What Is a Hosted Contact Center? (Benefits & How It Works)

January 31, 2024 7 min read

Alina Benny

Alina Benny

Hosted contact center featured image

In the past, call centers required substantial investments in hardware and software as well as complex maintenance. Agents were tied to physical workspaces with limited flexibility. 

Hosted contact centers overcome these challenges by delivering essential omnichannel support tools through the cloud on a subscription basis.

A hosted model allows businesses to scale operations up or down as needs fluctuate without capacity restraints. Agents can work productively from anywhere. Management gains robust analytics and automation to drive efficiency.

In this article, we’ll explore the benefits, features, and share tips to choose the right hosted contact center solution.

What Is a Hosted Contact Center?

A hosted contact center is a contact center housed offsite by a third-party provider and accessed remotely. It eliminates the need to install on-premises hardware and software. Instead, you access key contact center tools and features through a secure cloud service.

Think of it as renting a fully equipped contact center in the cloud, ready to use whenever you need it.

Customers now demand omnichannel support, expecting to reach you on their preferred platform: phone, email, social media, or even messaging apps. Hosted contact centers empower businesses to meet these demands effortlessly.

The terms “hosted contact center” and “cloud contact center” are often used interchangeably. However, there’s a slight difference.

Hosted contact center can refer to any contact center software or solution hosted by a third-party provider, whether it’s hosted in a traditional data center or the cloud.

Cloud contact center specifically refers to a contact center solution hosted in the cloud. Cloud-based contact centers offer all the benefits of hosted contact centers, with the additional advantages of scalability, security, and accessibility.

Hosted vs cloud contact center

A hosted contact center is also different than a traditional hosted call center as it covers many types of communication rather than just voice calls.

How a Hosted Contact Center Works

A hosted contact center outsources your customer communication infrastructure to a third-party service provider. Instead of owning and maintaining your own hardware and software, you rent access to it from the provider’s secure data center or cloud platform.

Here’s what’s included and you need to run a hosted service:

Hosted VoIP System - Diagram

The vendor hosts the platform offsite while the business manages the agents, call routing strategies, and reporting through easy-to-use web interfaces. This provides businesses with more flexibility and time to focus on customers.

Benefits of a Hosted Contact Center

Hosted service providers offer the latest contact center technology at an affordable price point for even small and midsize businesses. A hosted contact center offers powerful benefits compared to traditional on-premise call center software.

1. Contact center virtualization

The days of a busy, noisy contact center in a single physical location are long gone. 

Hosted contact centers use the cloud rather than relying on physical infrastructure and copper wires. Your agents can access their workstations from anywhere with an internet connection.

This makes them extremely flexible, facilitating remote work and supporting agents on the go.

2. Rich features for agents and supervisors

Modern hosted contact centers include robust features designed for handling high call volumes across distributed teams:

Contact Center Features

Supervisors gain better visibility into contact center KPIs like handle time, abandonment rate, and first call resolution to optimize operations.

3. Integration with business systems

Hosted contact centers simplify integration using APIs. This includes connecting your phone system to CRM platforms like Salesforce to bring up customer records automatically on incoming calls.

With the context of past interactions and purchases, agents deliver more personalized and satisfying experiences. Integrations centralize data across systems for a single source of truth.

4. Advanced IVR and intelligent routing

Interactive voice response (IVR) provides automated self-service options to customers using voice prompts or natural language interfaces. This deflects common inquiries away from live agents.

How IVR works

Intelligent call routing assigns callers to agents based on configurable rules and criteria. For example, Spanish speakers could be routed to bilingual agents.

These capabilities allow efficient segmentation of voice traffic to drive faster responses and higher satisfaction.

5. Cost efficiency and scalability

The total cost of ownership and ROI of a hosted contact center is far more attractive compared to legacy on-premise systems requiring costly hardware and maintenance:

6. Actionable reporting and analytics

Robust reporting provides visibility into contact center performance and trends over time:

Contact center metrics

These insights guide operational changes to enhance efficiency while improving the customer experience.

7. Outbound calling and campaigns

Hosted contact centers can efficiently orchestrate outbound calls to specified leads or contact lists.

