In today’s fast-paced technological world, communication drives the connection between businesses and their customers. Cloud telephony, also known as hosted telephony or cloud calling, is rapidly transforming into the foundation of modern business communication. This beginner’s guide explores everything you need to know about cloud telephony in 2025.
If you want to set up a new phone system or upgrade your existing one, cloud telephony is an excellent choice. It outperforms traditional telephony systems in various areas. Businesses around the globe now leverage its many benefits, including advanced customizations and seamless connectivity. In fact, 74% of companies identify cloud telephony as a top investment priority.
Unlike cloud telephony, traditional telephony systems rely on outdated desk landline setups common in many business offices. These conventional systems offer limited benefits, serving only to connect employees and clients without providing the advanced features modern businesses require.
Cloud telephony actively equips businesses with tools to enhance communication, streamline operations, and meet the demands of the digital-first era. By replacing passive systems with dynamic and customizable solutions, businesses can stay competitive and thrive in 2025.
Before diving into the benefits of cloud telephony, let us try to understand what cloud telephony is and how it works.
What is Cloud Telephony?
Cloud telephony, also known as cloud calling, delivers Unified Communication as a Service (UCaaS). A typical cloud telephony platform provides voice communication services along with various other features. Businesses are increasingly adopting UCaaS to replace conventional enterprise phone systems, such as Private Branch Exchange (PBX), due to its scalability challenges and high maintenance requirements.
Cloud telephony eliminates these drawbacks as it doesn’t employ any hardware. Also, since the calls are made through the internet, there are minimal signal fluctuations and downtime as compared to the traditional phone systems.
How is Cloud Telephony Different from VoIP Calling?
To the unversed, VoIP is short for Voice over Internet Protocol. It allows you to make audio and video calls over the internet connection instead of your regular landline connection. In other words, if you just have an active internet connection, you can subscribe to a VoIP connection and start making high-quality video and audio calls without any interruption. VoIP converts your phone calls into data packets that are transmitted over the internet. You can even use ethernet cables to make a VoIP call if you do not have a reliable WIFI connection.
Many people tend to mix up VoIP telephony with cloud telephony systems. This is quite understandable as they seem to be very similar on almost every parameter. But there are certain subtle differences.
The biggest difference is VoIP is just an automated calling system. Cloud telephony is much more than that. It provides a lot more features and services to businesses with the aim of making their communication system seamless.
Summary of Differences between Cloud Telephony and VoIP Calling
| Parameter | Cloud Telephony | VoIP Calling |
| Hardware | No physical hardware required. Just phones are sufficient. | Sometimes it might need physical hardware installation at the office premises. |
| Scalability | Offers easy scalability. Extremely simple to add new users. | Limited scalability is offered in some instances. Installed hardware only supports a fixed number of devices. |
| Maintenance | It is completely taken care of by the provider as the system is hosted on their premises. In case of any issues, they will be instantly taken care of by them without any downtime. | If the hardware is hosted on-site, a part of the maintenance has to be taken care of by us. In case of any issues, you will have to incur repair and maintenance costs. |
| Remote Working | Completely supports remote working as users can use their own mobile phones to make calls through cloud telephony. | It might not support remote working if it works only with the devices installed on the office premises. These devices might be connected to the hardware system or the switch. |
| Data Storage | Every data is saved in the cloud. Your data is always safe and doesn’t get lost during a disaster. | If your data is stored in internal data centers, it can be lost during a disaster. |
What is IP Telephony, and How is it Different from Cloud Telephony?
The differences are even more subtle when it comes to IP telephony and cloud telephony, mainly because there isn’t any major difference between IP and VoIP. You already know what VoIP calling is. IP telephony primarily constitutes technologies that enable voice calls, voicemails, video calls, fax, and messaging via IP’s packed-switch connections. The data is transmitted through a circuit-switched connection of the PSTN (Public Switched Telephone Network). IP telephony converts calls, faxes, and messages into tiny packets of data that are then transmitted through computer network lines.
Working of Cloud Telephony
To understand the working of cloud telephony, you must know what VoIP is. The VoIP(Voice over internet protocol) is a sophisticated technology that allows you to make voice calls through the internet instead of traditional (analog) phone lines. When you dial the number you want to call, your service provider intercepts the signal and converts the analog voice signals into data packets, and then transmits them via your internet connection. That is exactly how your call is received by the person you call via cloud telephony.
Cloud telephony systems have a concept called published number. This is the virtual number(that’s given to the outside world) through which your customers can connect with your organization. The system forwards incoming calls to one of the PRI lines in your cloud data center. The PRI (Primary Rate Interface) line or circuit provides an end-to-end digital telecommunication connection, supporting over 23 concurrent transmissions of data, voice, or video communication between the network and the user. Additionally, self-service implementation in telecommunications enables customers to independently manage their service options through cloud telephony systems, improving user experience and operational efficiency.
Here is the Working of Cloud Telephony Servers with Multiple PRI Lines
- The incoming calls are intercepted by the PRI lines on reliable cloud-based servers.
