Hosted PBX vs SIP Trunking: Which is Right for Your Business?

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In today’s fast-paced business world, companies need efficient and reliable communication systems to stay ahead of the competition. When searching online for a VoIP solution you have likely come across these terms: Hosted PBX and SIP Trunking.

Both are methods of providing your business with VoIP capabilities and access to all the advanced VoIP features. However, there are a few key differences and they both come with a set of pros and cons to consider.

Understanding how those 2 differ will help you make a more informed decision when choosing a VoIP provider. In this article, we’ll explain what Hosted PBX and SIP Trunking is and how they compare to each other.

What is Hosted PBX?

Hosted PBX, also known as Virtual or Cloud PBX, is a cloud-based phone system that allows businesses to manage their telecommunications through a third-party provider. The provider provides and manages the PBX hardware and software, allowing the company to enjoy the benefits of a PBX system without any major upfront investment or maintenance costs.

This means your VoIP provider will monitor and maintain your cloud-based PBX system. It’s very similar to website hosting. In order to host a website personally you would have to invest in the hardware required to set up a physical server and hire an IT team to maintain, update and fix issues regularly. Therefore, most companies not big enough to justify such an investment opt for a third-party provider to host it for them.

What is SIP Trunking?

SIP Trunking stands for Session Initiation Protocol Trunking. Just like Hosted PBX it is a method of providing businesses with modern communication solutions. It allows businesses to make and receive phone calls over the internet, thus enabling the use of VoIP.

Unlike Hosted PBX, SIP Trunking requires you to buy and setup your own on-site PBX. This means buying all the relevant hardware if you currently do not own any. With this method, you are also responsible for maintaining and managing the system yourself. This makes hiring an in-house IT department a necessity in most cases.

Hosted PBX vs SIP Trunking: Key Differences


One of the most prominent differences between the 2 is the cost. Hosted PBX requires very little to no initial investment as no hardware is required (Unless you require physical desk phones). On top of that your provider will be responsible for maintaining the system which eliminates the need for an in-house IT specialist. For this reason, however, Hosted PBX does carry a slightly higher monthly cost.

On the other hand, SIP Trunking requires a big initial investment. This is because you need to buy your own hardware, set up the PBX system and actively maintain it. Though this means your monthly VoIP costs after initial setup will be lower.


The 2 also differ significantly when it comes to scalability. Hosted PBX accommodates upscaling and downscaling more easily. In most cases it is just a matter of contacting your provider and adding or removing licences as needed.

SIP Trunking will usually require you to purchase more hardware as your business grows, with the biggest downside being that if you need to downscale you might be left with extra hardware and associated costs without any use for it.


It should be no surprise that SIP Trunking will offer the most flexibility. As you own all the hardware and maintain it yourself, you can customise the system as much as you want.

Hosted PBX may have greater limitations when it comes to customisation. It will entirely depend on your VoIP provider. However, in most cases your VoIP provider will offer you some level of customisation to ensure the system fits your specific business needs.


Both Hosted PBX and SIP Trunking are reliable options for business communications. However, with Hosted PBX you are relying on a third-party provider. If your provider encounters technical difficulties you will be subject to downtimes that are almost entirely out of your control.

While SIP Trunking relies mostly on how well your own on-site hardware is maintained and the stability of your business’s internet connection.


The choice between Hosted PBX and SIP Trunking will ultimately come down to your budget and unique business needs.

If you are an SME that needs a robust but simple to use solution and values scalability then VoIP providers that offer Hosted PBX will be the best choice for you. Alternatively, if your business has the budget and requires maximum control over your communication systems then you might be better off opting for SIP Trunking and setting up your own PBX System.

Whatever your needs may be, it is important you work closely with your VoIP provider and discuss all your business needs in full before making any commitments.

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