Internet Protocol (VoIP) and the Internet to manage inbound and outbound calls. Traditional PBX systems used telecommunication networks like the Public Switched Telephone Network, where customers are linked through telephone numbers.

Hosted PBX has advanced and attractive features like call forwarding, call conferencing, do not disturb mode, on-hold options, and more. It includes more features like:

• Find me, follow me (FMFM): This advanced feature enables you to forward calls to other numbers, ensuring no call is missed. 
• Voicemail to email: Voicemail is automatically forwarded to the receiver’s email inbox, providing them with more access options, and they can quickly and efficiently respond to the mail, eliminating the need to check voicemail.
• Auto attendant: It enables the automated setup to greet customers and then direct them to specific departments or individuals.
• Hunt Groups: To ensure that calls are responded to promptly, you can ring the phone until someone answers.

Wireless routers, high-speed internet connection, and communication devices like smartphones, desktop computers, laptops, and VoIP desk phones, based on your preferences, are the list of gadgets required to get started with hosted PBX.

Benefits of Hosted PBX

Organizations using hosted PBX can save a great deal of money on upgrades, maintenance, and the expense of buying new hardware.  Some tangible benefits include:

1. Flexibility

It enables the customer to connect to the cloud-hosted PBX from different parts of the world via the Internet, making it flexible to reach out to customers virtually or with toll-free numbers. It allows the user to answer one call in multiple channels like desk phones, mobile phones, or office phones, eliminating the probability of missing incoming calls, which enhances the level of customer satisfaction.

2. Plug-and-play system

It will eliminate disturbance resulting from the integration of new updates or technology that might have a major impact on workers’ productivity. The training required to be proficient with the hosted VoIP system is easy to comprehend because of its user-friendly interface. Thus, a plug-and-play hosted PBX may continue to operate and expand even when new technologies are introduced.

3. Enhance Customer Support

A cloud contact center’s call routing features facilitate incoming and outgoing calls, including email, web, and chat interactions globally over the Internet, which leads to effective customer engagement and responsiveness.

4. Scalable and Adaptable

It easily enables the addition of more functionality in the peak time and scales the service down. It allows the organization to enjoy additional new features on slower periods without change in costs by simply informing the third-party service processes that are available. Users have options to integrate the functions based on what suits their business. It is an inexpensive yet powerful communication tool for your business.

Hosted PBX service facilitates remote work and provides alternatives to use communication tools like leading-edge IP desk phones, softphones, and mobile phones when necessary. They can forward calls to another desk seamlessly, providing the ultimate flexibility.

5. Cost Effective

It is budget-friendly as it does not require extensive and expensive physical hardware. A third party handles them entirely, eliminating their maintenance so the IT team can focus purely on business growth. It provides a subscription-based service where you can add up or delete services according to your business preference and only pay for the services you need. 

What Is SIP Trunking?

SIP trunking is a system that sends voice and other unified digital communications across the internet using the SIP protocol. It makes it possible for the company to link the Public Switched Telephone Network (PSTN) to its PBX system and replace the traditional telephony system. Real-time communication, instant messaging, audio, video, and other communication services are initiated, maintained, modified, and terminated between two or more IP networks using Session Initiation Protocol (SIP). A trunk serves as a multi-signal highway in telecommunications. SIP trunking connects a business’s phone system to the internet, acting as a virtual equivalent of this highway.

Large-scale businesses generally use it as it offers greater flexibility and scalability, is inexpensive, and has a strong security infrastructure. It offers unlimited connectivity even to remote locations. However, sometimes, its advanced features and functionality are limited to the PBX system, which is already in use by businesses. Its maintenance cost is high as it receives less support from the provider and is responsible for maintaining its PBX. 

Benefits of SIP Trunking

Large-scale Organizations with over a hundred employees placing long distance or international calls can save loads of costs compared to Traditional phone service. Besides being cost-effective, it has attractive benefits like:

1. Unified Communications

One can unseal the advanced features like mobility, collaboration apps, instant messaging, and cloud-based tools from an IP-based communication suite by choosing a SIP provider with comprehensive communication tools like video calls and fast internet. It helps your business access Unified Communications as a Service (UCaaS) that stimulates enhanced productivity.

2. Multi-site and Global Potential 

SIP provides a uniform and configured telecommunications experience to businesses operating across multiple locations. You can use the same or non-geographic number across multiple sites without additional cost or complicated forwarding systems for your large-scale growing business. Hence, it improves crucial factors like customer trust, brand conformity, and consistency to survive and grow in the competitive market. For instance, if you are working in Nepal and want to contact a client from India, you can use an Indian number to appear local, enabling global outreach. 

3. Cost Efficiency

With SIP, one organization can considerably save up to 30 to 60% of its expenses.  The SIP packages come with FREE calls, significantly reducing the call charges. The simplicity of the installation and setup process that requires only an IP circuit reduces the cost of expert IT teams and physical hardware investment. The payment system is transparent, where you pay monthly for the required channels only. It eliminates the use of expensive traditional voice networks like ISDN lines and provides cost-effective, robust voice circuits that can effectively operate for the long term. 

4. Reliability

It is dependable and ensures reliable communication, unlike traditional telephony systems that face interruptions from weather, accidents, and other activities. With SIP, in case of failure, your calls are seamlessly routed to other offices or employee mobile devices without any disturbance in the communication. 

Hosted PBX vs SIP Trunking: Top Differences

Both systems have major differences in terms of cost, flexibility, call quality, security, and more. The top differences are explained below.