- These cloud-based servers are capable of call recording, IVR, and reporting and offer a bunch of other functionalities. They are also housed in reliable data centers with uninterrupted connectivity.
- The call distribution is done based on certain rules or based on the caller’s input in IVR.
- There can be another way of distributing calls which is CRM lookups. For example, if you have separate teams for handling new and regular customers, the telephony server checks your CRM once the call is received. It will identify whether the caller is a new or regular customer and route the call accordingly to the respective teams.
Here is the Typical Flow of Incoming and Outgoing Calls
- The caller calls on your published telephony number.
- The call gets forwarded to the PRI lines in the cloud data center.
- The servers then play the Interactive Voice Response (if configured) and redirect the call to an employee based on the call distribution logic.
- Finally, the caller gets connected to the prescribed employee.
- During this whole process, your call gets recorded, telephony API communicates with your CRM (if configured), and after the call, everyone receives an SMS notification.
How Does a Cloud Telephony System Differ from a Traditional PBX System?
As you already know by now, cloud telephony systems eliminate the need for any physical equipment that is usually found in the PBX system. Your employees can communicate with each other or any customer via an internet-connected device.
Getting started with cloud telephony is much simpler as all you need is a VoIP service provider and a reliable broadband connection. On the other hand, the traditional PBX system presents a steeper challenge in terms of initial setup. There are also high upfront costs involved in it. In a typical PBX setup, a telephone provider first visits your location and installs stationary equipment. You have to pay both for the labor and for the equipment installed. Also, in the long run, if something breaks or overheats or does not function properly, repairing them is not only costly but also can take a toll on your productivity.
Traditional PBX systems drive up the cost of long-distance calls and adopting advanced features like HD audio or call analytics can quickly deplete your budget.
Also, if your company is growing, then your phone system has to scale too. Scaling a PBX system means adding more equipment, which can add up to upfront costs considerably. But while using a cloud telephony system, you can scale up at a fraction of the cost because there’s no hardware involved.
Why Adopt Cloud Telephony?
Simpler to Use
Cloud technology totally eliminates the necessity to purchase expensive hardware because all the services and functionalities are configured online. This gives you the flexibility to manage the system remotely. There is no need to be present physically in the office. The entire management of cloud telephone servers can be done online, that too, in a simple and fast way. It removes the complexities posed by a typical PBX system and also allows you to connect seamlessly.
Higher ROI
Every investment you make is expected to deliver a certain ROI. Adopting a cloud telephony system makes your employees more accessible to clients and allows for personalized calls. This approach helps you reach a larger customer base while actively engaging them to drive upsells. Additionally, reducing hardware costs directly boosts your margins. Best of all, you can easily scale cloud telephony systems without significant additional investments, making it a smart and cost-effective choice for your business.
Greater Flexibility
Unlike traditional PBX systems, cloud telephony systems offer you the flexibility to carry your phone system anywhere. You can easily recruit remote staff who are situated anywhere around the world. It gives total freedom to do business the way you want.
Improved Productivity
Traditional PBX systems often interfere with an employee’s productivity; it can take days to set up the hardware in multiple locations across your organization. Also, in case a system fails, it can affect your services, which can negatively impact your relationship with the customers. Since the cloud telephony servers are managed offsite, there is minimal downtime. So employees can always stay connected with the clients.
Better Security
Many people mistakenly believe that anything ‘cloud’ is prone to cyber-attacks. However, this is far from the truth. Most cloud telephony providers implement military-grade security and use strong encryption to protect conversations between your organization and customers.
Key Trends Shaping Cloud Telephony in India
Cloud telephony is growing rapidly in India due to a variety of factors. Here are some key factors that are responsible for the stellar growth of cloud telephony systems in India –
1- A Rising Need for Low-Cost Communication Systems Among Startups in India
As you know by now, the most important feature of cloud telephony is its ability to operate seamlessly without any initial hardware setup. This brings down the installation costs considerably. Similarly, there isn’t any maintenance cost or repair cost for cloud telephony systems. All these features make it a compelling choice for startups and SMEs in India who are operating on a shoestring budget.
2- Hybrid Work Culture
Even after the pandemic, people continue to prefer the hybrid work model over the full office model. This preference stems from the numerous benefits the hybrid model offers, such as flexibility, cost savings, and improved productivity. Many companies also support hybrid work cultures to attract new talent and retain existing employees. However, this shift created a significant challenge: communication issues arose between employees due to the lack of business phones at home. Cloud telephony, being device-agnostic, resolved this issue.
3- Skyrocketing Customer Expectations
Customers’ expectations are increasing rapidly as they are spoilt for choices. Even a single sour experience with your brand can push them to your competitors. Bouncing of calls, lack of personalization during interactions, and poor call quality are some of the common sources of customer dissatisfaction when it comes to communication. All these problems are countered by a cloud telephony system, thanks to its advanced features like call routing, call recording, reporting, etc.
