On-premise vs. cloud-based call center software comparison

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If you’re trying to decide between on-premise and cloud-based contact center software, the real question isn’t just about your infrastructure. It’s also about outcomes.

Businesses that move to cloud contact center solutions enhanced with AI, for example, are seeing measurable results; at one company, this technology helped increase issue resolution by 14% an hour and cut handling time by 9%.* That means faster service and fewer roadblocks for your team, and it also means a better experience for your customers.

Let’s take a look at the advantages and drawbacks of on-premise phone systems, and their cloud alternatives to help you choose the right solution for your business.

TL;DR

1. On-premise call centers = reliable but costly & rigid.  

2. Cloud-based call centers = faster setup, lower costs, scalable, remote-ready.  

3. Cloud > on-premise for flexibility, integrations, and AI-powered features.  

Who this is ideal for

• Ideal for remote & hybrid teams  

  Run a fully distributed call center with browser and mobile apps—no office hardware or VPNs required.

• Great fit for startups with lean IT  

  Skip server purchases and complex maintenance; spin up agents in hours using a subscription model.

What’s the difference between on-premise and cloud-based call centers?

Before you choose call center software, it helps to understand how the different setups work. Call centers can be run on on-premise systems, cloud platforms, or a mix of both. Here’s a breakdown of what sets them apart.

Built for fast-growing sales teams: Add or remove users on demand and keep SLAs intact during hiring spurts or seasonal spikes.

For cost control and predictability: Replace capex and surprise maintenance with a transparent per-user subscription.

On-premise call center setup

With an on-premise phone system, all hardware and infrastructure are installed and maintained at your business location. Your IT team manages this infrastructure, from your servers to your desk phones. Here, you can either use a PBX or an IP PBX setup, depending on whether you want to make calls using an internet connection.

While on-premise systems offer reliable call quality, they come with higher costs, more technical complexity, and limited scalability. We’ll discuss this in more detail later in this guide.

Cloud-based call center software

Cloud-based call centers are hosted off-site in the cloud by a business phone service provider and can be accessed through desktop or mobile apps, including browser-based apps. 

The provider manages your system maintenance, and your team just needs a stable internet connection to make and receive calls. Your customer data is stored securely in the cloud, using providers like AWS.

A cloud contact center builds on voice capabilities by unifying phone, SMS, chat, email, and other channels in one system. It’s a fast way to deploy contact center operations that scale easily with your business. 

Comparing on-premise and cloud-based call center software systems

Call centers have shifted rapidly from traditional on-premise systems to cloud-based solutions, with nearly three-quarters of contact centers using integrated cloud platforms.

Let’s compare the key differences between on-premise and cloud-based call center software to help you decide which model best suits your needs:

Optimized for multi-channel engagement: Unify voice, SMS, email, and chat so agents never switch tabs to resolve a case. This ensures consistent, faster service across every touchpoint.

When evaluating cloud based call center software: Prioritize quick setup, native integrations, elastic scaling, and proven uptime to ensure your platform supports both current and future business needs.

Setup time

On-premise contact centers can take months to deploy, requiring hardware purchases, licensing, and a complex infrastructure setup. On the other hand, cloud-based systems work out of the box, often as simple as installing an app.

Costs and expenses

On-premise call centers require significant upfront investments. Ongoing maintenance and hardware replacements also add to long-term costs.

Cloud-based systems eliminate most of these expenses. Aside from a reliable internet connection and a laptop, you don’t need any physical infrastructure.

Just note that reliable internet, properly configured routers, and sufficient bandwidth are essential for maintaining clear call quality with a cloud-based system. But most providers can help you optimize this.

Flexibility

On-site call centers are rigid and costly to scale. Adding or removing users means buying new software and hardware, and if you downsize, you’re stuck with unused equipment. Mobility is also limited since desk phones must be tied to in-office servers.

Cloud-based call centers are easy to scale up or down, as no hardware is needed. They support remote work, allowing you to run a virtual call center, which can offer advantages like lower overhead.

Reliability

Some businesses stick with on-site call centers to avoid issues like lag or dropped calls. And while traditional phone lines are generally very reliable, the hardware itself can potentially cause problems. If a desk phone breaks or becomes outdated, you have to invest time and resources into replacing it. 

Cloud-based phone systems eliminate hardware concerns. Most of the issues that are often attributed to VoIP, like dropped calls or bad audio, are usually due to poor internet, not the technology itself. So as long as you’ve got a solid connection, cloud software is very reliable.

Integrations 

On-premise systems can integrate with other services, but licensing and setup are complex and time-consuming, even for experienced IT teams.

Cloud-based systems are designed to integrate with other services right out of the box. You can plug in tools like CRMs, helpdesk platforms, and survey templates to improve your workflows and deliver better customer support.

Collaboration and productivity

On-premise contact center solutions are limited in how they can connect with chat, email, or CRM platforms, which can limit team collaboration. But cloud-based software enables teams to share information seamlessly across channels. 

