By admin Published on: May 4, 2022 Updated on: IP PBX
A buyer’s guide_ Difference between Hosted PBX and SIP Trunking

Difference Between Hosted PBX and SIP Trunking – A Buyers Guide

Business communication has evolved rapidly to meet the requirements of ever-changing enterprise needs to facilitate seamless communication and collaboration. When choosing the right business communication tools, people without technical backgrounds may think terms like Hosted PBX Software and SIP trunking are interchangeable. However, both options have distinguished features along with specific pros and cons.

Hosted Private Branch Exchange (PBX) and Session Initiation Protocol (SIP) trucking are two prominent players in the world of virtual enterprise communication. Both business telecommunication systems bring unique features with different approaches to achieve the goal of providing seamless VoIP systems for the business. If you have been in the dilemma of choosing between these two as the best fit for your business requirement, here are a few pointers exploring various aspects of Hosted PBX System and SIP trunking to help you understand the fundamentals of both and make an informed decision.

Hosted PBX

Hosted PBX refers to the PBX telephone system that uses one network to facilitate multiple telephone lines and the services are hosted in the cloud. For phone system PBX, the service provider offers their branch exchange network, technical infrastructure, and maintenance services of the system to provide professional customer service for enterprises.

A hosted PBX, also known as cloud PBX, enables businesses to enjoy seamless VoIP without any on-premise business phone system equipment and management. The service providers lend the equipment and software so that the enterprise can enjoy access to the office network from multiple compatible devices. Also, supporting seamless business communication for remote or hybrid work models.


Hosted PBX software eliminates the use of clumsy PX equipment used in the traditional phone system and comes with a unique set of features to meet your modern VoIP needs. Every service provider has a different set of feature offerings when it comes to choosing hosted IP PBX software. Here are a few features of hosted PBX software while choosing the best PBX phone system for your business.

  • Auto-attendant
  • Interactive Voice Response (IVR)
  • Call reporting and analytics
  • Audio and video conferencing
  • Call encryption
  • Voicemail to email
  • Mobile app
  • Advanced call routing
  • Call recording and forwarding
  • Click to call


  • Minimal setup cost: The initial installment and setup cost of a Business phone System is lower than that of traditional on-site PBX setup and SIP trunking setup even if the company does not have any existing equipment.
  • Less on-site hardware equipment: Most service providers provide their hardware for the clients. It also eliminates the use of clumsy hardware and the number of hardware requirements is minimal thereby saving space and cost on on-site hardware.
  • Scalability: Most hosted PBX software service providers offer you the advantage of scaling up and scaling down as per your business needs. You may get the advantage of the ‘pay as you go model.
  • The flexibility of feature enhancement: Every service provider offers a bundle of features. While some are included in your package, you can further select add-on features to enhance the service.
  • Convenience: A company does not need to set up an individual infrastructure and in-house team when availing hosted PBX software services from a third party thereby contributing to the convenience of high-quality service without intervention.


  • Risk of low quality: The quality of customer service solely depends on the service provider. If you choose a vendor without prior research, there is a high risk of poor quality call service.
  • Limited choice of features: Add-on features can be added at a cost. Yet, the service provider provides limited choice depending on their capabilities. Therefore, you may not get the choice of choosing all the features that you may want or need.
  • Control domination of service provider: When adapting hosted PBX software, the service provider takes care of all the technical and communication aspects thereby you lose control over the quality of service (QoS).

SIP Trunking

SIP trunking is using your existing telephony setup and connecting your PBX services to the internet. It is the virtual connection that allows all the customers through the internet to use an IP network. In simple terms, SIP trunking elevates your traditional phone system PBX over the internet.

Also Read: Best PBX Phone System For Small Business – A Complete Guide

SIP trunking is a great choice when it comes to modifying the on-premises PBX for meeting the VoIP needs of the business. It uses all the call terminals of these physical phone systems PBX for inbound and outbound calls to establish a reliable communication system utilizing the PublicSwitched Telephone Network (PSTN). SIP Trunking is a better option than hosted PBX software when the business already has an on-site PBX setup and an in-house VoIP management team.


SIP trunking is a smart way to boost the flexibility and efficiency of your existing PBX phone system. It not only elevates the quality of calls but also comes with multiple features that enhance the customer service experience. Here are some of the common features of SIP trunking.

  • Quality codecs support
  • Automatic fail-over routing
  • Call load balancing
  • Call details records
  • Location Tracking
  • International phone numbers
  • Voice mail


  • Scalability: SIP trunking provides you the option of scaling the service as per your business needs.
  • Enhanced ROI: Once the SIP trunking setup is complete, you can fetch better ROI than the traditional phone system PBX due to consistency in quality.
  • Unification of communication channels: Businesses use multiple channels of communication and SIP trunking brings all the channels together facilitating communication through unified phone, written messages, and fax.
  • Cost-saving: The hardware required for SIP trunking is lower than the traditional PBX system thereby saving cost for your business.
  • Mobility: The agents can get access to the dashboard through any device as SIP trunking offers compatibility for phones, PCs, laptops, and other mobile devices.


  • Risk of interface congestion: Due to lack of bandwidth or monitoring, there is a high chance of interface congestion leading to a higher number of dropped calls.
  • Greater information security risk: The business data has a greater risk of a breach if the security measures are not tight or clearly defined. Therefore, it is essential to look closely into the security aspect while choosing a reliable phone system.
  • Higher investment cost: SIP trunking requires a hefty installation investment if the business does not have an existing business PBX system or uses old and obsolete hardware.
  • Sole dependency on your internet connection: The solid lines of the on-site PBX are the main players when it comes to determining the quality of service as the quality and connectivity of your internet connection determine the call service.

Final Thoughts

Business communication is a significant aspect of business growth. Therefore, choosing the right VoIP option is essential to ensure a high-quality customer service experience. Hosted PBX software and SIP trunking have their own set of pros and cons. Understand your business needs to choose which of these two would satisfy your telecommunication needs.

Hosted IP PBX software is an enterprise solution that requires less investment and no infrastructure. Your business does not need to take any headaches from VoIP management if you have chosen the best PBX phone system. If your business already has an on-premise PBX setup and team, SIP trunking serves as a better option. It also ensures greater control compared to PBX software. However, when customer information is of utter importance, hosted PBX software offers better security than SIP trunking.

Make careful considerations about your business communication needs in the current landscape as well as for the future. Reliable communication is essential for the growth and expansion of your business. Hope this blog provides you with a clear picture of both SIP trunking and hosted PBX phone system to help you make an informed decision.

Scroll to Top
🧩 Designing Competitive Customer Experience in Insurance | 27 June
This is default text for notification bar

    Schedule a meeting