4- Elimination of Unnecessary Spam Calls
About one in three people are subjected to sales-related spam calls every day. As a result, people are reluctant to engage even with legitimate calls. They avoid picking calls from numbers that do not have verified caller IDs. To avoid this, brands are keen on adopting cloud telephony solutions with their smart caller ID feature. This helps customers know the purpose of the call beforehand, and at the same time, brands can gain their trust.
5- Uninterrupted Customer Service
It is the backbone of any business. And without cloud telephony, uninterrupted customer service is not easy. Cloud telephony solutions come with IVR(Interactive Voice Responses) features and chatbots that help people resolve their queries instantly. Customers are also not kept waiting due to the smart call routing feature provided by the cloud telephony system that connects them to the right agent in a matter of seconds.
How to Pick a Cloud Telephony Provider in India?
Here are the different factors you need to consider before picking a cloud telephony provider –
- The solution should offer access to advanced features like IVR, smart routing, call analytics, call recording, etc.
- The solution should have 24X7 support and ensure there are hardly any downtimes or hardware breakdowns.
- The solution should offer regular updates to enhance the user experience.
- The solution should be ‘connected’’ with most of the utility tools such as CRMs, lead management tools, ATSs, etc.
- The solution should offer excellent security so that all your sensitive information is safe.
- The solution should offer a great return on investment and solve your pain point at a minimal cost.
- The solution should be easy to set up and manage even for newbie users.
- The solution should be tailored to your precise needs.
- The solution should be easily scalable and let you make unlimited calls without breaking the bank.
Top Features to Look for in Cloud Telephony Solutions
While shortlisting a cloud telephony provider, you must ensure that their solution provides some important features that can make the lives of your employees much better. Here are some of the top features you must look out for –
IVRs
IVRs efficiently manage inbound calls, connecting customers with your brand immediately after they dial your business number. With voice configurations and DTMF inputs, customers interact seamlessly, which enhances their overall experience. Adding this feature to your cloud telephony software improves customer satisfaction and streamlines communication.
Auto-Dialers
Auto-dialers are best suited for companies engaged in a lot of outbound calls. This intuitive feature automatically dials numbers from a list and connects your agent only if the call is picked up. This feature boosts agent productivity by allowing them to focus on important tasks instead of manually dialing hundreds of numbers.
Analytics
The importance of data in this modern world cannot be stressed enough. Most cloud telephony systems today come with a powerful analytics engine that generates real-time data about calls. This data can be used by you to make informed decisions and course-correct if necessary. Some platforms even send regular reports for you to stay updated with your call performances.
Call Recording
Cloud telephony systems now mandate call recording as a key feature. Businesses use this tool to train new recruits and analyze call issues. It also replaces note-taking effectively, enabling agents to focus entirely on conversations without the need to jot down notes.
Call Forwarding
This is another handy feature offered by several cloud telephony platforms. In this, a call is automatically transferred to another agent. There are two kinds of call forwarding – conditional and unconditional. In the former, the calls are transferred to another agent if the first agent is unable to pick up an incoming call because he/she is away. In the latter, all calls are forwarded to another agent without any condition.
Chrome Extension
This feature allows you to make calls directly from your browser. For example, Frejun lets you dial a person directly from your Chrome browser whenever a number appears on the screen. You no longer need to open multiple applications to find a number and make a call.
Call Scheduling
To automate all your business calls, ensure your cloud telephony solution includes this feature. It allows you to schedule calls and automatically connect with a customer at the chosen time. For example, you can set the date and time for an interview with a candidate or let them select a slot based on your availability.
Key Questions to Ask Your Cloud Telephony Provider
Once you have finalized a list of cloud telephony providers, the next step is to ask some key questions to them during the discovery call. Here are some of the must-ask questions to them –
- What support do you provide during setup(though it is not required)?
- How frequently do you run maintenance checks on your servers?
- How many data centers do you have? Do you have backup centers in case of any outages?
- What is the cost of the software?
- Are there any hidden costs (maintenance, licensing, or upgrade costs)?
- Do you have any plug-n-play integrations?
- Do you offer any API integration with our CRM, ATS, Lead management software, etc.?
- Do you have a trial plan? How long is it? What features can I test during the trial period?
- What will happen once my trial plan is over?
- How many calls can I make in a month?
- How does the billing work?
- What kind of reports can I generate on your platform?
Once you get answers to all these questions, make an informed decision about the best cloud telephony provider that exactly matches your needs and budget.
Winding Up
Cloud telephony goes beyond being a trend—it revolutionizes communication and keeps businesses competitive in a digital-first world. Whether you lead a startup or manage an enterprise, adopting this technology in 2025 streamlines operations, enhances customer satisfaction, and drives growth. Organizations increasingly integrate cloud technology into their digital transformation strategies to simplify tasks for employees and customers. These systems enable seamless scaling with minimal investment. However, selecting the right cloud telephony system is essential, as the wrong choice can disrupt your progress and fall short of meeting your requirements.
Frejun is the #1 cloud telephony system in India that automates your whole calling process by logging your business calls and providing valuable insights about them in a single click. Begin your journey with us by signing up for a free trial.
Further Reading: How Cloud Telephony Systems will help shape the future of businesses?