	Hosted PBX	SIP Trunking
Initial Setup Cost	In the absence of on-premise PBX equipment, the cost is low	In the presence of on-premise PBX equipment, the cost is low
Ongoing Cost	Monthly per phone line costs range from $15 to $50.	Monthly per-user calls range from $20-$50.
Call quality	Ideal for less number of calls occurring at once.	Ideal for large-scale organizations with a high number of calls.
Technical Expertise	It is maintained and operated by a third-party provider.	Operated by Internal technical expertise.
Security	The security standard depends on the third-party provider.	It provides superior and secure VoIP security.
Organizational size	It supports an organization with less than 20 employees.	It supports large-scale organizations with more than 20 employee
Geographical Flexibility	It’s flexible and self-reliant	It often depends on the PBX system for proper licensing support.

Both systems come with abundant features and benefits. But among them, SIP trunking is a commonly selected option as it has the ability to support medium to large-scale businesses with increased security, long-term cost efficiency, and flexibility with no interruption to your service.

Hosted PBX vs SIP Trunking: Pros & Cons

 Pros of Hosted PBX are:

• It’s a cloud-based system that eliminates the need for complicated on-site equipment and provides options for businesses looking for easy setup. It has a user-friendly interface that makes configuration and setting simple.

• It supports medium and large-sized organizations with an employee over 20.

• It generally has a low setup cost in comparison to a traditional on-premise PBX system. They avoid investment in heavy physical hardware as they depend on the service provider for infrastructure and maintenance.

 Cons of Hosted PBX are:

• It is operated by the service provider, so the organizations may not have complete control over customizations and updates.
• Though the service provider has strong VoIP security measures for data encryption, when the hosted PBX provider has issues, there is a thread on the organization’s security and privacy.
• It’s a cloud-based system that operates via the Internet, so a disturbance in the connectivity can have a negative impact on its accessibility and audio quality.

 Pros of SIP Trunking are:

• It reduces long-distance and line rental calls by optimizing resources like voice and data networks together, saving significant costs.
• It provides flexibility by combining various communication channels over a single IP network.
• It allows uninterrupted communication even in network failures by redirecting calls.

Cons of SIP Trunking are:

• The transition of a traditional phone system might be complex in the initial state and requires proper and clean configuration for greater performance.
• It highly depends on the Internet connection, and poor connection can impact call quality.
• Security threat as transmission of data takes over the Internet.

Who Should Use Hosted PBX?

For startups or small businesses who lack the funds for an on-premise PBX and internal IT specialists for maintenance, a hosted PBX is the ideal option. The third-party server is responsible for handling all aspects of the phone system, from setup to management.

A business that emphasizes features like flexibility and scalability but can compromise data security and quantity of voice calls.

Who Should Use SIP Trunking? 

The SIP Trunking system is flexible for both medium and large-size businesses that have over 50 in-house teams who can afford two separate PBX solutions. They emphasize high-quality premise-based telephony systems for greater control of the quality and quantity of phone calls and data security. 

Conclusion

Hosted PBX is a secure and reliable phone service run by a third-party Internet Telephony Service Provider (ITSP), eliminating the need for costly setup for physical hardware. Unlike traditional PBX systems, it uses Voice Over Internet Protocol (VoIP) and the Internet to manage inbound and outbound calls. On the other hand, SIP trunking is a system that sends voice and other unified digital communications across the internet using the SIP protocol. It replaces the traditional telephony system by linking the Public Switched Telephone Network (PSTN) to its PBX system. Both systems come with abundant features and benefits. However, SIP trunking is a popular option as it has the ability to support medium to large-scale businesses with increased security, long-term cost efficiency, and flexibility without disrupting workflow.

FAQs

What is the benefit of hosted PBX?

It enables the customer to connect to the cloud-hosted PBX from different parts of the world via the Internet, making it flexible to reach out to customers virtually or with toll-free numbers. It facilitates remote work, enhancing flexibility. A plug-and-play system will eliminate disturbance resulting from the integration of new updates or technology that might have a major impact on workers’ productivity. The training required to be proficient with the hosted VoIP system is easy to comprehend because of its user-friendly interface. It is budget-friendly and does not require extensive and expensive physical hardware, as it is entirely operated by a third-party server. It provides a subscription-based service where you can add up or delete services according to your business preference and only pay for the services you need. 

Which is better: PBX or VoIP?

VoIP systems have extensive features that require less expenditure for setup and maintenance. In general, they are more affordable,  more scalable, and provide great call quality. So, in many terms, VoIP is better, but also depends on organizational context and needs.

How does hosted PBX work?

It’s a cloud-based telephony system that takes place via the Internet. The third-party service provider manages the system and maintains all the necessary technical infrastructure, alleviating the workload of in-house IT teams and extensive setup like physical hardware. Unlike traditional PBX systems, it uses Voice Over Internet Protocol (VoIP) and the Internet to manage inbound and outbound calls. Traditional PBX systems used telecommunication networks like the Public Switched Telephone Network, where customers are linked through telephone numbers

What is the difference between PBX and hosted PBX?

Private Branch Exchange is an international telephone network responsible for calls, voicemail, and call-forward features whose physical hardware and infrastructures are installed within the organization’s location. They are responsible for managing and maintaining the overall systems. Meanwhile, hosted PBX is a cloud-based telephony system that delivers a secure and reliable phone service via the Internet, where every aspect of its telephony system is handled by a third-party service provider. The organization only pays a subscription fee, and the service provider handles other maintenance and upgrade expenses, so it’s cost-effective.