A cloud phone system is an office phone system that runs on the provider's servers on the internet, and is paid for as a monthly subscription for each user. It is also called a cloud PBX, or UCaaS, short for unified communications as a service. "Unified" means that phone calls, video meetings and team chat come together in one subscription and one app.
With an old office PBX, the company bought hardware and kept it in a cupboard. With a cloud phone system, there is nothing in the cupboard. Each employee's office number rings a softphone on the laptop, an app on the mobile, or a desk phone that connects over the internet. The calls travel as data, using VoIP.
Take, for example, a chartered accountancy firm in Nagpur with 40 staff. During the income tax filing season in July, half of them work from home. A client calls the firm's main number. The cloud system plays a short menu: "Press 1 for income tax returns, press 2 for GST." The client presses 1. The system rings the four staff in the income tax group at the same time, wherever they are. One of them answers on her laptop at home. The client cannot tell that she is not in the office. If she needs a partner's advice, she transfers the call with one click. The call is recorded, as the firm's policy requires.
An administrator manages everything in a web dashboard. Adding a new employee takes a few minutes: the administrator creates a user and gives the user an extension and a number, and the employee installs the app. There is no hardware to buy. The firm pays per user per month, so its bill grows or shrinks with its staff.
The same subscription includes video conferencing and team chat. Many providers also offer call transcription and AI summaries, so the notes of each call are ready when it ends. Banks and brokers must keep a record of the calls and messages in which certain staff, such as dealers, take or discuss orders, so their calls also go to a communications compliance and archiving system. A narrower product gives an employee a separate business number on her own mobile, where every call is recorded. This is mobile call recording for compliance.
A company that is moving from an old PBX connects the two systems through a session border controller during the change. Large support teams run contact centre software on top of the cloud phone system.
India has one rule that shapes this product. Connecting internet calls to ordinary phone numbers needs a telecom licence. So cloud phone systems sold in India usually reach ordinary phone numbers through a licensed Indian operator.