On-premise phone system vs Hosted Phone system vs Microsoft Teams PSTN calling plan: Which one is best?

If you are looking for a business VoIP solution, you might be asking yourself this question: Should I pick on-premises, hosted phone systems, or Microsoft Teams PSTN?

Well, there are bundles of advantages and disadvantages of hosting your phone system in the cloud, running it on-premise, or going for Microsoft Teams calling Australia. Business owners often end up making a hasty decision. 

We will walk you through the pros and cons of each phone system to help you make an informed decision.

Let’s go for the On-premise phone system first.

1. On-premise phone system: 

It is a phone system physically installed in your office or building. You can either have the physical wires in your office connecting the data centre to desk phones of employees, or you can go for IP technology through an internet connection. Irrespective of your choice, the PBX system lies in your office.

Pros of an On-premise phone system:

• Works fine even with a poor internet connection: You can rely on this phone system even if there is poor internet connectivity.
  
• Better reliability: Ideal for businesses looking for robust and reliable service, as there is maximum uptime with an On-premise phone system.
  
• Full ownership: You have complete ownership, and you can maintain/manage the hardware on your own.
  
• Gives an option to switch providers: Unlike a hosted system, it is easier to switch providers through an on-premise system.
  
• No upgrades needed: Your business needs no upgrades to handsets if you choose an On-premise phone system.

Cons of an On-premise phone system:

• Incompatible for remote working: It offers zero flexibility as the employees need to be physically present at the office to pick up or make a call.
  
• Higher initial cost: It requires a provider to visit your office and physically install the equipment. Thus, the set-up cost is much higher than a hosted phone system.
  
• Extra responsibility for your IT team: If something goes wrong, your IT team needs to fix it. It demands a skilled and experienced IT team who are adept at addressing any technical issue.
  
• New employees need training: There isn’t much flexibility to train the new employees as the team grows gradually shortly.
• Limited features: Apart from basic functionality, there are not enough features available with this phone system.

2. Hosted phone system:  

A hosted phone system only needs an app/software to get started because the system can work through the internet. Calls can be made through a technology known as Voice over Internet Protocol, or VoIP, for this phone system. Your employees can either make or receive calls with any device with an internet connection, including laptops, tablets, or personal smartphones.
 

For example, 3CX allows business meetings to be conducted without the need for any app. Through 3CX, your employees can work more efficiently through voice apps on their phones. Whether you prefer to deploy an on-premise, private cloud account or choose 3CX to host your PBX for you, you can get it all done with little management.

Pros of Hosted phone system:

• Ideal for remote employees: It offers more flexibility to remote employees as they can still use business phone numbers through their mobile devices to make or receive calls. Moreover, customers/clients cannot figure out any difference.
  
• Lower set-up cost: Since it is virtual and calls can be made through VoIP, it needs less set-up or installation cost.
  
• Better customer support: If something gets messed up, it is the responsibility of experts at the phone company to fix it. Employees at your company need not worry about any glitches. Since customer support is built-in, this one is a blessing for small business owners.
  
• Easy onboarding of new employees: There is no need for additional equipment when adding new employees. You can just add the new employees to an online portal or account, and you are good to go.
  
• No problem with maintenance: It is managed and owned by the service provider, as it is hosted in the cloud.
  
• Smooth integration with CRM: Be it voicemail to email, mobile app for remote employees, call queue monitoring, or seamless integration with CRM platforms, hosted phone systems surely surpass the on-premise with several features.
  

Cons of Hosted phone system:

• Depends heavily on the Internet: In the case of internet disconnection, communication with customers can take a bad hit as the voice call or video conferencing stops.
• No ownership of the phone system: There is a lack of complete ownership as the phone system is owned by the service provider.
  
• Lesser uptime: It is not a good choice if you are looking for 100% uptime.
  If on-premise is your option, then iPECS business phone systems built on unified communication technology and made by Ericsson-LG are the ones you should be looking at. You can check this webpage for more details and explore systems made by Ericsson-LG, such as iPECS eMG100 and iPECS-UCP.

3. Microsoft Teams for calling 

Microsoft Teams surely earned a reputation for being the most preferred tool for online collaboration. Coupled with telephony abilities, Microsoft Teams is a worthy option for business owners to give a second thought.

Microsoft Teams is no longer limited to online meetings, as it even offers the ability to make calls. For instance, Telstra Calling for Office 365 gives a cloud-based voice calling service, but you need to have a Microsoft Office 365 license. Now your team can work more efficiently as they can make calls to mobiles or landlines through Microsoft Teams Phone System.

The TCO365 Calling Plan of Telstra allows end-users to attend and make voice calls and includes a PSTN Phone number.

