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What is a Virtual Phone System? Benefits & Buying Guide

virtual phone system
  • For the last two decades, many technological advancements have occurred in the telecommunication industry. This revolutionized how individuals and businesses interact with colleagues, stakeholders, and customers.
  • One such advancement is VoIP and cloud telephony, which paved the way for adopting virtual phone systems for communications. The virtual business phone system has a multitude of benefits over old phone systems like PBX (Private Branch Exchange). These include reduced call charges due to internet-based calling, hardware-free setup, connecting from anywhere in the world, third-party tools integration, and cutting-edge call center features.
  • Let’s see how migrating to a virtual phone system like TeleCMI can improve office communication, remote working, and save telephone bills.

Table Of Contents:

1. What is a virtual phone system?

2. How does a virtual phone service work?

3. Differences between PBX and cloud PBX (virtual phone system)

4. 9 advanced features in the virtual phone system

5. Advantages of the virtual phone system

6. 6 Checklist for choosing the reliable virtual phone system

7. FAQs

What is a virtual phone system?

  • A virtual phone system is a cloud communication platform businesses, and individuals use to make and receive calls over an internet connection. It doesn’t require physical telephone devices. Instead, the virtual phone systems can be accessed via iOS, Android, Windows, Linux, or Mac applications installed on the user’s mobile, PC, or computer devices. Users are required to subscribe to monthly or yearly plans to use virtual phone systems. Typically, monthly plans range from $10 to $100 per user. The exact cost varies based on the features, the provider, and calling minutes.
  • It also comes with a UCaaS feature allowing users to communicate via different channels apart from voice calling, such as video meetings, SMS, eFax, and team messages.
  • A virtual phone system can be used for different purposes like office communication, remote collaboration, call center operations, alternate phone number, international calling, and cloud calling.

How does a virtual phone service work?

  • A virtual or cloud phone system uses VoIP technology to transmit calls through an internet connection. A VoIP is a voice over internet protocol that converts audio, video, and other forms of multimedia data digitally.
  • Your virtual phone system vendor maintains cloud-based infrastructure to facilitate virtual communications, and this includes data centers in multiple regions, telecom switches, and associations with local carriers like AT&T, Vodafone, and Airtel.
  • When a call is made in the VoIP phone system, it is automatically encoded into packets and digital data and sent to the destination (recipient). Most platforms use G.711 codec for call termination. The reason why it’s applied in VoIP environments is it improves call quality through better coding and decoding principles.
  • To make or handle calls in the virtual phone system, log in to the softphone app through mobile or desktop devices and enter the extension number in the dial pad to call colleagues or the recipient’s mobile number. You can also call using desk phones or IP phones that support VoIP. To use these devices, you have to finish the basic settings recommended by your VoIP service provider (Virtual phone system) on your landlines.
Traditional PBX vs. virtual phone system: 9 key differences
PBX vs virtual phone system
  • Business phone systems come in both traditional (PBX) and virtual. To understand the advantages and disadvantages of the two, read these nine key differences.
1. Architecture
  • PBX: A traditional PBX is a telephone hardware system deployed and maintained on-premises. It consists of copper wires connected to the local lines in the office, a switchboard for connecting inbound and outbound calls, and integration with the PSTN (Public Switched Telephone Network).
  • Virtual phone system: It’s hosted on cloud-based infrastructure by the vendor and sold to businesses as a uCaaS software (Unified Communication as a Service) on a subscription basis.

2. Management

  • PBX: As PBX is physical hardware, it requires IT administrators to maintain and upgrade the system frequently. These can be time-consuming and expensive for organizations of all sizes.
  • Virtual phone system: A virtual phone system operates on the cloud and is accessible for users as software that can be installed on existing devices like smartphones, tablets, and computers. The provider takes care of the maintenance and updates of the system.

3. Cost

  • PBX: The traditional PBX requires a substantial upfront investment for installing the physical hardware on-premises. In addition, it also consumes hefty money on ongoing maintenance.
  • Virtual phone system: It doesn’t require any upfront fee. Users can buy virtual phone system software for a monthly or annual fee. The only expenses are broadband service for internet connection and platform usage fee.

4. Accessibility and mobility

  • PBX: A PBX can be accessed through landlines or desk phones in the office. It’s location-dependent, as a result, employees cannot make and receive calls out of the premise. This makes users get tied to phones to manage calls.
  • Virtual phone system: The virtual phone system can be accessed on user’s mobile and laptop devices, as a result, they can manage calls from anywhere, anytime. This allows flexible communications with employees working in remote, other countries and field.

5. Reliability and Redundancy

  • PBX: Traditional PBX systems are susceptible to hardware failures and outages. Hence, businesses need to have backup power sources and redundant hardware in place to ensure continuous operation in the event of failures.
  • Virtual Phone System: Virtual phone systems typically operate on highly redundant and geographically distributed servers. Service providers employ redundancy measures to ensure high availability and minimize downtime. They often have built-in failover mechanisms and backup systems to maintain service continuity.

