Cloud Contact Center: What Is It & How Does It Work?

January 28, 2023 | 14 min read

What Is a Cloud Contact Center? How They Work, Features & Benefits Compared.

If you want to use a modern, hassle-free customer support platform, you should look into a cloud-hosted contact center. Why? It’s loaded with tools to help customers over the phone, email, social media, and integrates with your existing business applications.

What Is a Cloud Contact Center?

A cloud contact center is an online service that provides inbound and outbound telephone connectivity to agents through the internet. Agents would typically use a cloud contact center to receive incoming and place outgoing calls from their desktops.

Unlike business VoIP, cloud-based contact centers streamline customer communication across multiple channels, including phone, email, text, social media, and more. It offers advanced features you won’t find in an on-premises phone system.

But choosing the best contact center software can be tricky.

This guide covers the most useful features of cloud contact centers and the major differences between other types of customer support platforms. By the end, you’ll know how to select the best contact center for your team.

As organizations add more support channels, a hosted contact center solution helps them respond to every customer request and optimize agent productivity.

A cloud-based contact center is a communication hub that uses call center technology hosted in the cloud. It handles all types of inbound and outbound customer calls and communications, including voice, email, SMS, social media, and the web.

Unlike on-premise systems or hosted contact centers, a cloud contact center isn’t tied to a specific server or physical location. Instead, anyone in your team can access it from anywhere through the cloud—a system of high-performance servers distributed worldwide.

Cloud call centers use two main technologies: automatic call distributors (ACD) and interactive voice response (IVR) systems.

  • Interactive Voice Response (IVR): The audible menu greets you after calling a business that asks why you’re calling. IVR systems usually let you choose menu options by pressing a number or saying a request interpreted with natural language processing.
  • Automatic Call Distributors (ACD): It provides behind-the-scenes call routing automation to ensure every incoming call connects to the right contact center agent. It logically directs callers to the best agent to help.

How Does a Cloud Contact Center Work?

A cloud contact center handles all customer communication, including inbound and outbound calls, chatbot and text messages, social media, and video communications over an internet connection. Contact center providers handle all the technical setup, equipment, and maintenance.

Unlike an on-premises PBX, cloud centers don’t require telecom hardware to purchase, install, and maintain. Instead, phone calls and messages use Voice over Internet Protocol (VoIP) technology.

Cloud contact center software connects to other platforms like social media or email and integrates all channels seamlessly. Each interaction connects with a customer or prospect account and assigns incoming communications to the right agent to avoid conflicts.

A cloud contact center can also integrate with your customer relationship management (CRM) software, keeping all communication data in sync across your organization. It’s the best way to deliver a seamless customer experience across every channel

Since a contact center works entirely over the internet, it means you just need to provide workstations, headsets, and an internet connection for your team. While you can use special hardware, cloud-based software will work just as well on the computers and cell phones you’re already using.

Benefits of Cloud Contact Centers vs. Traditional on-Premise Contact Centers

There’s no avoiding the reality: on-premises call centers are quickly becoming outdated.

There’s a reason IDC predicts that business cloud solutions will continue to outpace (54%) on-site technology investments (46%) in the coming years.

Analysts forecast that cloud-based infrastructure will continue to unseat on-prem solutions.

On-prem contact centers require employees to be physically present, demand constant maintenance, and require expensive (and quickly obsolete) hardware. On-site call centers revolve around phone conversations, which don’t address the modern customer experience. For these reasons and more, cloud-based contact center solutions are the right approach for high-growth companies.

Cloud contact centers are entirely different. They offer accelerated setup, improved flexibility, and real-time analytics. In the end, this means lower operating costs, gains in customer experience, and faster time to market.

FunctionCloud contact centerTraditional contact center
SetupAffordable, out-of-the-box installation that can work with existing devicesMonths-long process that requires hardwiring each device to a central system
ScalabilityNear-infinite scalability; can add new lines in a few clicksEach new line requires additional on-premise setup
ReliabilityEnterprise-level reliability with excellent uptime and speed improvements through software upgradesReliability depends on existing hardware, which will deteriorate over time
ImprovementsEver-expanding set of key features using developing technologies like AI and predictive analyticsLimited to existing capabilities
FeaturesAll traditional features plus modern improvements like IVR, natural language processing, live call monitoring, and moreTraditional features like hold, call logging, and wait music
IntegrationsExtensive integrations across digital channels and toolsLimited integrations that can be difficult to set up due to installation and licensing issues
CostMinimal up-front cost and lower monthly cost per userHigh upfront costs and additional ongoing costs for system maintenance
Remote work flexibilityAgents can work from anywhere in the worldAgents are restricted to the system’s physical location
Customer engagementSeamless conversations across channels and departmentsEach channel is handled separately

