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PBX vs VoIP: Key Differences

PBX vs VoIP: Key Differences

Phones are an integral part of every organization. It’s quite safe to say that many organizations cannot function at all without a phone system in place. An organization needs an efficient phone system to facilitate employee-employee and employee-customer communications. But as a user, many of you might not have given a lot of thought to the technology or the different types of business phone systems currently available. Understanding them is important because it will help you pick the right phone system tailored for your organization. There are mainly three different types of business phone systems, viz. PBX vs VoIP vs KSU. Out of them, VoIP and PBX are the most common ones and are used widely across the globe. In this post, we will restrict our discussion to only those two technologies.

PBX vs VoIP: Definitions

PBX stands for Private Branch Exchange. It is a telephone system that switches calls between users on local lines, thus enabling users to share multiple external phone lines. PBX typically consists of stations and lines. Lines are connections provided by the service provider, while stations are the endpoints that constitute desk phones and fax machines. You need a ground box to house the internal components of the PBX phone system, along with multiple landline devices to answer the calls. Using PBX, one can easily make intracompany calls just by dialing an extension number.

VoIP, on the other hand, uses the internet instead of an analog phone line to facilitate communication. It stands for Voice over Internet Protocol. It converts voice calls into digital signals and transmits them over the Internet to the final destination. The core technology behind a VoIP system is called packet switching, where audio signals from the sender are converted into data packets, which are then transmitted wirelessly to the receiver. The packets are then decoded back into audio signals at the receiver’s end to complete the communication.

PBX vs VoIP: Key Differences

Here are the key differences between these technologies – 

PBX SystemVoIP System
Initial InvestmentHigh initial investments due to the need to purchase expensive hardware.Minimal investment needed as you don’t need any complicated hardware or software to operate a VoIP phone system.  
Operating CostsOperating costs can be high as you might have to maintain the expensive hardware and software installed on your premises. Operating costs remain low as even the limited maintenance is taken care of by the service provider. 
QualityAudio quality of the PBX system is generally good. Audio quality of VoIP is comparable to PBX systems. But the final quality is dependent on the speed of the internet connection. 
CompatibilityPBX systems are usually non-compatible with smartphones. Even in the case of an IP PBX, it is difficult to pair it up with smartphones.Since the only basic requirement is the Internet, VoIP phone systems are compatible with smartphones. 
ScalabilityPBX system is not very easy to scale up. The cost of scaling up can exponentially increase. VoIP is very easy to scale up and can accommodate any number of users without drastically increasing the cost of operation. 

Features of PBX

Most of the features offered by PBX are quite basic in nature. Here are the top ones –

  • Call control features – This primarily includes basic functionalities like call blocking, call forwarding, call transfer, and call waiting. All these features are quite primitive and found even in the most basic phones available today. 
  • Customer experience features – These include the more advanced and business-related functionalities like call recording, voicemail, Interactive Voice Response, and Direct Inward Dialing. As you can see, all these features help in making the lives of the customers better while communicating with your organization. The extension of these features could include custom greetings, welcome messages, and hold music.
  • Internal communication features –  These primarily include multi-person communication features like conference calls and internal extensions.
  • Local connections features – These features enable you to have local numbers in cities where you’re not physically present. In other words, it helps you create ‘virtual offices’ anywhere.

Features of VoIP 

Here are some common features of the VoIP phone system – 

  • Call Recording: In most VoIP phone systems, every inbound and outbound call is automatically recorded for you to analyze later
  • Call Analytics: VoIP phone systems can not only record calls but also provide you with valuable call insights needed to make better decisions. 
  • Integrations: VoIP phone systems can be easily integrated with platforms like CRMs and ATSs. This ensures that you have a single source of truth for all your calling needs. You also don’t have to rely on multiple devices and multiple platforms to manage calls.
  • Transcription: Many modern VoIP systems come with transcription services to ensure that all your calls are converted into text. Transcription generates proof of what was said by both parties in an easily searchable format
  • Autodialer: Some VoIP phone systems can automatically call all the numbers in a given list without the need to dial the numbers manually. This is quite useful when you have to make multiple outbound calls in a short span.

PBX: The Pros And Cons

Here are the positives and negatives of implementing PBX phone systems in your organization – 

Pros of PBX

  1. PBX systems offer more control over the connections. This makes it possible to analyze the costs and cut them down wherever possible. 
  2. Though the initial investment and operation costs might seem higher, they tend to gradually reduce in the long run.
  3. Data security and data control are very high in PBX phone systems.

Cons of PBX

  1. You always need trained personnel in your organization for PBX maintenance. The need will be more during contingency cases and emergency troubleshooting.
  2. You need a separate space to house all the hardware of PBX. You also need to lay lines on your premises.
  3. PBX is not a portable phone system.
  4. PBX is suitable only for large organizations that can afford high investments.

VoIP: The Pros And Cons

Here are the positives and negatives of implementing VoIP phone systems in our organization – 

Pros of VoIP

  1. Thanks to low investment and low maintenance costs, VoIP is one of the most cost-effective phone systems available. 
  2. VoIP phone system is highly portable. All you need is a smartphone and a reliable internet connection to make and receive calls.
  3. VoIP phone system is scalable. You can add as many new users as you want without having to spend an exorbitant amount for every new user. 
  4. Unlike PBX, VoIP offers a lot of advanced features that can elevate the overall user experience.

Cons of VoIP

  1. One of the biggest disadvantages of the VoIP system is that it is highly reliant on the internet connection.  In case your internet is patchy, your call quality is going to take a hit.
  2. Security is also a major concern in VoIP. There are chances of identity and service theft, phishing, viruses, and malware, cropping up in your organization.


As you have seen in this post, both PBX and VoIP have their own set of positives and negatives. While PBX is more conventional, VoIP is the more modern technology that can make your internal and external communication seamless and elevate the overall productivity of your team. Use this handy guide to decide between PBX vs VoIP for your organization. If you are looking for a robust VoIP phone system, try FreJun now.

PBX vs VoIP: Frequently Asked Questions

  1. Do I need a PBX or VoIP?

It depends on your exact needs. While PBX is ideal for large organizations, VoIP is preferred for small and medium-sized organizations. 

  1. Which is better: PBX or VoIP?

There is no definite answer to this question. Both have their own set of positives and negatives. 

  1. VoIP vs PBX: Which is cheaper?

VoIP is way cheaper when compared to PBX. The high initial setup costs and maintenance costs make the PBX a costly phone system.

  1. What is the best telephone system for a small business?

VoIP is the best telephone system for small businesses primarily because of its cost-effectiveness and its scalability. 

  1. How much does a PBX cost?

The average cost of a PBX system is around INR 50000 to INR 80000 per user. It constitutes everything from phone devices to central cabinet costs.

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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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