Hosted Phone Systems Explained: Pros, Cons, and Essential Features

According to Global Market Insights, the hosted IP PBX segment is expected to become the fastest-growing area of the VoIP market. It is predicted to grow by 15% from 2019 to 2025.

But what’s driving this surge in demand? 

In this article, we’ll explore the key benefits, features, potential drawbacks, and why so many businesses are making the switch. 

If you’re considering a modern solution for your business communication needs, this article will give you the insights you need to make an informed decision.

Key takeaways:

• A hosted phone system lets you make and receive calls over the internet using VoIP, removing the need for physical hardware and providing flexibility while saving costs.
• Hosted phone systems improve remote work flexibility, centralize data, and offer easy scalability as your business grows. However, they depend heavily on a stable internet connection and reduce user control since the provider manages the system.
• Hosted phone systems include features such as virtual voicemail, which transcribes messages to save time. They also include call recording for training and mobile apps to manage calls from anywhere, making work more flexible and efficient.

What is a Hosted Phone System?

A hosted phone system is a solution that lets you make and receive calls over the internet rather than traditional phone lines.here’s no need for all the physical equipment (cables, servers, etc.) in your office, as everything is hosted in the cloud.

This phone system can be beneficial for your business if you’re looking to reduce infrastructure and maintenance costs since you don’t need to install or manage physical equipment.

it could be an interesting option for you if you work with a remote team, as it allows you to make and receive calls from anywhere with internet access.

How Does a Hosted Phone System Work?

A hosted phone system uses Voice over Internet Protocol (VoIP) to make and receive calls over the Internet instead of using physical cables. 

In summary, when you speak, your voice is converted into data that travels through the network. Then, that data reaches the other end, where it is converted back into sound, and the other person hears you.

Here are the steps a hosted phone system follows to make and send a call:

1. When you place a call, your voice is converted into small packets of digital data.
2. These data packets are sent through the internet connection to the providers’ servers. 
3. The provider’s system organizes the data and sends it to its destination, which can be another extension (within the same company) or an external number.
4. Once the data reaches the receiver, the packets are reassembled into sound, allowing the other person to hear your voice.

These elements are essential for the system to work properly:

• A stable internet connection: This is the channel through which the calls will be transmitted.
• Devices with a speaker and microphone: These can be phones, computers, or even your mobile device.
• A VoIP (Voice over Internet Protocol) provider: They are responsible for managing the entire cloud system.

5 Key Benefits of Hosted Phone Systems

A hosted telephone system is like working with Watson if you are Sherlock Holmes: it always has your back, takes calls, and ensures you don’t miss any important details. 

Meanwhile, you and your agents can focus on solving the most important cases while everything is under control.

Let’s take a closer look at each of its benefits:

#1 Reduce Costs

Hosted phone systems can cut monthly phone expenses by up to 70%.

One of the main reasons is saving on hardware and installation costs. You can set up the system on your existing devices, such as computers, mobile phones, or tablets. 

All you need is an internet connection and the necessary app. This eliminates the need for investing in new hardware and complex installation processes, allowing you to save money and simplify the setup.

You only pay for what you need. The service is typically charged based on the number of users, and many providers offer the flexibility to add or reduce seats as needed. This ensures that you are only paying for the resources you use, helping you to manage costs more efficiently.

#2 Gain Flexibility and Mobility

If you have a remote or hybrid team, or are planning the transition, a hosted phone system is ideal. Since all you need is an internet connection, you and your team are not limited to working from the office. 

In fact, you can work from anywhere: your home, a café, or even another country. It doesn’t matter if you work for an American company and are visiting Italy: your clients will see an American number on the screen.

#3 Scale Easily

As mentioned earlier, you can add or remove seats without hassle, adapting to your business needs. With just a few clicks, you can add or delete a seat. 

Moreover, as you grow, you can upgrade to a more advanced plan that offers sophisticated features. For example, the Smart Dialer allows you to automatically import numbers from any website, CRM, or HelpDesk tool.

#4 Keep All Your Data Together

With a hosted phone system, you can connect your favorite tools and CRMs (such as Salesforce or HubSpot) to the system and have all your data in one place. 

Therefore, there’s no need to jump from one app to another. Imagine how much time and energy you can save. Additionally, it offers other features such as SMS, allowing you to send text messages and even automate them directly from the platform.

#5 Ensure Security and Reliability

Hosted systems typically include robust security measures. For example, CloudTalk uses end-to-end encryption, ensuring that only the sender and receiver can access the content of calls and messages. Moreover, our security team monitors the platform 24/7 to detect and prevent any potential threats or breaches.

Potential Downsides of Using a Hosted Phone System

Despite the attractive advantages, hosted phone systems come with some drawbacks:

#1 Depend on a Stable Internet Connection

No internet means no business. You need a stable internet connection for the system to work well. Without it, you might face issues like dropped calls, echoes, or delays.

To avoid these issues, choose a high-quality internet provider and set up Quality of Service (QoS) on your router to give calls priority over other data. This will improve call quality.

#2 You May Experience Interruptions

Since hosted systems rely on the company’s internal network and the provider’s infrastructure, any outage or maintenance can lead to service disruptions.

