What’s The Difference Between VoIP and Hosted VoIP?

Choosing a new phone system that suits your business may sound like an easy task, but this is not always the case. With tens of services and companies to choose from today, finding one that gets it right can be confusing.

One of the recent phone systems whose popularity is sweeping across the UK right now is the VoIP technology. This internet phone tech gives you higher quality communication services and more features than traditional analogue systems, all while saving you a lot of money.  

But with it comes terms and jargons that will probably sound unfamiliar to you. If you’ve started researching it and can’t seem to differentiate between VoIP and hosted VoIP, this article is for you.

Inside, we’ll explain what on-premise and hosted VoIP entail, their differences and finally help you decide which option best suits your business.

But before we delve too deep, let’s cover some basics first.

What is VoIP?

Today, the world is more connected than it has ever been. You can make calls from London to India right from the comfort of your office or home. This has helped a great deal to bolster international commerce. VoIP technology is to a significant extent responsible for making this possible.

VoIP – which is short for voice over IP – is the technology that allows you to make a call directly from your computer or any other devices connected to the internet. It works almost like the traditional landline system, the significant difference being that it works over the internet.

VoIP technology is also referred to as broadband telephony, internet telephony, broadband phone service, or IP telephony.

How Does VoIP Technology Work?

In simple terms, VoIP technology converts voice into a digital signal. It compresses voice to be transmitted over the internet using a computer, a dedicated VoIP phone, and other similar devices.

When the signal reaches the receiving end, it is uncompressed and reconverted into the audio you hear over the phone. This is all done by a VoIP service provider.

Hosted VoIP Vs. On-Premise VoIP

Whether you have a business that serves international clientele or operates only in the UK, it’s crucial to have a VoIP service that works for you. Under most circumstances, there are two options: having an on-premise VoIP solution or using a hosted VoIP service.

In the following sections, we’ll look at these two VoIP options including their respective pros and cons. We hope this makes it easier for you to figure out what option best suits your business.

On-Premise VoIP

Having an on-premise VoIP system means assembling all the necessary hardware to run the system located in your physical office. This differs from hosted VoIP, which uses a cloud-based network.

On-premise VoIP is a little traditional and is reminiscent of days when businesses had a physical room. Even though on-premise solutions are becoming less common today, they continue to serve thousands of businesses in the UK.

Should you introduce this solution to your business? Let’s look at some of the pros and cons of on-premise VoIP.

What Are the Advantages of On-Premise VoIP?

Whether you choose to go for a hosted VoIP or a physical VoIP will depend mainly on your needs and the size and scope of your business. Here are a few pros to having your VoIP system.

Suitable For Businesses with Hefty Communication Needs

One of the key reasons for implementing VoIP is to ensure that your business communication needs are met. These will depend on the size of your business and the scale of its operations.

For example, your staff will need to communicate with each other, as will different departments, especially when collaborating on tasks. Most importantly, you must make it easy for your customers and clients to contact the business when they need customer support.

Having an on-premise VoIP system will help accomplish this easily. It would especially be best suited for you if you’re running a large business and have hefty communication needs.

Get More Control Over Your Communication Costs

Many business owners who opt for on-premise telephony solutions do so because it gives them greater control over their business’s communication costs. When you own your VoIP system, you’re not liable to the price hikes that may come with using a host. This makes it easier for you to budget for your business operations since you can be sure exactly how much to spend on your communication needs.

Enjoy Better Security

One of the most crucial needs of any business is to have a secure communication system. Your employees will all communicate using your VoIP system. Your customers will also use this system to reach out to your company whenever they need to make orders, book appointments, or ask for customer support.

Often, these calls are recorded and the VoIP system logs call history. This is very sensitive information that shouldn’t get into the wrong hands.

Having an on-premise VoIP solution makes it easy to control the security around this data, which is in your best interests.

What Are the Disadvantages of On-Premise VoIP?

Having VoIP in your business location has some pros, but there are numerous disadvantages to it as well. As we’ve mentioned, this technology is relatively old and while it isn’t outdated, businesses that rely on more modern solutions might have a competitive edge over you.

Let’s take a look at some of the cons of using on-premise VoIP.

Costly to Set Up

An on-premise VoIP service is expensive due to all the equipment you’ll need to buy. This will translate to high initial costs while starting your business.

Remember that you will also incur maintenance costs and might need to have staff members solely dedicated to running it. This implies that the costs of owning such a system oftentimes exceeds that of a hosted service.

Not Easily Scalable

As your business continues to grow bigger, so do your communication needs. In the case of on-premise VoIP, upgrading the various systems involved can be such a costly affair.

Hosted VoIP

Hosted VoIP is a cloud-based broadband service that a service provider delivers to your business exclusively via the internet. When calls are made to your business, they are routed to you through your host’s server, which means you don’t have to have a dedicated call center.

What Are the Pros of Using Hosted VoIP?

The majority of new, small and mid-sized businesses choose hosted VoIP over its on-premise counterpart to manage their communication needs, and we’ll show you why in a moment.

Hosted VoIP Is Scalable

All you need is to contact your VoIP service provider asking them to scale up or down your bandwidth to match your needs as you grow. When you delegate this aspect of your business to a third party, you can focus solely on doing what truly matters – managing and optimising your company.

You Get Technical Support From Your Host

When you have a VoIP system on premise, you’re responsible for everything involved in running it, including fixing technical issues and hiring experts to make any changes. On the other hand, your service provider is responsible for all this if you decide to go the hosted VoIP route.

They will provide technical support – often around-the-clock, to take the weight off your shoulder.


Depending on the service provider, you can go for a monthly or yearly subscription. When you consider all factors involved, the cost of hosted VoIP is generally lower than what it takes to run your VoIP network.

What Are the Disadvantages of Using Hosted VoIP?

Prone to Interferences

A hosted VoIP system needs a reliable internet connection to work effectively. In case of any internet outages, your service may be disrupted in ways that are beyond your provider’s control. This is something you should have in mind when you’re using a hosted VoIP service.

Can be Expensive in the Long Term

Using a hosted VoIP service requires you to pay monthly charges or a fixed one-time price that covers a specific period. A lot of providers offer to lock you in for long-term contracts to access services at discounted rates. In the long term though, the amount you spend on hosted VoIP services could be enough to set up your network.

VoIP VS. Hosted VoIP: Which Way?

Whether you choose to use a hosted VoIP service or set up your network will depend on the type of business you run. No two businesses have the exact same needs, and no one knows what those needs are better than you do.

Before making a choice, consider the size of your business, the scale of your operations, and the kind of calls you get. That said, if you’re looking to delegate so you can focus on other managerial tasks, a hosted VoIP would be perfect for you.Are you searching for a reliable provider to set up a VoIP service for your business or company? Metrotech can help. Get in touch with us now for free consultation to determine the most suitable package to streamline communication in your business.