After auto-dialing numbers, qualified leads get connected directly with available agents. This automates previously manual and repetitive dialing tasks, allowing agents to have more productive conversations.

Today’s feature-rich hosted contact centers empower distributed teams to deliver superior, scalable customer experiences across both inbound and outbound interactions and drive better agent performance.

Who Should Consider a Hosted Contact Center?

Hosted contact centers work best for businesses that need omnichannel support.

Modern hosted platforms handle not just phone calls but also emails, chats, social media messages, and even video conferencing. So you offer seamless customer service across all channels.

Nextiva omnichannel engagement
Omnichannel Engagement Drives Better Customer Experience

If you’re seeking new features and faster innovation, cloud-based providers constantly update their platforms with new features and functionalities. With a hosted solution, you automatically benefit from these updates without additional investments.

Additionally, if you need advanced contact center features but your resources are limited, hosted cloud contact center solutions can provide sophisticated capabilities without large hardware investments or IT headcount.

The ability to scale, paying only for what you use, makes it financially appealing to many smaller organizations. Startup companies can get up and running quickly without large upfront costs and easily manage fluctuating customer interactions.

Choosing the Right Hosted Contact Center Provider

Ready to choose your contact center technology? You might come across some challenges and constraints related to pricing, compliance issues, security, and functionalities when selecting a hosted contact center.

Here are a few key factors to consider to make your choice easy.

Pricing models and total cost of ownership

Look beyond just the monthly fees or upfront costs. Make sure to factor in any additional charges for integrations, storage, support, training, and more.

Understand the full total cost of ownership over the lifespan of the technology. Some providers offer usage-based pricing which can scale up or down as your needs change.

Security measures and compliance standards

When reviewing contact center vendors, ask about the policies and procedures they’ve put in place to protect your data. This can include a disaster recovery plan, redundant data centers, 24/7 monitoring, and real-time network status updates.

Additionally, check each provider’s certificates and compliance with regulations, including GDPR, PCI, SOC 2, ISO/IEC 27001, and any certificates relevant to your industry such as HIPAA.

Features, integrations, and configurability 

List the features that are non-negotiable for your business communication.

Look for an integrated omnichannel approach to manage all your communication channels and expand to new ones if you need to. Otherwise, you might have to switch to a different provider once your needs grow.

Be sure to make the most of automation and intelligent routing with IVR, automatic call distribution, and predictive dialers. This way, you’ll maximize agent efficiency and make your workforce management (WFM) easier.

Analyze each provider’s features to double-check they offer everything you need. Consider reliability and uptime guarantees, options for geographic redundancy, and scalability add-ons.

Bots and AI-based automation

Bots and automation are here to stay. Gartner recently reported that 25% of customer service operations will use virtual customer assistants or chatbot technology, up from less than 2% just a year prior.

AI-based automation is the perfect match with the growing number of digital channels your customers use. With conversational AI, you can get your system to learn from each interaction and:

Customer experience and agent experience

Your software solution isn’t just about your customers, but also about your agents — and these depend on each other.

Customers feel agent experience impacts their customer experience and business results, and agents feel that technology plays a key role in this, a Global Contact Center Survey from Cisco revealed.

It’s essential to consider your agents’ needs and experience when choosing your contact center solution. Agents are on the frontlines with your customers, and how you equip them matters.

Empower your agents with an easy-to-use but powerful interface and maximize their focus time by minimizing distractions and repetitive work.

Set Up a Flexible Contact Center Solution

Implementing and managing a hosted contact center is key to driving better adoption, agent performance, and customer experience. When setting up a contact center solution, make sure to:

The best part about cloud-based communication solutions is that they’re flexible and scalable based on how your business evolves.

If you want to take more customer calls and monitor your call flow better, consider a contact center. You’ll be able to automate multi-channel customer support and build self-service options so your customers always feel taken care of, no matter how busy you get.

Scale your contact center operations.

See how Nextiva can help.

Alina Benny


Alina Benny

Alina Benny was the Senior Content SEO Lead at Nextiva. Her B2B marketing career has taken her all over the place — from branding and copywriting to product marketing, SEO, and SaaS content marketing. She also uses her keen eye for great copy, action bias, and search discoverability as a mentor with First Round Capital…

Posts from this author
Call badge icon