What Is Cloud Telephony, How Does It Work & Benefits
By Matt Mesar
| 25. June 2024 |
Call Center
By M. MesarMatt Mesar
| 25 Jun 2024 |
Call Center
    By M. MesarMatt Mesar
    | 25 Jun 2024
    Call Center

    The Ultimate Guide to Cloud Telephony:
    What It Is, How It Works & Benefits

    Over 87% of startups use cloud telephony for their calls and messaging. As more mid-sized businesses and enterprises implement the technology, it’s time to answer the question on everybody’s mind: “Why?”.

    In this article, we’ll explore cloud telephony in more detail, explaining how it works step by step, how it compares to traditional landlines, and how to choose the best solution for your business.

    Key Takeaways:

    • Cloud telephony systems run on the provider’s cloud and make calls over the Internet, allowing you to save money on infrastructure and call rates.
    • Compared to traditional PBX, cloud phones are highly scalable, easily customizable, and offer access to numerous advanced features and integrations.
    • Cloud calling is perfect for international operations with a global workforce, as it allows employees to work from their devices anywhere in the world.

    What Is Cloud Telephony?

    Cloud telephony, sometimes referred to as hosted VoIP or a softphone, is a type of Unified Communications as a Service (UCaaS) platform that allows businesses to make and receive calls and text messages over the Internet.

    As its name suggests, cloud calling’s unique value proposition is that it’s entirely hosted in the cloud. This empowers companies to decentralize their operations and offer services around the world with a partial or fully remote workforce.

    Due to its software-centric design, cloud telephony is easily scalable and modifiable. This lets you integrate it with third-party tools to unite and streamline processes in a single solution with near-limitless room for growth.

    Get started with Cloud Telephony the easy way!

    Cloud Telephony Vs. Traditional PBX: An Overview

    The most important decision when setting up a call center is which type of technology you base it on. And this usually comes down between cloud telephony systems, or traditional PBX landlines. Below, you’ll find a comparison of the two solutions.


    Cloud Telephony

    Traditional PBX


    Hosted in the cloud, no physical hardware required.

    On-premises hardware and equipment needed.


    Highly scalable, easy to add/remove users and features.

    Limited by physical hardware capacity.

    Cost Structure

    Subscription-based, lower upfront costs, pay-as-you-go.

    High upfront capital expenditure for equipment.


    Managed by the service provider with minimal IT involvement.

    Requires in-house IT staff for maintenance and updates.


    Accessible from anywhere with an internet connection.

    Limited to the physical location of the PBX system.


    Advanced features like IVR, call recording, and analytics.

    Basic calling features and additional features may require extra modules.


    Automatic updates and upgrades are provided by the provider.

    Manual upgrades are needed, often involving downtime.


    High reliability with redundancy and disaster recovery.

    Depending on local infrastructure, potential single points of failure.


    Easily integrates with other cloud-based services (CRM, email).

    Limited integration capabilities, often complex


    Supports remote work and mobile access.

    Typically limited to an office environment.

    Call Quality

    Dependent on internet quality, generally high with good connection.

    Generally high, dependent on internal network quality.


    Managed security, data encryption, and compliance by provider.

    In-house security management has the potential for higher control but also higher risk if not managed properly.

    Disaster Recovery

    Built-in disaster recovery and business continuity plans.

    Requires additional planning and resources.

    Installation Time

    Quick setup, typically within days.

    Longer setup time, could take weeks or months.


    High level of customization through software.

    Customization is possible but often requires hardware changes.

    How Does Cloud Telephony Work?

    When discussing how cloud telephony works, there are three aspects we need to address: the overall operations of the system, the VoIP calling itself, and client-based call center management.

    • Overall Operations: The system is hosted on the service provider’s cloud, which removes the need for physical on-location infrastructure. Users only submit requests, and service providers handle everything from system updates and data back-ups to call routing.
    • VoIP Calling: The system uses VoIP desk phones or smart devices to pick up your analog voice and convert it into digital signals. These are broken down into packets and sent over the Internet to the receiver, where they’re turned back into audible sounds.
    • Call Center Management: Despite running on the service provider’s cloud, telephony software offers a client-based app interface the allows users to set up automations, view analytics, install 3rd party integrations, request new numbers, and initiate calls.

    Why Is Cloud Telephony Important for Business?

    Cloud telephony systems naturally play a key role in business communications. However, their impact on your company’s overall operations is bigger than you might think. Some of its most important use cases include:

    1. Easily Scalable Call Center Operations: Cloud-based business phone systems aren’t limited by physical constrictions. This lets users increase or downsize their team sizes and telephone numbers as required quickly and easily.
    2. Affordable International Outreach: Thanks to its use of the Internet, cloud telephony can offer affordable call and SMS rates, lowering overall phone expenses by up to 75% and allowing for efficient international growth.
    3. Efficient and Customizable Processes: Thanks to its software-based modular design, cloud telephony systems can leverage advanced features and integrate with 3rd party tools to automate processes and save time on routine tasks.
    4. Access to the Global Talent Pool: Since cloud phone service can work on any smartphone, tablet, or computer with a microphone and an internet connection, companies can work with the best experts worldwide, regardless of location.
    5. Increased ROI: Cloud telephony systems are cheap to set up and maintain, only requiring monthly/annual subscription payments. Meanwhile, the time savings and improvements to customer experience can significantly boost ROI.

    Benefits of Cloud Telephony

    The business advantages of cloud telephony outlined above are the result of multiple benefits that cloud phone service offers. Here’s what you can do:

    • Save Time: Free yourself of the need for time-consuming installations and maintenance. Automate routine tasks with advanced features.
    • Lower Costs: Save money on expensive local infrastructure, pricy call rates, bloated team compositions, and lost time due to inefficient processes.
    • Increase Mobility: Empower agents with remote-friendly software so they can do their best work anytime and anywhere in the world.

