Microsoft Teams Calling Alternative: Better Options for UK SMEs

Last updated: April 2026

Microsoft Teams is everywhere. If your business runs Microsoft 365, you are probably using Teams for chat, video meetings, and file sharing already. So when it comes to your phone system, the obvious next thought is: "Why not just add calling to Teams?"

It is a reasonable question. And for some businesses, Teams Phone is the right answer. But for a lot of UK small and medium businesses, it is not. The licensing costs are higher than you expect, the telephony features are more limited than you realise, and the whole thing is more complicated to set up and manage than Microsoft's marketing suggests.

We are Compare The Networks. We have been helping UK businesses choose the right phone system since 2008. We are OFCOM regulated, rated 4.3/5 on Trustpilot from over 1,000 reviews, and we have seen hundreds of businesses go through the Teams Phone decision. Some are happy. Plenty are not. This guide gives you the honest picture and shows you what the alternatives look like.

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Why Businesses Look for Teams Phone Alternatives

Microsoft Teams Phone (formerly Teams Calling) lets you make and receive external phone calls through the Teams app. It turns Teams from an internal collaboration tool into a full business phone system. On paper, it sounds ideal. One app for everything.

In practice, the problems tend to fall into a few categories.

The Licensing Cost Adds Up Fast

To make external calls through Teams, you need a Microsoft Teams Phone licence on top of your existing Microsoft 365 subscription. This costs around £7.50 per user per month. Then you need a way to connect those calls to the UK telephone network. Microsoft's own option, a Calling Plan, adds another £10 to £12 per user per month.

So the total cost for Teams calling is roughly £17.50 to £19.50 per user per month, on top of whatever you are already paying for Microsoft 365. For a business with 10 users, that is £175 to £195 per month just for the phone system.

Compare that to a standalone hosted VoIP system starting from £6+VAT per user per month. A 10 user business could have a fully featured phone system for £60 to £100 per month, saving between £75 and £135 every month.

Telephony Features Are Limited

Teams was designed for internal collaboration, not for running a business phone system. The telephony features reflect that. While Teams Phone handles basic call making and receiving perfectly well, it struggles with the things that a proper business phone system does as standard:

• Auto attendant configuration is clunky. Setting up a professional "press 1 for sales, press 2 for support" menu in Teams requires navigating Microsoft's admin portal, which is not intuitive. On a dedicated VoIP system, this takes minutes.
• Call queuing is basic. If your business handles incoming calls from customers, Teams' queue management is functional but limited compared to what systems like 3CX or dedicated hosted VoIP platforms offer.
• Call recording requires additional licensing or third party software. On most VoIP systems, it is included.
• Reporting and analytics are minimal. If you want to know how many calls your team handled, average wait times, or missed call rates, Teams gives you very little. Dedicated VoIP systems offer detailed dashboards and reports.
• CRM integration is possible but often requires expensive third party connectors. Many VoIP systems offer native integrations with popular CRMs.

Setup and Management Complexity

Configuring Teams Phone properly requires someone who understands both Microsoft 365 administration and telephony. Number assignment, call routing policies, auto attendant setup, and voicemail configuration all happen through the Microsoft Teams admin centre and PowerShell. For a small business without dedicated IT staff, this is a steep learning curve.

A hosted VoIP system, by contrast, typically comes with a simple web portal where you can drag and drop call flows, assign numbers, and configure voicemail without any specialist knowledge.

Dependence on a Single Vendor

When Teams is your chat, video, file sharing, and phone system all in one, a Microsoft 365 outage takes out everything. Microsoft's reliability is generally excellent, but outages do happen. Having your phone system on a separate platform from your collaboration tools means a problem with one does not take down the other.

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The Alternatives: What Are Your Options?

If Teams Phone is not the right fit, you have several strong alternatives. Each has different strengths, and the right choice depends on your business size, budget, and requirements.

Option 1: Standalone Hosted VoIP

A hosted VoIP system is a cloud based phone system managed entirely by your provider. You pay a monthly fee per user, and the provider handles all the infrastructure, maintenance, and updates.

Best for: Businesses that want a simple, affordable, fully featured phone system without managing any infrastructure.

Pricing: From £6+VAT/user/month for basic packages, £10 to £15 for standard (including call recording, auto attendant, and queue management), £18 to £25 for premium packages with advanced call centre features.

Key advantages:

• Lowest cost option for most small businesses
• Professional telephony features included as standard
• Simple web portal for management, no technical skills needed
• Desk phones, softphone apps, and mobile apps all included
• Provider handles everything: setup, porting, maintenance
• Works independently of your other software

Get a free hosted VoIP quote for your business and see what it would cost for your specific setup.

Option 2: 3CX

3CX is a software based phone system that gives you much more control over your telephony. It runs on your own server (in your office or in the cloud) and connects to the telephone network through a SIP trunk provider.

Best for: Businesses with 10+ users that want advanced features, customisation, and do not mind a bit more hands on management (or have an IT provider to handle it).

Pricing: 3CX itself starts from free for up to 10 users (with limited features), with paid plans from around £150 per year for the Pro licence. You then pay separately for SIP trunking (typically £1 to £3 per channel per month) and any hardware. The total per user cost works out between £8 and £18 per user per month depending on your setup.

