Hosted Contact Center

Hosted Contact Center: What It Is, How It Works

The evolution of customer service has reached a new milestone with the advent of hosted contact center solutions. But what exactly makes these solutions so transformative? How do they compare to traditional on-premises systems, and why are so many businesses making the switch? As businesses strive for efficiency and customer satisfaction, transitioning from on-premises systems to hosted solutions has become crucial.

Recent statistics indicate a 30% increase in the adoption of hosted contact centers over the past year, with companies reporting a 25% boost in customer satisfaction and a 20% reduction in operational costs. This blog will explore what a hosted contact center is, its benefits, and why it may be the perfect fit for your business.

Read More: Contact Center Workforce Management: Meaning and Benefits

What Is a Hosted Contact Center?

A hosted contact center is a communication solution managed off-site by a third-party provider, typically in the cloud. Unlike on-premises systems, which are managed and housed within a business’s physical premises, hosted contact centers offer a cost-effective, secure, and feature-rich customer communication channel. This model eliminates the need for expensive hardware and maintenance, allowing businesses to focus on core activities.

How a Hosted Contact Center Works

Hosted contact centers have revolutionized the way businesses manage customer interactions by offering a range of features and benefits. Here, we delve into the operational mechanics of a hosted contact center to understand why it has become a popular choice for modern businesses.

Subscription-Based Model

  • Accessing Hardware and Software: Hosted contact centers operate on a subscription-based model, where businesses pay a recurring fee to access the necessary hardware and software. This subscription typically includes all the essential components needed to run a fully functional contact center, such as communication infrastructure, software licenses, and data storage. The subscription fee can vary based on the level of service, number of users, and additional features required by the business.
  • Flexible Pricing Structures: The subscription model offers flexible pricing structures that cater to different business sizes and needs. Companies can choose from various plans that align with their budget and operational requirements. This flexibility allows businesses to avoid the significant upfront costs associated with purchasing and maintaining on-premises systems, making it an economical option for many.

Provider’s Role in Maintenance, Updates, and Support

  • Maintenance and System Updates: One of the significant advantages of a hosted contact center is that the service provider takes full responsibility for system maintenance and updates. This includes routine checks, performance optimizations, and implementing the latest security patches. By handling these tasks, the provider ensures that the contact center operates smoothly and efficiently, minimizing downtime and disruptions.
  • 24/7 Support Services: Providers also offer around-the-clock support services to address any technical issues that may arise. This support can include troubleshooting, configuration assistance, and user training. Having access to expert support ensures that businesses can quickly resolve any problems, maintaining high levels of customer service and operational continuity.
  • Security and Compliance: Hosted contact center providers are also responsible for implementing robust security measures to protect sensitive customer data. This includes encryption, secure data storage, and compliance with industry regulations such as GDPR or HIPAA. By adhering to these standards, providers help businesses mitigate risks and maintain the trust of their customers.

Integration and Scalability

  • Seamless Integration with Business Tools: Hosted contact centers are designed to integrate seamlessly with various business tools and customer relationship management (CRM) systems. This integration capability is crucial for maintaining efficient workflows and ensuring that customer data is accessible and up-to-date across all platforms. For example, integrating with a CRM system allows agents to view customer histories and preferences in real-time, enhancing the quality of customer interactions.
  • Scalability to Match Business Needs: Scalability is another key feature of hosted contact centers. Businesses can easily scale their contact center operations up or down based on current demands. For instance, during peak seasons, additional agents and features can be added quickly to handle increased call volumes. Conversely, during slower periods, businesses can reduce their usage to save costs. This scalability ensures that the contact center remains agile and responsive to changing business needs.
  • Adapting to Technological Advancements: As technology evolves, hosted contact centers can quickly adopt new tools and features without requiring significant changes to the existing infrastructure. This adaptability means businesses can leverage the latest innovations in customer service technology, such as AI-driven analytics, advanced reporting tools, and omnichannel support capabilities, without extensive investments or disruptions.

On-Premises vs Hosted Contact Centers

The decision between on-premises and hosted contact centers is critical for businesses looking to enhance their customer service operations. Below, we delve into the detailed aspects of cost comparison and features & scalability to help businesses make an informed choice.

Cost Comparison

  • Upfront Costs: On-premises contact center systems demand a significant initial investment in hardware, software, and installation. These costs can be prohibitive, especially for small to medium-sized businesses. In contrast, hosted contact centers require minimal upfront investment. Businesses typically pay a subscription fee, which covers the use of the necessary infrastructure managed by the provider. This model allows companies to allocate resources more efficiently and avoid substantial capital expenditures.
  • Long-Term Maintenance Costs: Maintaining an on-premises system involves continuous expenses for hardware repairs, software updates, and IT staff to manage the infrastructure. These ongoing costs can accumulate over time, making the total cost of ownership quite high. Conversely, hosted contact centers have low ongoing maintenance costs. The provider handles all updates, security patches, and system maintenance, which are included in the subscription fee. This arrangement not only reduces financial strain but also ensures the contact center remains up-to-date with the latest technology.
  • Setup Time: Setting up an on-premises contact center can be a lengthy and complex process. It involves procuring and installing hardware, configuring software, and testing the system, often leading to significant downtime and delayed operations. Hosted contact centers, on the other hand, offer a quick and straightforward setup. Since the infrastructure is already in place and managed by the provider, businesses can rapidly deploy the system and start using it within a short period, ensuring minimal disruption to their operations.

