Hosted PBX is another term used to refer to virtual PBX. It is a new concept that is slowly gaining ground in many offices. To properly understand it, we must first define the general structure of a standard Private Branch Exchange (PBX). Simply understood, PBX is a telephone system that serves a particular office making it possible for their telephones to connect to one another under the control and supervision on an in-house operator. With the advent of the internet and VOIP technology, the original PBX system has been transformed into what is now known as hosted PBX. Under this system, the telephone system passes through the VOIP provider where it then connects to a much larger system (the host) and shares in its resources. Services such as call routing, voice mailing, faxing, automated greetings, conferencing calling and other features of the PBX is now enhanced with the video capability of the VOIP. Instead of the information sent in-house, it is routed to the host where it is processed and then sent back to the desired destination. In other words, it is a PBX system whose operator is somewhere else.

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