Hosted VoIP, SIP, or Microsoft Teams Phone: which is right?

If you're choosing a business phone setup in 2026, you'll keep meeting the same three names: hosted VoIP, SIP, and Microsoft Teams Phone. They get talked about as if they're three flavours of the same thing. They aren't. They solve different problems, and the right one depends far more on how your business already works than on a feature list.

This guide is about that one decision: which of the three fits you. It doesn't cover when to leave the old analogue network behind (our PSTN switch-off guide handles the timing and urgency of that), and it isn't a sales pitch for any one product. It's a plain map so you can rule options in or out before you talk to anyone.

Hosted VoIP, SIP, and Microsoft Teams Phone are not interchangeable choices for every business. Hosted VoIP suits many organisations that want an all-in-one cloud phone system, SIP fits businesses with existing PBX needs, and Teams Phone suits businesses already centred on Microsoft 365 workflows and calling inside Teams.

What is the difference between hosted VoIP, SIP, and Teams Phone?

All three carry calls over the internet rather than the old copper phone network. The difference is what each one actually is. Hosted VoIP is a complete phone system run in the cloud for you. SIP is a set of calling lines that feed an existing PBX. Teams Phone is a calling layer bolted onto Microsoft Teams. Get that distinction clear and the choice gets much easier.

When is hosted VoIP the best fit for a business?

Hosted VoIP is the default answer for most businesses that want a phone system and don't want the bother of running one. The provider hosts the platform, you get desk phones, softphones or both, and you manage everything through a web portal. There's no PBX hardware sitting in a cupboard to maintain, patch or replace.

It tends to fit best when you want call handling sorted out of the box: ring groups, call queues, auto-attendant menus, voicemail to email, hunt groups and easy moves when someone changes desk or role. Adding a new starter is usually a few clicks rather than an engineer visit. For a growing team that wants predictable, flexible phones without managing infrastructure, hosted VoIP is the path of least resistance.

It also suits businesses with more than one site, or with home and hybrid workers, because the same system reaches everyone regardless of where they sit. If that sounds like you, the practical question moves on to which features and handsets you want, which is what our business phone systems page covers in detail.

When does SIP make more sense than a hosted phone system?

SIP earns its place when you already own a phone system that works well and you'd rather modernise the lines feeding it than rip the whole thing out. SIP trunking replaces old physical phone lines with internet-based calling channels that plug straight into your existing IP PBX. The system you know stays, the lines underneath it get cheaper and more flexible.

This is common where a business has invested in a capable on-site or hosted PBX with call flows, integrations or contact-centre features that are working exactly as wanted. Replacing all of that to chase a new platform rarely makes sense. SIP lets you keep the investment, scale calling channels up or down as call volumes change, and add resilience by routing calls elsewhere if a site loses connectivity.

The honest caveat: SIP assumes you have, or are willing to run, a PBX that can take it. If you don't, you're really choosing a phone system, not a line, and hosted VoIP usually wins. SIP shines when the system is the bit you want to protect.

Who should choose Microsoft Teams Phone?

Teams Phone is the natural choice when your business already lives inside Microsoft 365 and your people spend their day in Teams. It adds external calling to Teams, so making and taking calls happens in the same app as chat, meetings and shared files. There's no separate phone app to learn and no second place to check for messages.

It works best where the whole team is genuinely Teams-first: staff who are comfortable taking calls on a headset and laptop, who are already used to presence, transfers and meetings inside Teams, and who value having one workspace rather than a dedicated phone platform alongside it. For these businesses, adding calling to Teams is a small, logical step.

Where it fits less neatly is when you need heavy, specialist call-handling that goes beyond what Teams offers, or when a chunk of your team (reception, a busy sales desk, frontline staff) doesn't use Teams as their main tool at all. In those cases a hosted VoIP system, sometimes alongside Teams for the rest, often serves better. The test is simple: is Teams already where your people work? If yes, Teams Phone deserves a serious look.

What should I check around numbers, handsets, and call features?

Whichever way you lean, a few practical checks decide whether a setup will actually suit you day to day. Run through these before you commit:

• Numbers. Confirm you can port your existing business numbers to the new platform, and agree the porting timing so calls keep flowing during the move. Check whether you need new numbers for extra sites or departments too.
• Handsets and apps. Decide who needs a physical desk phone and who is fine on a softphone or headset. Hosted VoIP and SIP both work with desk phones; Teams Phone leans towards the app, with desk phones as an add-on.
• Call features. List the handling you actually rely on: auto-attendant menus, queues, hunt groups, call recording, out-of-hours routing, voicemail to email. Check each option does what you need rather than assuming it does.
• Resilience. Ask what happens if your internet line goes down. Good setups can divert calls to mobiles or another site automatically, which matters most for customer-facing teams.
• The line underneath. All three depend on a solid connection. If calls and video share the line, upload matters as much as download, which our guide to upload speed for video calls explains, and a dependable business broadband line is the foundation under any of them.

How should I choose the right phone setup without overbuying?

The trap is choosing the most feature-rich option and paying for capability you never use. The better approach is to start from how your business actually works, not from the longest feature list. Three honest questions usually settle it.

First: do you already have a phone system you want to keep? If yes, SIP is worth looking at first, because it modernises the lines without throwing away a working system. If no, you're choosing a system, so SIP drops out and the real contest is between hosted VoIP and Teams Phone.

Second: do your people live in Microsoft Teams all day? If the whole team is genuinely Teams-first, Teams Phone keeps everything in one place and is a small step to add. If only some of the team uses Teams, or you need richer call handling for a reception or sales desk, hosted VoIP is usually the steadier all-rounder, on its own or alongside Teams for those who want it.

Third: what do you genuinely need on day one, and what can wait? Pick the setup that covers today's real call handling and can grow later, rather than the one with the most boxes ticked. A team working from home will weigh this differently again, which our home office broadband guidance speaks to. Once you've answered those three, you'll usually find one option fits cleanly, and that's the point at which a quick conversation about handsets and pricing is worth having.

Frequently asked questions