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What is VoIP and How Does it Work? – An Ultimate Guide to VoIP

an ultimate guide to voip

The world is undergoing a rapid digital transformation, thanks to the advancements in various technologies. The growth of the internet and its benefits to people is nothing short of a fairy tale today. It’s hard to imagine a day in our lives without the internet. India, in particular, is home to billions of people and millions of businesses with access to high-speed internet connections. This has created a great opportunity for businesses to use VoIP as a cost-effective alternative to traditional communication systems. But what is VoIP technology, what does VoIP stand for, and why is it so popular today – Let’s find out answers to all such questions in this post. 

What is Voice over Internet Protocol (VoIP)?

VoIP is a next-gen technology that converts voice signals into digital signals. It enables you to make calls directly from a computer, VoIP phone, or any other data-driven device. 

Apart from facilitating seamless communication, VoIP gives you access to a host of advanced features that can help improve the productivity of your organization. Popular features include conditional call routing, auto dialer, call forwarding, call scheduling, and plug-n-play integration with other workflow tools.

Types of VoIP

There are two main types of VoIP technology –


In this type of VoIP, organizations have to purchase all the necessary equipment to set up the VoIP service. More importantly, they need to host the equipment in the office premises. As a result, you will end up incurring huge capital costs. You also have to pay a monthly fee for SIP trunking and salaries to personnel who will maintain and repair the VoIP system regularly.


In this type, organizations need not purchase expensive hardware to set up the VoIP system. The service provider will take care of hosting and maintaining the software for a fixed monthly fee. This is also completely scalable as you do not have to worry about purchasing more and more equipment pieces as the number of users increases over a period of time

Major Differences between VoIP and landlines

Here are some key differences between a VoIP system and the traditional landline system – 

ParameterVoIPLandline Phones
Communication mediumCommunication happens via the internet.Communication happens via copper and optic fibers of PSTN
Setting upIt hardly takes any time.It takes a lot of time to install multiple landline phones and set up connections.
ManagementIt’s extremely easy to manage. You do not need any dedicated employees to manage VoIP systems. You need a dedicated team to manage during outages or while you encounter any other issues in the phone system.
Remote-readinessSince it is device-agnostic, users can make VoIP calls from any place with an active internet connection.Users have to be present at the office where the phone systems have been installed to make or receive calls.
ScalableEasily scalable as all that you need is an internet connection that can be shared among many users.Difficult to scale as you need to purchase more phones to cater to more users. 
IntegrationYou can integrate your VoIP phone system with most of the popular tools like CRM and ATSThe landline phones can be integrated with very limited tools.

How does VoIP work?

VoIP telephony work by converting analog voice calls into packets of data. Like any other data (say email or files), these data packets get transferred over the public internet or any private network. Here are the different steps involved in the working of a VoIP telephony system – 

  1. A VoIP phone first splits the voice data into information packets.
  2. It adds a destination address to each data packet.
  3. These packets are sent over your broadband line to the router.
  4. The router then searches for the shortest path to the destination and starts transmitting the data to that location.
  5. The packets, one by one, are received at the destination.
  6. The VoIP system at the destination puts the data packets in the correct order.
  7. The end user receives the data as a recognizable speech.

Top 5 Benefits of VoIP

Here are some of the benefits one can enjoy by adopting VoIP –

#1 Cost-effective

This is a given. Since VoIP uses your existing internet connection, there is hardly any additional cost involved in making or receiving phone calls. You just need to pay for your internet connection and handle the licensing fees of your VoIP service provider. The best part is that your service provider maintains all the software and hardware upgrades. You do not have to hire any person or pay additional costs to the service provider to maintain the system. 

#2 Device-agnostic

Ever since the pandemic struck, most of us have been working from our homes. This means business phones at most organizations are sitting idle. Many smart businesses have switched to VoIP phones because it is device-independent. Your employees can even use their own personal mobile phones, tablet, or laptop to make or receive calls. In other words, your teams can operate at full capacity despite not being physically present at the office. No call will be ever missed, and you can guarantee a great customer experience.

#3 Improved security

This might come as a surprise to you because not many people associate phones and security together. After all, how can someone hack into your phone calls and eavesdrop on a conversation? Unfortunately, this is very much possible and also happening quite prevalently. This is mainly because your landline phones cannot be encrypted or connected through a VPN. In other words, it’s impossible to prevent unauthorized access to such systems. On the other hand, VoIP calls can be encrypted, making them much harder to hack into.