However, trusted providers take measures to prevent interruptions and service outages. At CloudTalk, we use multiple data centers and backup network routes to keep our service running smoothly.

#3 Reduce Control Over the System

The service provider manages hosted phone systems remotely, which can be an issue if you want more direct control over your communications.

However, reliable providers offer accessible management tools, such as control panels where you can perform key tasks. For instance, at CloudTalk, administrators can add or remove users without the need for technical support.

Hosted Phone System vs. SIP Trunking

First, let’s take a brief look at the meanings of a hosted phone system and SIP trunking:

• Hosted Phone System (Hosted PBX): It works over the Internet without the need to install physical equipment in the office. The provider hosts the entire system on external servers, so calls are managed in the cloud. Therefore, you only need an internet connection to install the application on your devices. This system is ideal for businesses seeking flexibility and who don’t want to deal with technical management.

• SIP Trunking: This technology connects a local phone system (PBX) to the public telephone network via the Internet. Unlike traditional phone lines, SIP trunks transmit calls over the internet, allowing businesses to use their existing infrastructure (such as a PBX) while saving on physical line costs. It’s a solution for companies that already have an on-premise PBX and want to upgrade to IP technology without replacing it.

The table below highlights the key differences between hosted PBX and SIP trunking:

7 Key Hosted Phone System Features For Your Team 

Hosted phone systems come with many features, so it’s easy to get lost. However, there are 7 essential ones that you should know:

#1 Virtual Voicemail

Gone are the days of endless voicemail messages. With Virtual Voicemail, messages are automatically transcribed and even sent to your email inbox. Therefore, you won’t waste time listening to the entire message, and you can focus on the most important part.

For example, imagine that you receive a call during an important meeting but can’t answer it. Instead of listening to the full voicemail later, the Virtual Voicemail system automatically transcribes the message and sends it directly to your email inbox. 

This way, you can quickly read the message during a break and prioritize it if it’s urgent, without spending time listening to the entire voicemail.

#2 Integration with CRM and Other Tools

You get real-time information when you connect your phone system to a CRM or other tools. During calls, the system shows customer details instantly, helping agents personalize their service, resolve issues faster, and improve customer satisfaction.

Let’s say you work as a customer service agent at a tech company. While you’re on a call with a client, your phone system is connected to the company’s CRM. The customer’s interaction history and preferences instantly appear on your screen, allowing you to personalize the conversation. 

Thanks to this real-time information, you can resolve the client’s issue faster, improving both customer satisfaction and your work efficiency.

#3 Call Recording

Call Recording feature lets you monitor customer interactions for training and quality assurance.

For example, imagine that after reviewing several recorded calls, you identify that many agents take longer to resolve specific queries due to a lack of technical knowledge. Based on this information, you could organize training sessions for agents focused on those technical issues causing delays.

#4 Interactive Voice Response (IVR)

IVR is a useful tool when different groups of agents are handling specific issues or languages. Consequently, callers receive assistance without being transferred back and forth, improving first-call resolution rates.

For example, you could say something like “Press 1 for technical support, 2 for sales.” The client chooses the option they need, and the system connects them to the appropriate person or department without needing to speak to an operator first.

#5 Call Routing

Call Routing is one of the standout features, as it efficiently distributes calls, ensuring they reach the right agent or department. It improves productivity, reduces wait times, and enhances the customer experience by quickly connecting them with the most qualified person to handle their query.

For example, you could use call routing to direct numbers from Spanish-speaking countries to agents who speak the language. You could even route calls to specific agents who have previously spoken to the customer and are familiar with their situation.

#6 Call Transcriptions

Call Transcription feature lets you quickly review conversations without listening to recordings, saving time. It also helps analyze interactions to find ways to improve service or sales.

For example, imagine you work for a financial services company and you detect that several agents are not correctly mentioning important details about loan terms. 

Thanks to this tool, you can quickly correct the issue without having to listen to hours of recordings.

#7 Mobile and Desktop Apps

Mobile and desktop apps allow you and your team to manage calls from anywhere, using smartphones or laptops as if they were in the office.It ensures teams can work flexibly and stay connected even when they are away from the office.

For example, imagine you’re attending a conference in another city when a client calls your office line with an urgent issue. Using the mobile app on your smartphone, you can answer the call as if you were sitting at your desk. 

You can access all the same features, transfer the call to a colleague, or check the client’s information on the app, ensuring seamless communication and problem-solving even while you’re away from the office.

Switch to a Hosted Phone System Today

A hosted phone system is a great choice if you want more flexibility, cost savings, and better communication. With features like virtual voicemail, CRM integration, and mobile apps, it makes managing calls easier for both remote and office teams. It’s scalable, secure, and ensures smooth communication.

Looking for a top-quality hosted phone system? Try CloudTalk. It’s easy to use, scalable, and offers advanced features like AI tools and over 160 international numbers—all at an affordable price. Simplify your communication with CloudTalk today!

Sources

• 12 Most Important VoIP Statistics for 2024
• Six cost-reducing benefits of switching to a cloud phone system