Skip nav to main content.
Are you looking to improve agent productivity by 2X? Learn More Close Banner
Cloud Based Contact Center

How Do You Choose Between On-Premise and Cloud Contact Centers – Everything You Wanted to Know!

Dhivakar Aridoss

Dhivakar Aridoss

Marketing Head

Let us delve into the world of contact centers and explore the differences between on-premise and cloud solutions.

We will also look at why you should choose one over the other.

On-Premise Contact Centers: Traditional Yet Limited

An on-premise contact center is a setup where all the necessary hardware, software, and infrastructure are hosted and managed within the organization’s physical premises.

These contact centers require significant upfront investment in equipment, space, and IT resources to install, maintain, and update.

What Is an On-Premise Contact Center?

In an on-premise contact center, the organization has complete control over the hardware and software components, allowing customized configurations and tailored solutions to meet specific business needs.

However, this control comes with challenges, such as high initial costs, lengthy deployment times, and limited scalability.

Benefits of On-Premise Contact Centers

Control and Customization

Organizations have complete control over their contact center infrastructure, allowing highly customized configurations to meet unique requirements.

Data Security

With data stored on-premise, organizations perceive and feel they have greater control over security measures and compliance requirements.

Integration With Legacy Systems

On-premise solutions can seamlessly integrate with legacy systems and applications, ensuring compatibility and continuity.

Drawbacks of On-Premise Contact Centers

High Initial Costs

On-premise solutions require significant upfront investment in hardware, software licenses, and infrastructure.

Limited Scalability

Scaling an on-premise contact center can be challenging and costly, requiring additional hardware and resources as the organization grows.

Maintenance and Upkeep

Organizations are responsible for ongoing maintenance, updates, and troubleshooting, which can strain internal IT resources and increase operational costs.

Cloud Contact Centers: The Future of Customer Engagement

On the other hand, cloud contact centers, also known as virtual or hosted contact centers, leverage cloud-based technology to deliver a flexible, scalable, and cost-effective solution for customer engagement.

What Is a Cloud Contact Center?

A cloud contact center operates on a subscription-based model, where all the hardware, software, and infrastructure are hosted and managed by a third-party provider in the cloud.

This eliminates the need for upfront investment in hardware and infrastructure and the burden of maintenance and updates, allowing organizations to focus on their core business objectives.

Benefits of Cloud Contact Centers


Cloud contact centers offer a pay-as-you-go pricing model, allowing organizations to scale up or down as needed without the high upfront costs associated with on-premise solutions.

Scalability and Flexibility

Cloud contact centers provide virtually unlimited scalability, enabling organizations to easily add or remove agents, channels, and features to meet changing business demands.

Rapid Deployment

With cloud contact centers, deployment times are significantly reduced compared to on-premise solutions, allowing organizations to get up and running quickly and efficiently.

Remote Accessibility

Cloud contact centers enable remote access to the platform from anywhere with an internet connection, providing flexibility for remote agents and distributed teams.

Drawbacks of Cloud Contact Centers

Most cloud contact center drawbacks are perceived and are so yesterday. However, I will list a few of them for better understanding.

Dependence on Internet Connectivity

Cloud contact centers rely on stable Internet connectivity to function effectively. Any disruptions or outages in Internet service can impact operations and result in downtime.

Potential for Vendor Lock-in

Organizations may become locked into a specific cloud provider’s ecosystem, making it difficult to switch providers or migrate to on-premise solutions in the future. This can limit flexibility and increase dependency on the provider.

Differences Between On-Premise and Cloud Contact Centers

Infrastructure ownershipOwn and maintain the infrastructureProviders host and manage the infrastructure
Scalability and flexibilityVery limited scalability and flexibility; requires huge investmentsScale up and down without any hassles at the click of the button
Cost structureHigh upfront costs and ongoing maintenance expensesSubscription model with predictable monthly fees
Maintenance and updatesHigh-cost IT resources are needed to maintain and update the infrastructure.Maintenance and updates are part of the provider’s SLAs
Accessibility and mobilityRequire physical presence in the office or VPN access for remote work, limiting mobility and flexibility for agents.Offer accessibility from anywhere with an Internet connection, enabling remote work and flexibility for agents to work from home or on the go.
Global reach and localizationScaling globally can be complex and costly, requiring additional infrastructure and resources in each region.Can easily scale globally, with the ability to deploy contact center services in multiple regions and support localization for different languages and time zones
Disaster recovery and business continuityImplementing disaster recovery measures for on-premise solutions can be challenging and costly, requiring redundant systems, off-site backups, and comprehensive recovery plans.Offer built-in redundancy, data backups, and disaster recovery options, ensuring business continuity and minimizing downtime in the event of disruptions or outages.
Environmental impactRequires organizations to maintain and operate their own data centers, which consume significant energy and resources, contributing to a higher environmental impactEnvironmentally friendly, as they leverage shared infrastructure and resource pooling, leading to reduced energy consumption and carbon footprint.
Regulatory complianceOrganizations must implement custom policies and procedures to meet specific regulatory requirements.Providers offer compliance certifications and adherence to industry standards, helping organizations meet regulatory requirements such as GDPR, HIPAA, and PCI DSS.
Enhanced collaboration and communicationRequires separate collaboration tools or integrations, adding complexity and cost to the setup.Comes with in-built collaboration tools like chat, presence, and video conferencing, enabling seamless communication and teamwork among agents, supervisors, and other stakeholders.
Agility and InnovationMay lag behind in innovation, as organizations are responsible for managing and updating the infrastructure, which can be time-consuming and resource-intensive.Continuously innovate and introduce new features and capabilities, allowing organizations to stay ahead of the curve and leverage the latest technologies to enhance customer experiences.
Customer experience differentiationLack the flexibility and agility to adapt to changing customer preferences and expectations, limiting the organization’s ability to differentiate on customer experience.Empowers organizations to deliver personalized and omnichannel experiences, enabling seamless interactions across multiple channels such as voice, email, chat, and social media.
Improved agent experienceMay lack modern features and user interfaces, leading to suboptimal agent experience and potentially impacting performance and morale.Comes with user-friendly interfaces, intuitive workflows, and remote access capabilities, enhancing the agent experience and productivity.