#4 Better call quality

There is a popular misconception that the calls made from VoIP phones are not as clear as the ones made from landline phones. This is far from the truth. VoIP calls these days offer a much better call quality, more than even landline phones. This is because many VoIP providers offer HD voice and HD video call feature that transforms your whole calling experience. Many users have said that it sounds as if they’re talking to someone in the same room.

Pro Tip: Though VoIP phones support excellent call quality, the final output is determined by various external factors such as your internet connection and your headphones. So always invest in a high-speed broadband connection and a good-quality headphone if you want a great calling experience. 

#5 Improved decision-making

Many VoIP phone systems also come with an inbuilt analytics engine that tracks key metrics related to your calls. This data is extremely important because it lets you get a more accurate view of how your business is operating on a daily basis. Apart from this, you can also use the information to train your employees or course correct in case there is any issue. On the whole, you start making much better decisions that are backed by real-time data.

Important Features to Check in a VoIP 

Here are some of the key features to look for while selecting a VoIP telephony system – 

#1 Autodialer

This is a must-have feature if you make a lot of outbounds calls or cold calls in a day. As the name suggests, an autodialer automatically dials numbers from a list and connects an employee only if one of the receivers picks the call. This saves a lot of time for your employees as they no longer have to dial numbers manually one after the other. 

#2 Integrations

Most businesses, big or small, use a variety of tools on a daily basis. It could be CRMs, ATSs, or any other workflow tools. Now, when you operate your VoIP system and these tools in silo, redundancies and manual errors can creep up. However, when you integrate them together, you will have a single source of truth for all your information related to calls. For example, when you integrate a CRM with a VoIP system, you can directly call someone from the CRM via the VoIP system.

#3 Call recording

Many VoIP phone systems have an in-built call recording feature. Call recordings are particularly useful if your employees engage in a lot of sales calls with customers. For instance, they ensure that key points of the conversation do not fall through the cracks and disappear. Agents or employees can return to the call recording any number of times and capture notes from them. By recording every call of the agents, managers can evaluate the performance of the agents and offer help to those who need it. Call recordings also help in dispute management.

#4 Analytics

Thanks to the analytics dashboard present in the VoIP systems, businesses can not only monitor calls but also act based on insights. For instance, you can use the data to understand your customer’s calling patterns and use it reduce their wait periods. Similarly, you can also use this information to identify high performers and poor performers in your workforce. 

#5 Call scheduling

Another feature you must look for is call scheduling. This is particularly useful if you are in the hiring industry or department. For instance, you can schedule a call by selecting the date and time of the call. The system then connects you with that person on the set date and time by automatically calling them.

How to choose the Best VoIP for your business?

Now that you know everything about VoIP systems, the next logical step is to choose a VoIP provider for your business. There are multiple factors that come into play in this exercise. Here are some of the most important ones:

Ensure that:

  • The VoIP system supports all the features highlighted in this previous section. This is the bare minimum you need to take care of.
  • It is tailored for your industry and use cases. This is important because it becomes a daunting task to modify the platform according to your exact needs later on.
  • It comes with a free trial so that it gives you the chance to test all its features without committing or paying for it. 
  • It fits your budget. Never spend more than what you can because the last thing you want to be negatively impacted is your ROI.
  • It is beginner friendly. It can eliminate the need for any major training for your employees. It will also ensure that the tool can be used instantly. 
  • It offers regular upgrades to the software so that all the features work impeccably on all the platforms.

Top VoIP providers in 2022 (VoIP Examples)

Here are the top 5 VoIP providers that you can try in your organization – 

#1 FreJun

FreJun is the leading VoIP provider in India that comes with a variety of features such as call scheduling, call recording, autodialer, click-to-call, etc. It can also be integrated with top tools like HubSpot, PipeDrive, CEIPAL, X0PA, Google Calendar, and Outlook Calendar. FreJun is also a great tool if you want to improve call pickup rates and enhance employee productivity. 

#2 Polycom

Polycom is a global leader in business phone systems and offers some of the best features in the market. Some of the noteworthy features include presence detection, archiving, collaboration, remote access capabilities (via VPN), and unified communications gateways. The tool has an intuitive admin panel which makes it easy for you to manage your calls from any device or location. You can also create custom greetings for your customers using Polycom’s AI-powered voice recognition technology.

