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Cloud vs. On-Premises Contact Center Solutions – Which is Best for Your Business?

As consumer expectations continue to grow, contact center solutions are becoming more critical than ever. At the same time, the number of touchpoints customers use to interact with their favorite brands continues to expand. Achieving this high level of omnichannel engagement requires tooling that streamlines communication across voice, email, and many other digital channels.

With today’s globally distributed workforces, enterprises also need to ensure their contact center solution is accessible from anywhere and offers reliable performance. That way, companies have the tools and infrastructure necessary for their employees to remain productive no matter where they are. In turn, this can lead to more efficient business operations and an improved customer experience across numerous touchpoints.

In this post, we’ll look at what a cloud contact center is, how these solutions differ from on-premises contact centers, and which option is right for your business.

What is a Cloud Contact Center?

A cloud contact center is a system for handling all inbound and outbound customer communications, which is hosted on cloud servers. In general, cloud contact centre solutions offer capabilities for delivering customer service across voice, SMS, email, and many other digital touchpoints from a single application. That means they go beyond call centers, which only offer phone capabilities, by providing multichannel features as well.

Typically, cloud-based contact center software is offered as a comprehensive service, which is called Contact Center as a Service (CCaaS). CCaaS solutions are similar to Unified Communication as a Service (UCaaS), but focus on customer communication rather than internal and external employee communication and collaboration.

Many of these cloud contact center solutions also integrate with Microsoft Phone System, so that organizations can use Microsoft Teams for both internal and external calling. If you’re interested in learning more about using Microsoft Teams as an enterprise telephony solution, take a look at our guide to Microsoft Teams Phone System.

On-Premises vs. Cloud Contact Center Solutions

While cloud contact center solutions are hosted on cloud servers, traditional contact center solutions require on-premises hardware. This distinction between how these solutions are deployed creates some key differences across a number of relevant criteria like implementation requirements, upfront and ongoing costs, third-party integrations, reliability and resiliency, scalability, and adaptability.

Here’s a more in-depth comparison between on-premise and cloud contact centers solutions.

Implementation Requirements

Setting up an on-premises contact center can take months due to the time needed for IT teams to procure the necessary hardware, configure the physical infrastructure and install the required software. In many cases, internal IT staff will need to learn new skill sets in order to handle these tasks, especially if the on-premises solution uses proprietary hardware or software.

Cloud contact centers, on the other hand, are usually much more straightforward to set up. CCaaS providers often help with the implementation and handle many of the technical details behind the scenes. That means cloud-based solutions can be faster and easier to implement for organizations of all sizes.

Upfront & Ongoing Costs

On-premises solutions require servers and other hardware that involve considerable upfront expenses, and may need to be replaced every few years before they become obsolete. In addition, IT teams need to maintain this hardware and continually upgrade the software to ensure security and performance. It can often be expensive to find IT staff with the right expertise.

Cloud-based contact center solutions don’t require any upfront investments in hardware or infrastructure. Instead, contact center software providers usually charge monthly or annual subscription fees based on certain usage metrics. These pay-as-you-go models ensure all upfront and recurring costs that the provider incurs are built into the fees, and businesses can closely align contact center expenses with their actual usage.

Third-Party Integrations

As most on-premises contact centers rely on proprietary hardware, integrating these solutions with other business applications can require support from the vendor. Companies will also often need to put together a development team to implement any integrations from scratch, which is especially difficult and time-consuming for legacy applications.

Most cloud-based contact center software offers integrations with other leading services out of the box. For example, companies can connect with business applications they’re already using for customer relationship management (CRM), helpdesk ticketing, survey tools, and more. In addition, most CCaaS solutions offer robust APIs for connecting with other cloud-based applications to further accelerate any integrations.

Reliability & Resilience

Although many businesses believe on-premises contact centers are more reliable, these solutions are vulnerable to issues with the hardware and infrastructure they run on. Relying on local servers could introduce a central point of failure and increase the risk of downtime. Many on-premises solutions, therefore, lack enterprise-level global redundancy and disaster recovery.

