For many businesses today, switching to Voice Over Internet Protocol (VoIP) systems from traditional landlines is a no-brainer. Not only do they offer greater flexibility, enhanced calling features, and useful integrations, but they also charge lower rates for domestic and international calls – a huge bonus for businesses looking to keep costs low.
However, these systems also have their share of issues. They’re completely dependent on the internet, for example, making them more prone to cybersecurity risks, and resulting in latency issues for businesses without stable internet connections.
There’s lots to discuss when it comes to VoIP advantages and disadvantages, so if you’re unsure whether the tech is right for your business, read on to learn about some benefits and drawbacks associated with using the technology.
What is VoIP?
VoIP is a technology that enables you to make calls through the internet. Unlike traditional landline phones, which rely on a physical network of copper wires, cloud-based VoIP systems can be used anywhere with a stable internet connection. They’re also compatible with a wide range of other business systems like web conferencing and small business CRM software.
VoIP technology comes in two main forms: desk phones and softphones. VoIP desk phones are physical phones that connect to VoIP software, and softphones are software applications that can run on multiple devices like mobile phones, tablets, desktop computers, and laptops.
Who is VoIP best for?
VoIP phone systems are a great solution for businesses that process a high volume of inbound and outbound calls. This is because most providers offer a wide variety of excellent call management features, including barge, hold, whisper, forwarding, transferring, and more.
Our pick of VoIP plans – Zoom’s Regional Unlimited Plan – provides all of this, in addition to 24/7 live chat and phone support, integrations with Google, Microsoft, Slack, Salesforce, and more. Impressively, it costs just $15 per user, per month.
Benefits of VoIP: 10 Advantages for Your Business
From flexibility to cost savings, here are ten major advantages VoIP systems could bring to your business. You’ll find an at-a-glance list below, and then I’ll go into more detail on each advantage and disadvantage further down the page.
Pros of VoIP:
- Streamlined internal communications
- Cheaper call rates
- Bandwidth utilization
- Affordable hardware
- Enhanced calling features
- Greater flexibility
- Business scalability
- Conference calling
- Voice quality
- Portability
Cons of VoIP:
- Internet access required
- Latency
- Emergency calling
- Security
- Hidden costs
1. Streamlined internal communications
Lots of VoIP providers offer impressive communication features in-house. From instant messaging tools to voicemail-to-email transcription, these capabilities allow businesses to manage internal and external comms from one centralized system, eliminating the need to carry out these tasks externally.
Ooma’s meeting integration in web view. Source: Tech.co
2. Cheaper call rates
With traditional phone lines, you usually pay for every minute spent on the phone, which means that your monthly bill can be very high, especially if you regularly make international calls. The situation with VoIP is completely different, and your costs should be cut significantly.
3. Bandwidth utilization
Optimizing your VoIP plan according to your needs can be a bit tricky at first, but if your provider gives you detailed statistics about your monthly data usage, then the process will be much easier. What’s great about VoIP services is that you can see every tiny detail that can help you optimize inbound/outbound calling in order to get the best value for money.
4. Affordable hardware
VoIP technology eliminates the need for expensive phone lines, telephone sets, and other underlying hardware that can boost the initial cost of your company’s communication to thousands of dollars. Aside from VoIP software, all you need is a good internet connection, a computer, a sound card, a microphone, and speakers or headphones – things that are pretty common for every office around the world. Learn more about how much VoIP systems cost.
5. Enhanced calling features
The features that come with VoIP services are much better than those offered by traditional phone lines. You’ll have more flexibility in terms of call management, as well as take advantage of extra perks such as voicemail, extra-virtual numbers, contact lists, caller IDs, etc. Some other useful VoIP calling features to look out for include call routing, call screening, call recording and call forwarding.
Using the visual voicemail feature from RingCentral. Source: Tech.co
6. Greater flexibility
Unlike landline phones, VoIP systems allow employees to work anywhere with a stable internet connection. This flexibility makes the technology the perfect pick for businesses managing remote and hybrid teams. VoIP systems offer real-time call analytics too, enabling managers to monitor worker productivity from afar. This helps businesses overcome productivity roadblocks much more easily than if they relied on legacy phone systems.
7. Business scalability
If your business is looking to expand in the future, VoIP systems are perfectly equipped to scale alongside your business. Most providers offer modular, customizable packages that can be adjusted to meet your specific needs. Moreover, if your team expands and you require different services in the future, you can upgrade to a plan with a greater selection of features and more generous user limits.