How Cloud-Based Contact Centers Improve Customer Experience

Before transitioning to the cloudAfter transitioning to the cloud
Customer communications are siloed across different departments and teamsAgents have access to all customer communications in a single integrated platform
Customers are limited to using a few fractured channelsCustomers can reach out using their preferred channel, like calls, emails, text messaging, chatbots, and more
Call analytics data is reduced to single, incomplete data pointsDeep analytics across all calls are readily available and easy to access
Callers spend a large part of their time on hold, waiting for the next available agentCalls are routed smartly with less hold time and modern alternatives like automatic callback
Agent performance is difficult to measure, analyze, and improveAgents receive better feedback and training based on real-time analytics and monitoring

Cloud Contact Center Pricing

Cloud contact centers are billed on an ongoing basis as a contact-center-as-a-service (CCaaS) model. Pricing depends on the total number of users you’ll need—the larger your team, the less you’ll pay per user.

PricingEnterprise plans start at $36.95/userCustom quote for contact center
Communication ChannelsVoice, text messaging (SMS), video conferencing, team messaging, internet fax, voicemailVoice, text messaging (SMS), video conferencing, team messaging, internet fax, voicemail
Monthly Toll-free Minutes and numbersIncludedAdd-on
Reliability99.999% uptime99.999% uptime
Customer supportPhone support and live chat are available 24/7Phone support and live chat are available Monday-Saturday during extended business hours
IntegrationsMicrosoft, Salesforce, HubSpot, Google, and moreMicrosoft, Salesforce, HubSpot, Google, and more

How to Choose the Right Cloud Contact Center Vendor

The cloud-based contact center industry is expected to grow by a compounded annual growth rate of 26% through 2027. But as the industry grows, choosing between providers is harder.

How can you decide on the best cloud contact center provider for your needs? Here are the factors to remember as you review which cloud call contact center technology to use.

  • Uptime: You won’t be able to deliver without performance and reliability. Look beyond a service level agreement (SLA) to see if the provider’s status updates are posted publicly.
  • Analytics: Solving customer concerns is just the beginning. You must also measure resolution rates across contact channels, accounts, teams, and individuals. Ensure that this data is accessible and intuitive for most users. 
  • Supervisor Dashboards: In the world of remote work, ensure that team supervisors can track the real-time performance of their teams, intervene if someone needs help, and maneuver around easily. Enhanced workforce management features let supervisors plan out agent schedules and anticipate customer cases.
  • Smart IVR: This type of interactive voice response (IVR) system responds differently based on caller ID, account status, and when there’s a known issue. Look for a contact center solution that adapts to evolving business needs and customer experiences. Advanced Automatic Call Distributor (ACD) systems can direct calls to the right agent and share key presses from the IVR.
  • UCaaS Integration: Managing two communication systems can be challenging for any organization. Check into a cloud contact center’s unified communications partnerships for seamless integration across the enterprise. Moving your communications to the cloud ensures you have increased business continuity. (Psst! Five9 has partnered with Nextiva for this deep integration.)

Comparison: Cloud Contact Center vs. Cloud Call Center

The most significant distinction between call centers and contact centers is how agents interact with customers.

Cloud-based call center software is designed to handle a heavy volume of inbound and outbound phone calls. Agents talk with customers over the phone in real time. Since it’s in the cloud, it’s scalable, and employees can work in the office, remotely, or a hybrid of both.

A cloud-based contact center also handles phone calls but also integrates other channels, including email, social media, text messages, chatbot, and video. The result is a seamless system where customers can get help regardless of their chosen channel, all with consistent improvements and quality management.

The role of a contact center has expanded from fielding customer service inquiries to driving customer success and equipping salespeople with multichannel engagement tools beyond automated dialers.

Secure data integrations and endless customizations make cloud contact centers the ideal solution for service and sales teams to hit their growth targets. 

What is the difference between cloud and on-premises contact centers?

The main distinction between a cloud-hosted contact center and an on-premises one is the location of hardware and software that manages their communications.

With on-premises contact centers, businesses are responsible for hosting their own servers and hardware, while cloud-based contact centers rely on offsite servers and software provided by trusted software vendors.

On-premises contact centers are generally more expensive and need more maintenance. Cloud contact centers have more attractive pricing that adjusts to the company’s needs.

Is a cloud contact center more reliable than on-premises?

Setting aside the need for internet connectivity for agents — which is a necessity for most business applications today — cloud contact centers are more reliable than on-premises phone systems.

Modern cloud contact center platforms like Nextiva offer 99.999% uptime thanks to their redundant cloud environment, data backups, active monitoring, and global connectivity. The underlying infrastructure is routinely audited for security updates.

At a technical level, since the cloud-based phone systems use several points of presence, the nearest server is usually no more than 3–4 hops away, or milliseconds, to support real-time phone conversations.