6. Features

  • PBX: It has basic and limited call management features like call conferencing, call forwarding, voicemail, call recording, and extension dialing.
  • Virtual phone system: It’s packed with advanced features to meet modern communication requirements. These include video meetings, CDR (Call Detail Reports), agent performance analytics, voicemail-to-email, SMS, IVR, auto dialer, intelligent call routing, work tool integrations, and more. Apart from these, providers also roll out new features to enhance the platform’s capabilities.

7. Multi-location support

  • PBX: Traditional PBX phone systems can be used in single-location only and cannot support connecting multiple offices.
  • Virtual phone system: Virtual phone systems act as a unified phone system and can be accessed in multiple locations enabling communication across offices based in different locations.

8. Integration

  • PBX: PBX doesn’t support integration with other software like CRM, email automation, team collaboration, and resource management.
  • Virtual phone system: Virtual phone systems can be integrated with other business tools like Zoho, Zendesk, HubSpot, Zapier, and Salesforce. You can enable app integration within the dashboard in a few clicks.

9. Scalability

  • PBX: Scaling the phone system is time-consuming and costly as it requires purchasing new phone devices and hardware and might also result in downtime during configurations.
  • Virtual phone system: You can onboard as many users as you want, from 10 to 10,000+, through single or bulk upload. You don’t need to install dedicated landlines. Instead, you can create a user extension number for all users within the admin application.
9 Advanced features in the Virtual phone system
Automatic call distribution
  • A business can receive a large number of sales and customer support calls every day, especially it’s true for businesses in the e-commerce, banking, and real estate. Any missed call might bring lost business opportunities and frustration to clients. Hence, having an advanced phone system in place is crucial to handle massive calls at any given time. As a virtual phone system have an in-built call router, it automatically assigns incoming calls to the right agent and ensures each call is attended instantly.
Performance analytics
Call analytics
  • You can gain visibility to advanced call center metrics like the number of calls attended, missed, and made. Including the average call duration, number of queued calls, number of active calls, agent-wise call reports, and agent working status like online, offline, or break. These analytics can be used for decision-making, planning the resources, and evaluating the productivity of the call center and individual agents.
Number masking
  • This feature can be used for multiple purposes, which include (1) protecting the privacy of both participants (caller and recipient) and (2) displaying a different phone number to the recipient to increase call answer rates. For example, when the number or call masking is enabled, a caller dials through 123 and the receiver sees 321 in the caller ID, and the original number is hidden for the receiver and vice versa.

Call Monitoring

  • The call monitoring feature is used in the contact centers to monitor live calls between agents and customers through either call barge or whisper. This function helps call center managers to listen to conversations live and assists agents in solving a query or closing the deal.


  • The click-to-call feature saves time for sales, support, recruiting, and other teams by allowing them to call a phone number without typing the contact number in the dial pad. When integrated with your working tools like CRM, the call icon will be automatically displayed next to the phone number, and the user can make a call by simply clicking it. The click2call can also be integrated into the website so visitors can contact your business by clicking the number.

Auto dialer

  • Auto dialer is a dialing software that is a built-in feature in many VoIP phone systems like TeleCMI. It can be helpful for running telesales and telemarketing campaigns as the system calls bulk leads in the list without human intervention. Once the prospect picks up the call, it will be connected to an available sales rep to close the deal. It’s used in political campaigns, government bodies, and marketing campaigns for voice broadcasting, collecting votes, and announcing product offers. Auto dialer comes in different types, such as progressive dialer, predictive dialer, and preview dialer.

Local, toll-free, and vanity numbers

  • In a virtual phone system, you can register and use any number of business numbers without purchasing SIM or installing new phone lines. These numbers are called virtual phone numbers and work in the cloud. You can buy local phone numbers with city codes, international numbers with country codes, and toll-free numbers. The virtual numbers cost $5 to 10 depending on the provider and function like real phone numbers. You can make, receive, and forward calls flexibly using these numbers.

Call flow manager

  • Using call flow designer, you can control how your incoming calls should be routed and handled. For example, you can create a call flow for a business number 983xx 322xx with a voicemail activation, so when a customer makes a call, the system asks the customer to leave a voice message and businesses can arrange a callback later. Likewise, you can create an IVR menu for your business number with options like press 1 for sales, press 2 for support, and press 3 for connecting with the live agent. So when a customer presses the relevant number, appropriate action will take place.

API and webhooks

  • Your virtual phone system partner has features like Voice APIs and webhooks, which are designed for developers to integrate advanced voice calling solutions into their applications. Using these APIs and SDKs, you can implement advanced cloud communication features in your business tools.

