Hosted PBX or On-site PBX: Which One Should You Go For?

PBX, or Private Branch Exchange, is a type of phone network used commonly by businesses to take care of all their communications needs. Most of the time, businesses are torn between choosing a hosted (remote) PBX solution, or an on-site system. In this post we’ll explore the pros and cons you need to take into consideration when making your decision.

Hosted PBX ShoreTel

According to, hosted PBX is a “service where the call platform and PBX features are hosted at the service provider location.” This is in contrast to an on-site PBX, which is installed and managed in the company premises. But, what are the advantages of each system? And how can businesses choose the PBX system that best fits their needs?

On-site PBX

An on-site PBX is likely to be based on a PSTN (public switched telephone network) and requires a –usually expensive– unit for managing calls and making connections. Historically, on-site PBX solutions have been used by mid-to-large scale corporations because of their prohibitive initial setup costs. However, despite their high price tag, on-site PBX systems have often proven to be highly reliable.

Hosted PBX

For a Hosted PBX solution, we have a much simpler and less costly solution that has proved to be especially popular with small and medium-sized businesses (SMBs). In this case, VoIP technology is used to provide a link between regular business phone systems at the client’s office and the actual PBX call management platform remotely located at the service provider’s facilities.

With a hosted PBX solution, businesses only need to acquire inexpensive VoIP phone systems (desktop phones) and use a broadband Internet connection, while the service provider handles the actual PBX platform and its management, setup and maintenance.

That being said, let’s analyze the pros and cons of several factors like: cost, scalability, availability, and technology.


  • Pro: Hosted PBX systems are more affordable and cost-efficient.
  • Con: On-site PBX systems have higher initial setup costs.


  • Pro: Hosted PBX is based on VoIP and is inherently more scalable.
  • Con: On-site PBX systems are based on analog technology which limits potential applications.


  • Con: Since internet connections vary, Hosted PBX are perhaps less dependable than regular phone networks.
  • Pro: On-site PBX systems are more reliable because of the relative lack of downtime of telephone services.


  • Pro: VoIP-based hosted PBX solutions are more likely to evolve with changing telecommunications technology.
  • Con: Most on-site PBX solutions are analog-based, and as far as technology goes, there may be limited potential for growth and development in this area.

So there you have it! After looking at the basics of hosted PBX and on-site PBX systems, we would like to hear your thoughts on the matter. Please leave your comments below and join the conversation!

3 thoughts on “Hosted PBX or On-site PBX: Which One Should You Go For?

  1. One of the biggest things for my business, being located in an area with many tropical storms is the fail over lines and ability for off site maintenance. We could never go back to a traditional PBX.

  2. I’m really impressed with your writing skills and also with the layout on your blog.
    Is this a paid theme or did you modify it yourself? Anyway keep
    up the excellent quality writing, it’s rare to see a nice blog like this one today.

Leave a Reply