    How to Choose the Right Cloud Telephony Solution for You?

    There are several aspects you should consider when looking for your next cloud telephony. These include:

    #1: Call Center Type: 

    The type of call center software you choose can vary greatly. In addition to the features and integrations included, the solution type also influences deployment time and pricing

    For example, you can get cloud-based software like CloudTalk up and running for just $25 per user/month in a day.

    #2: Use Cases: 

    Different providers specialize in solutions based on business size or specific use cases. For example, a solution focused on SMB customer support will likely be cheaper but have fewer features and international numbers.

    On the other hand, a provider primarily selling to outbound, enterprise-size call centers will be much more expensive but offer numerous features, integrations, international numbers, and high call quality.

    #3: Users and Features:

    How many agents you onboard naturally influences the price of your solution. However, many providers have a minimum/maximum number of users on their pricing plans, which can cause issues when selecting the correct plan.

    For example, if you have only a few agents but need high-tier features, you may need to buy add-ons or more licenses than you need. Similarly, if you have a lot of agents but low feature requirements, you still might get stuck with a more expensive plan.

    #4: Number Selection:

    The amount, type, and geographical location of numbers a VoIP provider can offer greatly depends on their connections within the industry, including local providers, regulators, etc.

    As such, it’s best practice to not only look at the numbers you want to port right away but also think into the future and consider your expansion plans (international numbers) or possible initiatives (toll-free numbers).

    Move Your Phone System to Cloud Telephony

    So, did we convince you to give cloud telephony a shot? If so, it couldn’t be easier to get started. 

    Here’s what you need to do:

    1. Schedule a call with our expert team
    2. Explain your current needs and wants
    3. See the software for yourself in a tailored demo
    4. Submit all the necessary paperwork
    5. Get acquainted with the system in a free trial
    6. Train your team to hit the ground running
    7. Start calling!

    It’s really that simple. So, when time is of the essence, why not see what CloudTalk can do for you?

    Discover Cloud Telephony for Yourself


    Is cloud telephony the same as VoIP?

    Cloud telephony and Voice over Internet Protocol (VoIP) are related but not exactly the same. VoIP refers specifically to the technology that allows voice communication over the Internet instead of traditional phone lines. It converts voice into digital signals and transmits them over IP networks.

    Cloud telephony, on the other hand, is a broader concept that encompasses VoIP but also includes other services like call routing, automated attendants, call recording, and Interactive Voice Response (IVR) systems. 

    Essentially, cloud telephony leverages the internet (including VoIP technology) to deliver a comprehensive suite of communication services managed through the cloud, making it more versatile and feature-rich than just VoIP.

    What is a cloud IVR?

    A cloud IVR (Interactive Voice Response) is a telephony menu system hosted in the cloud that interacts with callers, gathers information, and routes calls to the appropriate recipient. 

    It allows businesses to automate their customer service and manage calls efficiently without needing on-premises hardware. Callers interact with the IVR through voice or keypad inputs to navigate through a series of prompts. 

    Because it is hosted in the cloud, a cloud IVR system is highly scalable, easily updatable, and can integrate seamlessly with other cloud-based services and databases.

    How much does cloud telephony cost?

    The cost of cloud telephony can vary widely depending on several factors, including the size of the business, the specific features required, the number of users, and the service provider. 

    Generally, costs are structured on a subscription basis, with monthly or annual fees per user or per line. Basic plans might start as low as $10-$20 per user per month, while more advanced plans with additional features (such as advanced IVR, call analytics, CRM integration) can range from $30 to $100 or more per user per month. 

    Additionally, some providers may charge extra for usage, such as international calls or additional storage for call recordings.

    How to move from traditional telephony to the cloud?

    Moving from traditional telephony to cloud telephony involves several steps:

    1. Assess Needs and Budget: Identify the communication needs of your business and establish a budget. Consider the features you require, such as IVR, call routing, call recording, and CRM integration.

    2. Choose a Cloud Telephony Provider: Research and select a reputable cloud telephony provider that meets your needs. Look for features, pricing, customer support, and integration capabilities.

    3. Plan the Migration: Develop a migration plan that outlines the steps for transitioning to the new system. This should include a timeline, resource allocation, and risk management strategies.

    4. Setup and Configuration: Work with your provider to set up and configure the cloud telephony system. This may involve porting existing phone numbers, configuring IVR menus, and setting up user accounts and permissions.

    5. Train Employees: Ensure that your staff are trained on how to use the new system. This might include training sessions, user manuals, and ongoing support.

    6. Test the System: Conduct thorough testing to ensure that all features are working as expected. This includes making test calls, checking call quality, and verifying that the IVR and other features function correctly.

    8. Go Live: Once testing is complete and you are satisfied with the setup, you can go live with the new system. Monitor the transition closely to address any issues that may arise.

    9. Ongoing Support and Optimization: After the migration, continue to provide support to users and optimize the system based on feedback and evolving business needs.

    How often call center forecasting should be performed?

    Call center forecasting should be performed regularly, typically on a daily, weekly, and monthly basis. Daily forecasts help manage immediate staffing needs, while weekly and monthly forecasts are useful for longer-term planning and trend analysis. 

    Continuous monitoring and updating of forecasts ensure they remain accurate and relevant.

    How to increase call center forecast accuracy?

    To increase forecast accuracy, use high-quality, comprehensive historical data and regularly update your models with the latest information. Incorporate external factors such as marketing campaigns and holidays, and employ advanced analytics and machine learning techniques. 

    Regularly validate your models with backtesting and cross-validation, and seek input from operational teams to capture qualitative insights.