Features and Scalability

  • Integration: Integration with other business tools and customer relationship management (CRM) systems is crucial for a seamless workflow. On-premises systems often face challenges in integrating with modern software due to compatibility issues and the need for custom development. This can lead to additional costs and complexities. Hosted contact centers are designed with integration in mind, offering seamless connectivity with various business applications and CRMs. This integration capability ensures that data flows smoothly across systems, enhancing productivity and customer service efficiency.
  • Advanced Features: Hosted contact centers come equipped with advanced features that are essential for modern customer service operations. These features include interactive voice response (IVR), automated call distribution (ACD), call recording, and real-time analytics. Such functionalities are often difficult and expensive to implement in on-premises systems. Additionally, hosted solutions allow businesses to scale their operations easily. Whether it’s adding new users or expanding functionalities, hosted contact centers can adapt to changing business needs without significant investments or operational disruptions. In contrast, scaling an on-premises system often involves purchasing additional hardware and software, along with the associated setup and configuration efforts.
  • Scalability: Scalability is a key advantage of hosted contact centers. Businesses can easily adjust their contact center capabilities to match their growth or seasonal demands. Adding or removing users, features, or capabilities can be done quickly without the need for extensive planning or investment. This flexibility ensures that businesses can respond promptly to market changes and customer demands. On-premises systems lack this flexibility. Scaling up requires purchasing additional hardware and software, configuring the new components, and potentially hiring more IT staff. This process is not only time-consuming but also costly, making it challenging for businesses to remain agile.

Benefits of a Hosted Contact Center

Operational Cost Savings

  • Lower Upfront and Maintenance Costs: Hosted contact centers eliminate the need for substantial initial investments in hardware and software. Businesses pay a subscription fee, which includes access to all necessary infrastructure managed by the provider. This model is particularly advantageous for small to medium-sized enterprises that may find the capital expenditure for on-premises systems prohibitive. Additionally, ongoing maintenance costs are significantly lower. The provider is responsible for system updates, security patches, and any necessary repairs, reducing the financial burden on the business.
  • Support for Remote Working: With the rise of remote work, hosted contact centers offer robust support for a distributed workforce. Employees can access the contact center from anywhere with an internet connection, using a variety of devices. This flexibility reduces the need for large physical office spaces, thus lowering overhead costs. Furthermore, it ensures business continuity and operational efficiency, even when employees are working remotely, by providing seamless access to all necessary tools and data.


  • Easily Add or Remove Users and Features: One of the standout benefits of hosted contact centers is their scalability. Businesses can effortlessly adjust the number of users and features according to their current needs. Whether expanding during peak seasons or scaling down during quieter periods, hosted solutions offer the flexibility to make these changes without significant time or financial investment. This adaptability ensures that the contact center can grow in tandem with the business, supporting its evolving requirements.
  • Adapting to Business Demands: The ability to quickly adapt to changing business demands is crucial in today’s fast-paced market environment. Hosted contact centers allow businesses to introduce new functionalities, integrate additional communication channels, and enhance customer service capabilities on the fly. This flexibility ensures that companies can respond promptly to customer needs and market trends, maintaining a competitive edge.

Integration Capabilities

  • Native Integrations with Business Tools: Hosted contact centers are designed to integrate seamlessly with a variety of business tools and customer relationship management (CRM) systems. This integration capability ensures that data flows smoothly across different platforms, enhancing overall efficiency. For instance, customer data from the CRM can be accessed and updated in real-time during interactions, providing agents with the information they need to deliver personalized and effective service.
  • Streamlined Workflows: The ability to integrate with existing business tools streamlines workflows and reduces the need for manual data entry and transfers. This not only improves productivity but also minimizes the risk of errors. Hosted contact centers often come with APIs and pre-built connectors that facilitate easy integration, allowing businesses to quickly connect their contact center with other critical systems.

