An office phone system, or PBX, is a company's own telephone switch, which connects its desk phones to each other and to the outside phone network. PBX stands for private branch exchange. Traditionally, it is a cabinet of hardware in an office cupboard or server room, wired to every desk phone in the building.
A PBX does the jobs that people expect from an office phone. Each desk phone has a short internal number, called an extension, such as 214. Staff call each other by dialling the extension, and these internal calls cost nothing, because they never leave the building. To call outside, a person usually dials 0 or 9 first. The PBX also transfers calls, puts callers on hold with music, plays the "press 1" menu, sends unanswered calls to voicemail and joins a few people into a conference call.
Consider a 200-room hotel in Udaipur. Every room has a phone, and so do the front desk, the kitchen, housekeeping and the manager's office. The hotel's PBX sits in a small room behind reception. A guest in room 312 dials 5 for room service, and the kitchen phone rings. The PBX connects the hotel to the outside world through a trunk line from the operator, a line that carries many calls at once. A traditional digital trunk in India, called a PRI line, carries up to 30 calls at the same time. So 30 guests and staff can be on outside calls together. When a travel agent calls the hotel's main number, the PBX rings the reservations desk first, and then the front desk if nobody answers in 20 seconds. The PBX also keeps a record of every outside call. The hotel's billing software, part of its hotel technology, reads these records, so that a guest's calls appear on the room bill.
Older PBXs carried calls as electrical signals on copper wires. Most newer ones, called IP-PBXs, carry calls as data over the office network, using VoIP. An IP-PBX connects to the operator's network through a session border controller, which protects it from attacks and from call fraud.
Many companies still run a PBX that they bought years ago, because it still works. Replacing it means new equipment, new training and the risk of failed calls during the change. These are called switching costs. So the PBX makers move their customers to a cloud phone system in stages. First comes a hybrid, with some hardware on site and the rest in the cloud. Later, the whole system moves to the cloud. A company that answers many customer calls also connects its PBX to contact centre software, where support staff take the calls.