8. Conference calling
Traditional phone lines are pretty limited when it comes to conference calls, and this may prove to be a problem for many business owners. When you use VoIP services, you can include multiple people on your conference call. On RingCentral’s Ultra plan ($35 per user, per month), for instance, you can include up to 200 participants on your video calls.
9. Voice quality
While landlines can offer slightly superior call quality to VoIP systems, for most users with a strong internet connection the difference is negligible. VoIP voice quality is dependent on the strength of your internet connection, so as long as your network is reliable you’ll have nothing to worry about. Some VoIP providers are better than others when it comes to this aspect, though, so if it’s crystal-clear sound quality you’re after, we would recommend choosing a leading system like RingCentral or GoTo Connect.
10. Portability
Compared to landline hard phones that are restricted to one specific location, VoIP technology is completely portable, and can be used on a range of business devices. This allows employees to use the technology anywhere they choose, whether that’s the office, home, or another flexible working location. Not only is this a clear boon for remote and hybrid teams, but it’s also a win for workers who travel a lot and carry out business meetings from multiple locations.
Making a call with Ooma on desktop, mobile, and VoIP phone. Source: Tech.co and Ooma
Drawbacks of VoIP: 5 Disadvantages for Your Business
Despite the varied benefits associated with VoIP systems, the communication system isn’t perfect. Read on for some limitations to be aware of before switching to VoIP.
1. Internet access required
Since VoIP is an internet-based system, you need a stable internet connection if you decide to switch to VoIP from legacy phone systems. While this shouldn’t pose a problem to the majority of businesses, it will be a drawback for businesses without routers or with weak connections. A particularly strong bandwidth is required for companies handling high call volumes, so businesses need to be aware of this before subscribing to a service.
2. Latency
VoIP is generally renowned for its excellent call quality, with the average latency (delay) for VoIP systems being just 150 milliseconds, according to industry leaders. However, if your internet connection has poor bandwidth, latency and jitter issues can occur, negatively affecting the call experience and lowering its reliability. Latency issues can be avoided with a strong internet connection, though. We recommend using a reliable provider like Google Fiber or Xfinity, or upgrading to CAT-6 or CAT-5e cables if you use ethernet cables.
3. Emergency calling
Emergency calls made through VoIP automatically provide emergency service personnel with the caller’s call-back number. However, since IP addresses don’t always give away the exact location of callers, it’s not always easy for operators to route the calls to the appropriate emergency call center. Fortunately, more and more VoIP services offer E911 calling, which offers geolocation features. So if you’re looking for that extra peace of mind, we’d advise opting for a provider that offers this feature, like Ooma or RingCentral.
4. Security
Just like any internet-based service, VoIP systems are prone to a range of security issues like phishing, spamming, malware, and identity and service theft. However, while the internet is more prone to security risks than landlines, VoIP services can be just as secure as legacy systems, as long as you choose a provider with adequate security measures. Check out our full guide to VoIP security to learn more.
5. Hidden costs
While the overall costs of VoIP systems are lower than landline phones, there are still a lot of less obvious costs to look out for. For example, on top of the price of monthly plans, lots of providers charge extra for basic calling and communication features, which can bump up the price of the overall package. Businesses may have to pay an additional number porting fee if they choose to transfer their number from their old service, so it is worth checking with your chosen provider to avoid paying unwanted fees.
How to Choose a VoIP Provider For Your Business
If you’re looking to sample the advantages of VoIP yourself, there’s an abundance of quality providers to choose from. However, here are some considerations to make before you commit to a service:
What is my budget?
VoIP systems are much more affordable than legacy systems, but some are more cost-effective than others. Before moving forward with a solution, make sure it works with your business’s budget. Don’t just consider monthly prices too. Look out for hidden costs, start-up fees, and installation costs, to get a complete overview of how much it could cost your business.
How large is my team?
Different VoIP plans will have different user limits. So, you will need to select a plan that fits the size of your business. If your team is likely to expand over time, we recommend opting for scalable packages and those with strong onboarding and training features.
Which VoIP capabilities do I need?
While most VoIP providers offer similar capabilities, feature sets will vary with each system. For instance, while some may prioritize inbound communication features like call queues and ring groups, others may offer stronger collaboration tools. Work backward by establishing what features your business requires before choosing a provider that reflects these needs.
Do I require hardware?
VoIP softphones won’t suffice for all businesses. If your business handles large call volumes and requires superior call quality, it may be a better idea to opt for one of the best VoIP hard phones. For other businesses – especially those with flexible working policies – VoIP softphone apps will likely be a better fit.