With a cloud-based system, agents can leave tags and notes about a customer’s conversation history, giving team members helpful context that saves them time and helps them provide a better customer experience. Plus, cloud-based systems offer real-time dashboards to help you track call volume and monitor productivity in your contact center.

For quality assurance and coaching: Monitor, whisper, and barge into live calls to guide agents without disrupting the customer experience, improving both training and outcomes.

Security and privacy

Many businesses assume on-premise systems are more secure because data stays in-house. But 95% of all data breaches result from human error, which is a risk that is often higher with legacy setups.

Cloud providers invest heavily in security and stay ahead of threats, and their redundancy and data protection measures usually exceed what on-premise systems can offer. 

Perfect for compliance-conscious industries: Use enterprise-grade security, SSO/2FA, and audit-friendly call recording to meet regulatory requirements like GDPR and HIPAA with less manual overhead.

How does a cloud contact center work? 

Cloud based call center software routes calls over the internet through IVR and ACD, connecting agents with CRM data

Optimized for multi-channel engagement: Unify voice, SMS, email, and chat so agents never switch tabs to resolve a case. This ensures consistent, faster service across every touchpoint.

When evaluating cloud based call center software: Prioritize quick setup, native integrations, elastic scaling, and proven uptime to ensure your platform supports both current and future business needs.

A cloud contact center uses VoIP technology to connect and route calls using the internet. This setup allows for smooth customer communication without the restrictions of traditional phone lines. 

Advanced features like Interactive Voice Response (IVR), Automatic Call Distribution (ACD), and call queuing are integrated into these systems to ensure that customer inquiries are directed to the right agents efficiently.

Another benefit of cloud contact centers is how easily they connect with your existing business tools. 

With CRM integrations, for example, your agents can see a customer’s history, notes, and previous interactions as soon as they answer a call, meaning they don’t have to waste time searching for information or context. This integration improves the customer experience by enabling more informed and personalized responses.

Cloud-based contact centers also come with built-in analytics and reporting tools that make it easy to track your team’s performance. These insights help you spot areas for improvement and make smarter decisions about your customer support and sales strategies.

A cloud contact center gives your team a flexible and scalable way to handle customer interactions. The key is choosing a platform that fits your needs and then learning how to set up virtual call center software for smooth implementation. 

Top benefits of cloud based call center software

Cloud-based phone systems deliver the tools you need to operate your call center smarter, faster, and from anywhere. Building on the differences we outlined above, let’s now highlight how those distinctions translate into key benefits for your business:

1. Flexibility and scalability

2. Cost-effectiveness

3. Advanced features

4. Reliability and uptime

5. Security

6. Quick deployment

7. Remote work and collaboration

Best for support teams needing CRM context: Auto-log calls and surface history in Salesforce, HubSpot, or Zendesk to reduce handle time and improve customer satisfaction.

For data-driven leaders: Real-time dashboards and reporting help you spot bottlenecks and coach in the moment, driving continuous improvement in your contact center.

Flexibility and scalability

Cloud contact centers work on mobile devices and computers and from any location, as long as you have a reliable internet connection. Your agents can access the system remotely, removing the need for physical infrastructure. And you can add users instantly, giving your business the agility to adapt quickly to an increase in call volume without hardware constraints. Whether you’re onboarding five new agents or scaling to hundreds, cloud platforms make it much easier to add or remove users, and you don’t have to worry about hardware or IT costs.

You won’t need to install new phone lines, reconfigure servers, or expand your physical resources as you grow. Instead, cloud systems scale dynamically with your call volume and team size. This flexibility is ideal for businesses with seasonal spikes or fast-paced growth.

Plus, most cloud providers offer elastic pricing models, so you only pay for what you use, meaning no sunk costs or wasted capacity. 

Cost-effectiveness

Cloud-based call center software helps you reduce costs. There’s no need to invest in expensive on-premise hardware, ongoing maintenance, or complex telephony infrastructure when you set up one of these systems.

Cloud phone systems operate on a subscription-based model, turning large upfront costs into predictable operational expenses. You also don’t have to worry about ongoing fees related to dedicated IT staff, as the provider handles updates, security, and system performance.

Advanced features

Modern cloud contact center software comes packed with tools designed to improve productivity and customer experience. 

Automated workflows, for example, reduce manual work by assigning tasks, routing calls, or triggering follow-ups based on custom rules. These advanced capabilities speed up resolution times and create a more personalized and consistent customer service across every touchpoint.

AI-powered features like in-call prompting, call summaries, key topic recognition, and sentiment analysis help teams respond faster and more effectively. And omnichannel support lets you handle conversations across voice, email, chat, and social media all from one interface.

Reliability and uptime

Cloud contact centers are built for high availability. With redundant data centers distributed across regions, your system stays online even if one server goes down. Automatic failover and regular backups ensure zero disruption to operations and no lost data.