Cloud Contact Centers – What Should You Be Wary Of?

There are several myths and misconceptions when it comes to cloud contact centers. Let us address some of those myths in this article.

Do All Cloud Contact Center Providers Offer You the Comfort of Offloading the Maintenance and Operations of the Platform?

This is a good question. You should be wary of this when subscribing to a service.

Do check with them on who will manage the operations and maintenance of the platform. Do you need to have experts in-house to do it?

For instance, if you are handling the implementation or are dependent on a third-party provider, then you are stuck when it comes to customizations and workflows.

If you have to roll out the implementation, then that definitely is a showstopper, and you should move away from that provider.

Would Hosting a Cloud Contact Center Platform Turn out Expensive Over Time Compared to the Outright Purchase of Technology?

This is a myth that has been doing the rounds for years now. Let me break this down for you.

Firstly, let us look at the costs involved in a contact center:

  • Dialer costs
  • Voice infrastructure costs
  • Hosting the dialer on a server either locally or at a data center
  • Integrating the dialer platform with multiple other departments and systems
  • Integrating the various channels through which you offer customer experience with the contact center platform – voice, IVR, click-to-call, email, web, SMS, chat, video, and social
  • Managing patches, upgrades, and vulnerabilities of the infrastructure
  • Customization of the workflow to fit your organizational needs
  • Ongoing maintenance and support

These are the overall costs involved in running a contact center.

Let us look at the scenario where you own the technology.

You must pay a hefty license cost and commit to the vendor on the number of seats you purchase on different channels upfront. Likely, you may not use everything you buy right from the beginning.

Besides, you will sign an annual maintenance contract to be covered with upgrades, patches, and vulnerability fixes.

You will also have to factor in resources that would ensure the security and availability of your infrastructure. You will have to upgrade your server and voice hardware every three years, as they become obsolete at the hardware and software levels.

Now, look at the cloud offering.

There is no CAPEX that you incur. You will be billed per minute, including dialer, voice, integrations, maintenance, upgrades, patches, vulnerability fixes, data security, hosting, customizations, and all the channels.

There is no annual maintenance control; you don’t need resources to manage and sustain the infrastructure.

Besides, you can scale up and down the number of agents per your needs. There is no upfront commitment on the licenses and the number of agents. You pay per your use.

All your agents need is an Internet connection, access to a browser, and a headset to be up and running to provide the best possible customer experience.

Now, a cloud contact center would mean better ROI in the short- and long-term.

Ours Is a Very Regulated Industry, and We Must Comply With Several Regulations. We Are Always Worried Whether the Provider Understands These Nuances of Our Needs

This definitely can be a showstopper. You should check with your cloud contact center providers on how they would manage the compliance needs.

While most platform providers understand the compliance needs of various industries, it can be a dark spot for some.

Ensure they satisfy your compliance needs before you choose to work with them.

Take, for instance, our platform – by virtue of providing Contact Center as a Service (CCaaS) for more than 20 years now, our platform is compliant with various industry standards and regulations like HIPAA, PCI-DSS, TCPA, FDCPA, Reg-F, SOC2, FedRamp, and ISAE 3402 Type II specifications.

This has been one of our USPs, ensuring compliance for our customers.

We Always Worry About How the Cloud Contact Center Provider Manages Our Instance’s Security. What Should I Know About It?

Let me assure you that cloud providers typically have better security mechanisms compared to what you may have in-house. Usually, cloud providers have full-time staff monitoring their security operations center round-the-cloud against attacks and vulnerabilities.

That being said, you should ask these questions before signing up:

  • How do you ensure the availability of my data? Do you provide redundancy and automatic failover? Do you ensure availability even during natural calamities and disasters?
  • Do you support virtualization?
  • How do you ensure the physical security of the servers?
  • Who would handle patching and operating system-level vulnerabilities?
  • How do you segment the users from the network where the data resides?
  • What kind of encryption do you support?

The choice between on-premise and cloud contact centers ultimately depends on each organization’s unique needs, preferences, and goals. While on-premise solutions offer control and customization, cloud contact centers provide agility, scalability, and cost-effectiveness.

As businesses continue to prioritize customer engagement and satisfaction, cloud contact centers are increasingly becoming the preferred choice for organizations looking to future-proof their customer experience strategies and drive business success in the digital age.

Explore our full range of call center software features