Cloud Call Center vs. PBX Comparison

FunctionCloud contact centerCall center PBX
Setup Time1–4 weeks6–12 weeks
ScalabilityFeatures delivered on-demandRequires extensive hardware upgrades
IntegrationsNumerous API-based integrationsLimited middleware integrations
FlexibilityEmployees can work in the office and remotelyEmployees must work within an office
AnalyticsReal-time customer journey analyticsLimited to agent dispositions
Cost (Assumption: 75 seats)Approximately $100 per agent per month that grows with youApproximately $75,000 upfront per agent, plus software licenses, trunks, and maintenance
ReliabilityRedundant upstream carriers are monitored 24/7Less susceptible to jitter over the internet

Top Features & Benefits of Cloud Contact Centers

1) Lower setup and ongoing costs

Our comparison between VoIP and landlines shows that businesses stand to save up to 65% when they switch from analog. It’s not just the monthly cost that matters.

Organizations that opt for a cloud-based contact center won’t need to budget for real estate, redundant power (diesel generators), multiple network carriers, security audits, and the staff to troubleshoot client software. 

Microsoft once found that 82% of businesses reported cost savings when they moved to the cloud. Without the hard costs of hardware or an expansive IT workforce, a cloud-hosted PBX system is more affordable.

The best part? The cost savings of a cloud-based system don’t stop there. There are likely several apps you pay for that can be replaced by cloud contact center software, too.

2) Built for remote work

With many companies now working from home and the office, cloud contact centers provide the ultimate flexibility. Everyone stays connected no matter the location. Supervisors and call center directors can keep up with the team wherever they work.

Cloud-based contact centers are engineered to work across various devices and operating systems. They also provide real-time reporting to provide greater transparency into productivity and the customer experience.

End-to-end security is essential for remote work, both for the privacy of the customer and the employee. Cloud call center solutions are routinely audited to prevent data breaches and leaks.

A vast majority of employers and employees indicate remote work has been successful. (PwC)

3) Fast installation and setup

Cloud contact centers have a much faster setup window. While there’s typically no hardware involved, you can customize anything in a matter of minutes, not months. Onboarding employees is instant, and you won’t need to deal with endless IT support requests.

When supervisors pull stats on calls, cases, customer surveys, and employee performance, they can do it in minutes. Cloud-based contact center solutions are streamlined for sales and service teams. That means no need for SQL queries, terminal access, or four-inch-thick admin manuals.

4) Superior performance

Cloud-based systems are resilient to more users and inquiries. It’s because they use virtualization technology to spin up more server resources instantly. You’re covered no matter how many calls, cases, or employee interactions you have.

Cloud contact center leaders have invested in their network to ensure maximum redundancy. Since customer interactions travel through the internet, providers use multiple network backbones to provide noticeable gains in uptime and responsiveness.

If your internet service goes down, you can deploy messaging to customers and route incoming calls to agent cell phones as a backup.

On-site physical phone systems have finite resources. Upgrading means taking the entire system offline, and you’ll need full-time staff dedicated to server upgrades and backups. Cloud-based systems simplify everything.

5) Improved agent productivity

Many companies use several tools cobbled together to address fragmented workflows. This inefficiency saps productivity.

Instead of sluggish customer service tools, cloud contact centers like Nextiva put agents in the driver’s seat with an optimized dashboard tuned for each type of customer inquiry. It can save hours of context switching and lets your team anticipate customer needs.

Additional features, like click-to-call, minimize misdials and help you place outbound calls faster. Cloud contact center platforms leverage artificial intelligence to resolve customer concerns before they even reach the agent. At a minimum, they can intelligently direct incoming calls to self-service to improve the customer experience.

6) Plenty of room for growth

Cloud-based call centers let you add as many users, calls, or cases as you want. A cloud-based system means no additional wiring, complicated configuration, or pesky IT requests to submit. You can start small and grow when you’re ready.

With on-prem voice solutions, you need to go big on day one. And you’ll need to upgrade when you hire, add new locations, or support more customers.

Cloud-based contact centers also let you choose between a VoIP desk phone setup or a software VoIP app. They give you the ultimate flexibility to provide both hardware and software options.

7) Enterprise-grade reliability and uptime

Traditional phone systems are more susceptible to localized outages than cloud-based ones. Common risks include severe weather, building hazards, and regional network outages.

Nextiva has one of the most reliable business voice networks in the U.S.

Cloud phone systems adopt a different tact. They’re built for reliability from the ground up. Cloud communication providers like Nextiva monitor the network 24/7 to ensure everything runs smoothly, and many offer enterprise service level agreements (SLA) upon request.

Related: Is VoIP Reliable? Nine Facts To Know Before You Switch

8) Industry compliance with hardened security

On-premises solutions require you to perform regular, costly audits. They also place confidential customer and employee data at risk. Cloud contact centers offer world-class security that’s integrated across the platform.