Pros of Microsoft Teams:

• No need for hardware

Whether you are moving your office or changing the operating system, Teams work fine all the time. It requires no extra investment in PBX hardware.

• Reduces telephony costs

It is perfect for long-distance calls within the company, and thus, carrier charges get eliminated.

• PBX landscape updates

Being a leader in the communication service industry, Microsoft sends out regular updates for calling features. Thus, no need to worry about managing or checking on upgrades.

• One point of support

Unlike the traditional PBX system, where you need to depend on many vendors after hitting downtime, Microsoft Teams offers you a single point of support.

• Businesses can get new numbers.

Already, reputed businesses can migrate their current numbers to Microsoft Teams. Smaller or new businesses can get new phone numbers through Microsoft.

Although Teams seems a promising option, below are five reasons to make business owners think twice before choosing it as a replacement for other phone systems.

Cons of Microsoft Teams:

• Vendor lock-in

First-time users might be taking a risk as they end up keeping all their eggs in one basket. After a while, it becomes difficult to migrate from the Teams ecosystem, where a chunk of the software, hardware, and everything depends on its service.

• The cost plan is too complex.

Additional calling plans can be availed on a per-month basis. Depending on your region or location, you might be charged an extra amount for conferencing, too. It is wise to check the detailed plan before going for it.

• Only 300 seats can be added with Business Voice.

According to the Business Voice licensing of Teams, you can only assign phone numbers to 300 users. It may not work well for larger companies in need of massive numbers.

• Additional work for your IT team 

If you rely on a third party to set up/manage your phone system, then it is fine. It doesn’t make much difference. If your current system is managed by a separate phone department, then switching to Microsoft Teams might put an extra burden on your in-house IT team.

• Needs a good and stable internet connection

Irrespective of the employee’s location, home or office, you need high-speed internet for a clear voice call. If the connection breaks during the call, everything comes to a halt.

You cannot rule out Microsoft Teams since the availability of 300 numbers is a decent choice for small businesses with fewer requirements. Of course, Microsoft has yet to march a long distance to establish itself in the phone system industry.

Requirement for a user to avail the TCO365 Calling Plan of Microsoft Teams offered by Telstra: 

• Must have an Office 365 license for the user.
  
• The Office 365 tenancy needs to be located in Australia.
  
• Must accept Telstra as their Cloud Service Provider.
  
• Needs a geographical location such as Australia.

Which One Is the Best?

It is hard to tell as each one can serve your business needs in different ways.

• In case of complex integration, advanced unified communication features, or a robust data network, go for an on-premise system.
• If you have a company with remote workers or several locations, a hosted phone system will be an ideal choice for your business.

• Microsoft Teams sounds perfect if you have a low budget for phone bills and prefer to have a unified collaboration experience. 

We, at Telco, help you with the setup of Office 365 and also the migration of your existing email account.

What sets Telco ICT apart?

Our services are ideal for both small and medium-sized businesses as we offer 24×7 technical support.

• You can expect zero downtime and a safe migration of emails without losing any business data.
• You can get many domains in a single Office 365 account.
• You don’t need to dig into the technical stuff of each option to pick the right one for your organisation. 

Hope this blog helps you to see the bigger picture as we have compared each phone system at a granular level. It is up to you to decide which is the right fit for your business needs.

Already made the decision?

Then reach out to the experts at Telco to take further steps. We will help you get a reliable and robust phone system with the highest uptime.

Frequently Asked Questions

1. How do managed IT services differ from traditional “break-fix” support?

Traditional support is reactive; you pay when something breaks. Managed IT is proactive, using continuous monitoring to prevent issues before they cause downtime, ensuring your operations remain stable as you grow.

2. Can managed IT services scale back down if my business needs change?

Yes. A major benefit of managed services is flexibility. Most providers allow you to scale resources, such as cloud storage or user seats, up or down based on your current workforce or seasonal demands, ensuring you only pay for what you use.

3. How does outsourcing IT save my business money in the long run?

Outsourcing can reduce IT costs by 25-45%. It replaces high, unpredictable capital expenses (like buying servers) with a fixed, predictable monthly fee. It also eliminates the overhead of hiring, training, and retaining a full-time in-house team.

4. What happens if I already have an internal IT person or team?

Managed IT can work alongside your existing team through a model called Co-Managed IT. The provider handles routine maintenance and 24/7 monitoring, which frees your internal staff to focus on higher-level strategic projects that directly drive growth.

5. What is a Service Level Agreement (SLA), and why does it matter for growth?

An SLA is a contract that guarantees specific performance standards, such as response times and system uptime. For a scaling business, a strong SLA ensures that technology remains a reliable foundation rather than a bottleneck during critical expansion phases.