Voice over Internet Protocol (VoIP) is a standard for converting analog phone calls into digital packets that can be sent over the internet. It provides a convenient method of providing telephony services. It does, however, require buying and implementing the servers and other technology to make it work. Hosted VoIP providers offer a complete, scalable VoIP service through the cloud on a subscription basis. This means that a business only needs to pay a monthly fee for the service without the capital or set-up costs of implementing it in-house.

Hosted services can offer an enterprise-standard business telephone system with all the features of a PBX at an affordable rate; in fact the service usually costs significantly less than using traditional landlines. The features and flexibility offered by a modern VoIP system can be a competitive advantage for a business. It has features that can, for example, be used to support employees working remotely.