Call encryption (TLS and SRTP), permissions management, and extensive logs help you neutralize potential threats.

Many cloud contact center providers also undergo audits to ensure they meet the rigorous standards to process credit card payments, discuss private health information, and handle sensitive personal information. Accreditations to look for include PCI-DSS, HIPAA with business associate agreements, and SOC 2. And if you do business in California, look for CCPA compliance as well.

Cloud contact centers provide you with the assurance you need to work safely and securely.

9) Vibrant integration ecosystem

Contact centers use approved third-party integrations to bridge the digital divide between critical business applications.

Salesforce’s State of the Connected Customer report showed that two-thirds of consumers have to repeat themselves to different representatives. That’s compared with 85% who said they’d be more loyal to companies that provide consistency across departments.

A cloud contact center can help you deliver that consistency by syncing data across different apps.

Let’s say someone calls your support hotline. You can identify their account based on the saved phone number and connect it to purchases, calls, ticket history, surveys, and potential upsell opportunities. The result is a streamlined system that feels integrated no matter which channels your customers use.

10) Tracks real-time analytics

One of the underrated advantages of cloud contact centers is the simplicity of measuring every stage of your customer experience. This strength comes in two forms: real-time dashboards and custom reports.

Agents and supervisors can see how they’re progressing at a glance. Analytics also help with scheduling and workforce optimization.

Call center managers and directors can use historical data to forecast trends and satisfaction scores and dissect cross-sections of customer data. Since cloud-based contact centers keep all data in sync, you can instill trust and achieve growth with a single source of truth.

While on-site contact centers can provide some of the raw data for these reports—provided you have skilled data scientists to make sense of it—they lack many modern features in cloud-based platforms.

You’ll need to transition to the cloud if you want natural language processing, real-time analytics, and more.

11) Ease of management

Adjusting the settings in a cloud contact center is easier for both experienced IT staff and business professionals.

You can carry out those changes instantly when you want to make a quick change or modify user permissions. This freedom lets you manage the system instead of letting the system manage you.

Administrators can adjust every setting from a secure web portal. It’s accessible from anywhere, on any connection. No more IT emergencies that require taking the system offline during the middle of the night.

Since a contact center touches more than phone calls, admins can adjust incoming cases, post-interaction surveys, agent views, and more. This flexibility grows with you as you add new services or product offerings.

12) Delivers a better customer experience

The goal of a contact center is to solve problems for your customers. You want to make it easy for them to get in touch. Lasting customer relationships require seamless customer experiences.

Traditional customer support tools struggle in multi-channel environments. For example, online ticketing tools are designed for online interactions, but what happens when they pick up the phone? Or reply to an order confirmation email? Or respond to a promotional text message?

Consider the communication channels your customers prefer. For example, Microsoft’s Global State of Customer Service report cites that almost half of customers use up to five different communication channels to resolve their issues. Therefore, offering an omnichannel routing approach is key to keeping your customers happy.

Take to heart that cloud contact center tools reduce the burden on the customer and equip agents with the means to solve their issues. More outbound channels deliver proactive customer service and offer new ways to improve customer satisfaction.

Scale Your Sales and Support Organization With Nextiva

Looking for a top-rated contact center solution? Nextiva was named Customers’ Choice for Midsize Enterprise and North America by Gartner Peer Insights. It’s an easy-to-use omnichannel cloud center platform paired with Nextiva’s award-winning customer support.

Thousands of companies rely on Nextiva for scalable communication solutions to grow their businesses.

Here are three reasons why Nextiva stands out from the rest:

  • Excellent network reliability: Nextiva offers eight data centers across the United States that reliably connect billions of calls every year.
  • Amazing Service: Every account benefits from our award-winning customer service, with 24/7 support, monitoring, and hands-on guidance whenever you want it. Our onboarding takes care of everything so you can focus on serving customers.
  • Ease of use: Take the guesswork out of meeting your growing needs with powerful tools for your team. Not only are they easy to use, but they’re also easy to set up!

A contact center solution is ideal for those facing a rising tide of customer and sales requests. Nevertheless, the benefits of moving your contact center to the cloud far exceed those of an on-site solution.

You can’t go wrong with a cloud call center—it offers unmatched scalability. And when you’re ready to move to an omnichannel contact center, we’re ready.
There’s a reason why companies in industries like healthcare, logistics, and finance trust Nextiva. It’s dependable and enables them to grow faster.

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Chris Reaburn


Chris Reaburn

Chris Reaburn is the Chief Marketing Officer for Nextiva. He embraces the nontraditional. He was a sailor for years before I went to B school. In between roles leading public company marketing organizations, Reaburn ran a regional wireless carrier and an IT managed service provider, led enterprise sales groups, and led business divestiture, acquisition, and…

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