#3 Microsoft Lync

Microsoft Lync is an enterprise VoIP solution that lets you make calls, attend meetings, and share documents online. The tool has a very user-friendly interface which makes it easy to manage your calls from any device or location. You can also integrate the system with other applications like SharePoint and Skype for Business to create a powerful communications platform.

#4 Nextiva

Nextiva is a feature-rich VoIP platform that lets you make calls from any mobile device. You can use the tool to make or receive calls, send and receive messages, access your voicemail, create custom greetings, and more. Apart from this, Nextiva comes with some other premium features such as call forwarding, call routing capabilities, 24×7 support, etc.

#5 Vonage

Vonage is a VoIP provider that offers its services to individuals and organizations. The main feature of this tool is its scalability which means that it can be adapted to meet the needs of any business or organization. Vonage also has a number of tools available such as call routing capabilities and multi-language support. It also comes with some nifty features like voice activation, caller ID, etc.

How much does VoIP cost in 2022?

On average, you can expect to pay anywhere between $20 to $40 per user per month. As we pointed out earlier, a VoIP system is not at all costly to set up or manage. But the VoIP ecosystem is filled with some providers who charge extremely high without offering a lot of value and some who offer great value at a fraction of the price. Try to find the providers in the second bucket. Similarly, some providers charge based on the number of users who will be using the system, while the rest charge based on the number of calls. Again, pick someone who offers unlimited calling. 

Best Practices in VoIP

Here are some handy tips or best practices you can follow after adopting VoIP in your business –

  1. Choose good network hardware: Choose devices like routers or firewalls from known vendors. It is important to make sure that the products or applications have good reviews across various forums. This way, you can avoid any reliability issues later on.
  2. Avoid using multiple VoIP providers: This may seem to be a great idea, especially considering the fact that you will have a backup during a rainy day. But, having multiple providers will lead to unwanted finger-pointing when some issue arises. It also becomes a challenge to integrate your existing tools with multiple VoIP.
  3. Continuously monitor your VoIP system: It is important to keep testing your VoIP system to ensure that you stay ahead of possible security breaches. This way, you can always protect your data from malicious hackers.
  4. Pick equipment pieces that are interoperable: This way, you can support an open architecture ecosystem. But make sure that the devices are actually interoperable, as many vendors claim the same, but they’re not.
  5. Invest in network management: By doing this, you can not only track various QoS metrics but also ensure that value hovers around the range they are supposed to be.

Frequently Asked Questions

  1. While using VoIP, can I call any phone number or just another VoIP phone number?

Most VoIP providers let you call any phone number today. It can be a local number, landline number, mobile number, or even an international number. The cost of the call will also be the same – Free!

  1. Is there any negatives to using VoIP?

The only known negative of VoIP is that you always need an active(and strong) internet connection. If there is an internet outage, you cannot make or receive calls. But with the advancements in modern-day internet, this is no longer a major problem.

  1. Is there a difference between VoIP telephony and cloud telephony?

Though they may seem similar, there are certain differences between the two. VoIP is a calling system that relies on the internet. On the other hand, cloud telephony offers a bouquet of several other features and services to businesses to make their communication system seamless.

  1. Is there any difference between VoIP telephony and IP telephony?

There are minor differences between the two. IP telephony is nothing but an array of technologies that enable voice calls, voicemails, video calls, fax, and messaging via IP’s packed-switch connections. While VoIP telephony is a communication system that allows you to make voice and video calls over the internet.

  1. What is a VoIP caller?

A VoIP caller is someone who calls from a VoIP phone system rather than traditional landline or business phone. 

  1. What is VoIP used for?

VoIP technology is predominantly used by businesses to communicate with their customers, clients, and employees. It’s the best way to save money on call bills and improve the way your employees communicate.

  1. What is a VoIP number used for?

A VoIP number is the phone number assigned to a user while you subscribe to a VoIP system. It is the number the other party enters on their phone to reach you in the VoIP system.

Further Reading: 10 Frequently Asked Questions About How To Make Calls From India To The USA


And that’s everything you need to know about VoIP for now. The next logical step is to select a VoIP provider for your organization. This is where FreJun steps in. It is the #1 VoIP and cloud telephony provider in India, with clients like UpGrad, Antal, and Olx People, to name a few. 

Ready to experience the powerful benefits of VoIP through FreJun? Sign up for a free trial now. 

A writer/business analyst, who enjoys expressing creativity through painting during leisure hours. Embracing the 'Workcation' philosophy, he seamlessly blends the craft of writing with the allure of exploring new destinations.

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