Advanced Features

  • Interactive Voice Response (IVR): IVR systems are a key feature of hosted contact centers, allowing automated call routing based on customer inputs. This improves the efficiency of handling incoming calls and enhances customer satisfaction by directing callers to the appropriate department or agent without delay. IVR systems can also provide self-service options for common inquiries, reducing the workload on agents.
  • Call Routing and Analytics: Hosted contact centers offer sophisticated call routing options, ensuring that calls are directed to the most appropriate agent based on factors such as skill set, availability, and customer history. Additionally, these systems provide real-time analytics and reporting tools, offering valuable insights into call patterns, agent performance, and customer satisfaction. This data-driven approach enables businesses to make informed decisions and continually improve their customer service operations.
  • Access to a Wide Range of Functionalities: Hosted contact centers come with a variety of advanced features that enhance the overall customer service experience. These include call recording and transcription for quality assurance and compliance, power dialers for outbound calling campaigns, and workflow automation to streamline repetitive tasks. The availability of these features in a hosted environment means businesses can leverage cutting-edge technology without the need for extensive in-house expertise or infrastructure.

Must-Have Hosted Contact Center Features

Interactive Voice Response (IVR)

IVR systems are crucial for managing high call volumes efficiently. They enable automated call routing based on customer inputs, such as pressing a number to reach a specific department. This reduces wait times and ensures that customers are directed to the right agent or department quickly. IVR systems can also offer self-service options, allowing customers to resolve common issues without speaking to an agent, which improves overall customer satisfaction and frees up agents to handle more complex inquiries.

Call Flow Designer

A call flow designer allows businesses to create and customize call flows that guide customers through a series of steps or options. This tool helps in designing intuitive and efficient customer journeys, ensuring that callers are routed correctly based on their needs. Custom call flows can be adjusted and optimized over time to improve the customer experience and operational efficiency. This feature is particularly useful for handling various scenarios, from simple inquiries to complex support cases.

International Phone Numbers

Having international phone numbers is essential for businesses with a global presence. Hosted contact centers provide access to local phone numbers in multiple countries, allowing customers to reach the business without incurring international calling fees. This not only enhances customer convenience but also expands the company’s reach by making it more accessible to international markets. Moreover, it projects a local presence, which can be beneficial for building trust with customers in different regions.

Call Monitoring

Call monitoring features are vital for maintaining high-quality customer service. Supervisors can listen to live calls to ensure agents are following protocols and providing accurate information. The whisper function allows supervisors to coach agents in real-time without the customer hearing, providing immediate feedback and support. The barge-in feature enables supervisors to join calls when necessary to assist with difficult issues or take over when required. These capabilities are essential for training, quality assurance, and handling escalations effectively.

Customizable Call Routing

Customizable call routing ensures that calls are directed to the most suitable agent or department based on various criteria such as agent skill set, customer history, or call priority. This feature helps maximize efficiency by ensuring that each call is handled by the best-equipped agent to address the customer’s needs. Advanced routing options can also include time-based routing, where calls are directed differently based on the time of day or week, and geographic routing, which considers the caller’s location.

Call Recording and Transcription

Call recording is a critical feature for quality assurance, training, and compliance purposes. Hosted contact centers offer secure storage for recorded calls, ensuring that sensitive information is protected. Transcription services convert voice recordings into text, making it easier to review and analyze interactions. These recordings and transcripts are valuable for evaluating agent performance, identifying areas for improvement, and ensuring compliance with industry regulations.

Power Dialer

A power dialer automates the dialing process for outbound calling campaigns, significantly increasing agent productivity. This feature ensures that agents spend more time speaking with customers and less time dialing numbers. Power dialers can also manage call lists, schedule calls, and retry numbers that were busy or unanswered, optimizing the efficiency of high-volume calling campaigns. This automation is particularly beneficial for sales teams and customer outreach programs.

Workflow Automation

Workflow automation in hosted contact centers streamlines repetitive tasks such as call logging, follow-up scheduling, and data entry. By automating these processes, businesses can reduce manual errors and free up agents to focus on more valuable activities. Automation also ensures consistency and accuracy in handling customer interactions, leading to improved data quality and operational efficiency. Automated workflows can be customized to align with specific business processes and objectives.

Built-In Analytics

Built-in analytics tools provide real-time insights into contact center performance. Metrics such as call volume, average handling time, customer satisfaction scores, and agent productivity are tracked and displayed on customizable dashboards. These analytics help managers identify trends, monitor performance, and make data-driven decisions to enhance service quality and operational efficiency. Real-time reporting allows businesses to respond quickly to emerging issues and optimize their contact center strategies.

CRM Integrations

Integrating the hosted contact center with customer relationship management (CRM) systems streamlines workflows and enhances customer service. This integration ensures that agents have access to comprehensive customer information during interactions, enabling personalized and efficient service. CRM integrations facilitate seamless data exchange between systems, reducing the need for manual data entry and improving data accuracy. This connectivity helps businesses maintain a unified view of customer interactions, supporting better decision-making and customer relationship management.


Hosted contact centers offer numerous benefits, including cost savings, scalability, and advanced features that can enhance customer service efficiency. As businesses continue to evolve, adopting a hosted contact center solution can cut costs, improve efficiency, and elevate customer satisfaction. Transitioning to a hosted contact center could be the key to staying competitive in today’s dynamic market.

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