Why you should choose a virtual phone system: 5 Advantages

Lower communication charges

  • As the virtual phone system uses VoIP technology, it reduces the call charges for subscribers by connecting calls through an internet connection rather than using PSTN networks.
  • It also reduces the reliance on hardphones because the system can be installed on existing devices like mobile and laptop devices. Some providers like TeleCMI offer unlimited calling plans for businesses that make and receive a large number of calls. This further cuts down additional charges for enterprises and startups.

Cloud-based setup

  • A virtual business phone system is deployed on the cloud, i.e., the software is installed and accessed through the user’s mobile or PC. This eliminates the need for setting and configuring on-premise telephone hardware like PBX and desk phones.

Call from anywhere

  • Staffs can make and receive calls from anywhere, whether they are in the office, home, or field. They can use devices enabled with Wi-Fi or fiber net to perform audio and video calling.

Hassle-free user management

  • Virtual phone systems make admins' and supervisors' work easier when it comes to adding, deleting, and managing team members. Unlike PBX systems, They eliminate the technical burdens involved in configuring devices and setting new landlines.

Time-saving features

  • Features like IVR, click2call, automatic call distribution, CRM integration, call recording, and auto dialers accelerate user productivity and save time on basic call center actions. As a result, you can witness overall growth in sales, customer service, and team communication.

6 checklist to consider when buying the virtual phone system

1. Call quality and reliability

  • Makes sure calls can be connected without jitters, echoes, and disconnections. Check the service provider’s reliability measures like QoS (Quality of Service), SLA (Service Level Agreements), and uptime guarantee.

2. Pricing

  • Evaluate how different providers’ pricing structure works, such as whether they charge per user, per line, or a flat rate. Check the number of features included in each plan. Basic plans include limited capabilities, and premium plans consist of high-level features. Some vendors offer few features as an add-on service which may consume additional costs for small businesses and large organizations.

3. Security and Compliance

  • In the virtual communication industry, VoIP service providers should comply with security and data protection regulations and local laws such as HIPAA, GDPR, FCC, and VNO. This ensures your partner is a qualified service provider and they have the required license and certifications in place. Also, check the encryption protocols of your partner to make sure all your conversations are protected end-to-end.

4. Integration capabilities

  • Ensure the virtual phone system can be integrated with third-party business tools that your organization is using. This eases the workflow and improves the productivity of employees and agents. Also, check the API resources your provider offers for seamless data exchange.

5. Customer support

  • The provider’s reputation can be judged by how quickly they respond to a complaint or ticket. You can check the provider’s support hours, channels, and average response time on their website or during onboarding. You can also read customer testimonials and reviews to understand the client’s experience with the vendor.

6. Product and technical training

  • Check if the provider has a team to provide a demo and training to new clients. Understand how the platform works and the capabilities of the platform. Most virtual phone systems take a slight learning curve for freshers and absolute beginners. You can always refer to the knowledge base and FAQ section on the provider’s website to resolve doubts and questions.
  • We encourage you to go through the above checklist to make an informed decision and buy the right business phone system that suits your business requirements.

Take away

  • Virtual, VoIP, or cloud phone system provides great flexibility for businesses to communicate from anywhere. Switching to this communication platform reduces financial costs and elevates productivity among employees and agents. Getting started is effortless, which takes only signing up with the service provider.

Frequently asked questions


Yes, if you own a phone number with the other provider or carrier, you can transfer it to a new provider through number porting. The requirements for number porting includes a Letter of Authorization (LOA), PIN number, recent phone bill, and continuation of the service until the number is moved to a new service provider. Based on the matching information, it takes 1 to 2 weeks to port all your phone numbers completely.


The VoIP plans cost $10 to 100 monthly, depending on the provider you choose. The features available to access also change based on the plan you choose. When you purchase a plan annually, they provide a yearly discount. Mostly, each plan contains allocated free minutes, like 4000 minutes free. After exceeding, a user needs to recharge or pay the required charges to continue virtual phone service without interruption. To avoid paying metered charges, you can upgrade to an unlimited plan for a flat fee, suitable for businesses that place a lot of inbound and outbound calls.


The important features to look for in the virtual phone system are 4-digit user extension, multi countries coverage, VoIP calling, call blacklist, HD voice quality, IP whitelisting, auto attendant, call transcription, webRTC (Web Real-Time Communication), CTI, custom IVR/voicemail greetings, call forwarding, call transfer, call conferencing, and smart routing.


Considering affordability, state-of-the-art platform features, and service quality, we suggest you try a TeleCM virtual phone system. You can try it risk-free with a free trial or schedule a free demo to explore the product functionalities. TeleCMI is used by 1,500+ enterprises like Hyundai, Porter, Zebronics, and Dr.Reddy’s for customer support operations and business communications.

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