Cloud-based contact center solutions can scale across multiple servers around the world, so these solutions generally have improved uptime and availability compared to on-premises alternatives. That said, cloud contact center solutions rely heavily on the Internet, so businesses will require adequate bandwidth to ensure call quality. With high bandwidth, however, cloud solutions can have greater resiliency and reliability at a lower cost than many company-specific on-premises solutions.


Another critical factor, especially in today’s distributed work environment, is flexibility. On-premises contact centers often tie employees to specific locations, which limits adaptability as customer service agents work-from-home or switch offices. Scaling on-premises hardware for seasonal businesses is also challenging, so organizations end up over-provisioning infrastructure for peak demand or under-provisioning and experience poor performance during usage spikes. 

Cloud-based solutions aren’t tied to a specific office location, so employees throughout the organization can seamlessly interact with customers no matter where they are. That means IT staff have centralized control over scalability, and don’t need to manage on-premises capacity across a number of different office locations as well. Moreover, cloud solutions are more elastic than on-premises solutions, so organizations can scale up and down their contact center infrastructure throughout the year as needed.


Customer expectations are evolving quickly, so it’s critical that enterprises have contact center solutions that can keep up. Traditional on-premises contact centers, however, often leverage proprietary systems that aren’t always designed for adding new functionality quickly, which can impact the customer experience in the long run. Vendor lock-in, where it becomes difficult to migrate to a new system, is also a common issue with many traditional contact center solutions.

Adding new functionality for emerging customer channels or other trends is often much easier with cloud-based solutions that provide robust APIs. In fact, most modern software includes APIs for not only integrating multiple systems but extending their functionality to meet specific business requirements. That means enterprises can leverage CCaaS solutions for greater organizational agility and the ability to quickly meet customer expectations.

Which Contact Center Solution Should You Choose?

While choosing between an on-premises or cloud-based contact center solution may seem daunting, it’s crucial to make the decision based on the unique circumstances of your business. The complexity of your requirements, available budget, IT expertise, and more can be critical factors that impact which is the right option.

In the past, many enterprises chose on-premises solutions to have greater control over security and availability, but this is changing with cloud vendors offering attractive Service Level Agreements (SLAs). That said, on-premises contact centers are challenging for small and medium sized businesses because they usually lack a dedicated IT team for installation, maintenance, and integrations. It’s also difficult to scale on-premises solutions if the business grows rapidly and requires upfront investments based on potential demand in the future.

Cloud-based contact center solutions are usually faster and easier to set up, so companies require fewer resources to get started. Combined with robust APIs and out-of-the-box integrations, many CCaaS solutions are also more flexible and customizable without requiring a lot of additional IT resources. The reduced reliance on IT and pay-as-you-go model can also make CCaaS solutions cheaper for small businesses and large enterprises alike. Finally, cloud-based contact center solutions aren’t tied to a single office, so they’re ideal for companies that have a large number of employees working remotely.

Microsoft Teams Contact Center

Building centralized communication and collaboration infrastructure allows companies to operate more efficiently. By providing employees with all the features they need without switching between multiple business applications or legacy systems, companies can increase productivity and improve the customer experience. Moreover, IT teams can manage a single platform rather than dealing with multiple systems and vendors, which can reduce costs and improve business continuity.

As mentioned before, Microsoft Teams is an excellent option for enterprises that need a comprehensive cloud telephony solution, especially when using Microsoft Phone System and Direct Routing for external calling with customers, clients, and employees outside the office. Moreover, businesses can connect a CCaaS solution with Microsoft Teams using the Contact Center API. This enables Microsoft Teams to become a true UC solution and centralized hub for all business communication.

LoopUp is a leading provider of cloud communication solutions and a certified Microsoft Gold Partner that helps enterprises implement Microsoft Direct Routing using our global voice network. Our network leverages 13 tier-1 PSTN carriers to ensure regional redundancy and 99.995% uptime availability. That’s why over 5,000 enterprises globally have chosen LoopUp as their trusted partner for communication solutions and remote work initiatives.

Want to learn more about integrating Microsoft Teams with a cloud contact center solution? Contact LoopUp and we’ll support you along your cloud communication journey.

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