And unlike on-premise systems that rely on aging hardware and local servers, cloud-based solutions eliminate the risk of physical equipment failure; you never have to wait on IT teams to fix or replace a faulty phone line. 

Security

Cloud-based software offers enterprise-grade security that’s often out of reach for in-house systems. With features like single-sign-on (SSO), two-factor authentication (2FA), and end-to-end encryption, your data stays protected in transit and at rest.

Compliance with regulations like GDPR, HIPAA, and SOC2 is built into the software, with no manual configurations or costly audits required. You also get granular access controls and user permissions to manage who sees what. 

Compared to on-premise setups that rely on local IT and outdated security protocols, cloud platforms provide continuous monitoring and threat detection without the overhead. It’s a far more proactive approach to protecting sensitive customer and business data.

Quick deployment

One of the biggest advantages of cloud-based call center software is how fast it can be deployed. Unlike on-premise systems that require server rooms, hardware procurement, and weeks of setup, cloud solutions are ready to go in hours.

There’s no need for complex installation or IT configuration. Your team can get started using the devices they already have. Because the software runs in a browser or via lightweight apps, your agents can be onboarded and make and receive calls almost immediately.

This speed is valuable for growing teams that need to scale quickly without waiting on IT infrastructure. With cloud systems, launching a new call center (or transitioning from an old one) is faster and less disruptive.

Remote work and collaboration

Hosted platforms are built for remote and hybrid teams. You can listen in on live calls, coach agents in real-time without the customer hearing, and keep track of performance from anywhere. It’s all designed to make oversight and support easier, no matter where your team works from.

Features like shared dashboards, call tagging, and centralized conversation centers create a collaborative environment, even across time zones. You can track KPIs, provide live coaching, and ensure quality standards are met no matter where your agents are located.

And with everything centralized in the cloud, there’s no need to worry about office-bound equipment or rigid workflows. 

Essential features to look for in cloud-based call center software

Modern cloud-based systems offer far more than just voice capabilities. The right platform should make your operations easier to manage and improve your agents’ performance. Here are the top features to prioritize.

• Omnichannel support: Your phone system needs to meet customers where they are, whether that’s on the phone, via SMS, or in their email, all from a single platform. This unified approach keeps communication consistent and efficient.

• Interactive Voice Response (IVR): IVR menus filter and route calls before they hit your agent’s queue. You need smart IVR like Aircall’s, with features like voice recognition and fully customizable menus, which improve accessibility and call efficiency.

• Advanced call routing: You should be able to automatically direct calls to the right agent based on their skills, availability, or language. Intelligent routing reduces wait times and increases first-call resolution.

• Real-time analytics and reporting: Aircall, for example, can track live call volumes, agent activity, and key performance metrics in customizable dashboards. These insights help you optimize team performance in real-time.

• Call recording: You need to be able to automatically record and store calls for training, quality control, and compliance. Easy access to recordings also supports transparency and performance reviews.

• Call monitoring: A platform like Aircall lets you listen in on live calls, whisper feedback to agents, and intervene when needed, no matter where your team is located.

• CRM and helpdesk integrations: Native integrations with tools like Salesforce, Hubspot, and Zendesk enable agents to access customer data instantly, reducing call handling time and improving customer service.

• Conversation intelligence: Aircall’s AI features offer real-time call summaries, sentiment analysis, and suggested responses. This helps your agents stay focused and efficient during every interaction

Why choose cloud based call center software in 2025

Cloud-based call center software offers lower upfront costs and faster deployment than on-premise solutions. These setups support remote and dispersed work and scale easily with your team. 

Aircall’s cloud-based customer communications platform is built for growing teams, with plug-and-play integrations and advanced features that improve productivity and efficiency. 

Our customers see more efficiency, better call outcomes, and improved customer satisfaction. For example, after adopting Aircall, Too Good To Go increased sales and customer support team productivity by 50% through better coaching and real-time insights.

If you’re looking for a reliable cloud-based phone system that’s incredibly easy to use and set up, look no further than Aircall. 

Aircall’s cloud business phone system helps you have better conversations for happy callers and increased sales. Try for free today.

*The economic potential of generative AI: The next productivity frontier, McKinsey & Company

Frequently asked questions about cloud-based call center software

What is cloud based call center software?

It’s a business phone system hosted in the cloud that allows companies to manage calls and customer interactions over the internet, without physical hardware.

Is cloud based call center software secure?

Yes. Leading providers use enterprise-grade encryption, compliance standards (like GDPR and HIPAA), and continuous monitoring to ensure data safety.

How much does cloud based call center software cost?

Most providers use a subscription model. Costs depend on the number of users and features, but cloud systems eliminate upfront hardware expenses.

What are the main benefits over on-premise systems?

Faster setup, lower upfront costs, instant scalability, and full support for remote or hybrid teams.

Which businesses benefit most from cloud based call center software?

Companies with remote teams, high growth, or seasonal call fluctuations see the biggest advantages.

Published on March 30, 2020.