Key advantages:

• Extremely feature rich: auto attendant, call queues, call recording, CRM integration, live chat, video conferencing
• Can integrate with Microsoft 365 and Teams for presence and calendar sync (giving you some Teams benefits without Teams Phone licensing)
• Web based management console that is genuinely intuitive
• Scales very well from 10 to 500+ users
• One off licence cost rather than per user per month for the software itself

Option 3: Teams with a Third Party SIP Trunk (Direct Routing)

If you are committed to Teams as your phone interface but want to avoid Microsoft's expensive Calling Plans, you can use Direct Routing. This connects Teams to the phone network through a third party SIP trunk provider instead of Microsoft's own calling plans.

Best for: Businesses that are heavily invested in Teams and want to keep calling within the Teams interface, but want lower costs and more telephony flexibility.

Pricing: You still need the Teams Phone licence (£7.50/user/month), but you replace the Calling Plan with a SIP trunk at around £1 to £3 per channel per month. Total cost works out around £9 to £12 per user per month, depending on your call volumes.

Key advantages:

• Keeps calling within the Teams interface your staff already know
• Lower cost than Teams with Microsoft Calling Plans
• More flexibility on call routing and number management
• Can keep your existing phone numbers more easily

Drawbacks:

• Still needs the Teams Phone licence on every user
• Requires a Session Border Controller (SBC) which adds complexity
• Still limited by Teams' telephony feature set
• Needs someone with technical knowledge to set up and maintain

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The Full Comparison: Teams Phone vs 3CX vs Hosted VoIP

Here is how the three main options compare across the metrics that matter most to UK small and medium businesses.

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When Does Teams Phone Actually Make Sense?

We are not here to tell you Teams Phone is always wrong. There are genuine scenarios where it is the best choice:

Teams Phone works well when:

• Your business is larger (50+ users) and already pays for Microsoft 365 E5, which includes the Teams Phone licence at no extra cost
• Your staff are primarily mobile or remote and already live inside the Teams app all day
• Your telephony needs are straightforward: making and receiving calls, basic voicemail, simple call routing
• You have dedicated IT staff or a managed IT provider who can handle the Microsoft admin
• Reducing the number of separate apps is a priority for your team

Teams Phone is usually a poor fit when:

• You are a small business (under 30 users) on Microsoft 365 Business Basic or Business Standard, where the Teams Phone licence is an expensive add on
• You need professional call handling: multi level auto attendants, skills based routing, call centre features, detailed reporting
• You do not have IT resource to manage the Microsoft admin side
• Budget is a primary concern and you need the cheapest per user cost
• You want desk phones from a wide range of manufacturers (Teams certification limits your choices)

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Cost Analysis: A Real World Example

Let us work through the numbers for a typical UK small business with 15 staff who all need to make and receive external calls.

Option A: Teams Phone with Calling Plans

Option B: Hosted VoIP (Standard Package)

Option C: 3CX with SIP Trunking

The savings are real. Option B saves roughly £82.50 per month compared to Teams Phone. Option C saves over £200 per month. Over a 3 year contract period, that is £2,970 or £7,200 respectively.

And with both Option B and C, you get better telephony features than Teams Phone provides.

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Integration: Can You Still Use Teams Without Teams Phone?

Absolutely. This is the misconception that catches most businesses. You do not need Teams Phone to keep using Teams. Teams for chat, video meetings, and file sharing works perfectly on any Microsoft 365 licence. Adding an external phone system does not break or interfere with Teams in any way.

In fact, many VoIP systems and 3CX specifically offer Teams integration. This means your VoIP system can sync with your Teams presence (showing colleagues when you are on a call), access your Outlook calendar, and even allow click to call from Teams contacts. You get 90% of the "single pane of glass" experience without paying for Teams Phone licensing.

Your staff keep using Teams for what it does well (chat, video, collaboration) and use a dedicated phone system for what it does well (external calls, call routing, queuing, recording, reporting). Best of both worlds.

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How to Switch from Teams Phone to a VoIP Alternative

If you are currently on Teams Phone and want to move to a standalone VoIP system or 3CX, the process is straightforward.

1. Choose your new system. Get a free quote and we will recommend the right option based on your business size and requirements.
2. Port your numbers. Your existing phone numbers transfer from Microsoft to your new provider. This takes 5 to 15 working days and is handled by your new provider.
3. Set up your new system. Your VoIP provider configures everything: auto attendant, call routing, voicemail, user extensions.
4. Remove Teams Phone licences. Once you are live on the new system, remove the Teams Phone and Calling Plan licences from your Microsoft 365 admin. Your Teams chat, video, and collaboration continue working as normal.

The transition typically takes 2 to 4 weeks from start to finish. During the cutover, calls can be forwarded from the old system to the new one so you do not miss anything.

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What We Recommend

For most UK small and medium businesses with 5 to 50 users, a standalone hosted VoIP system is the best balance of cost, features, and simplicity. You get professional telephony features that Teams Phone cannot match, at a significantly lower price, with none of the admin complexity.

If your business has more complex needs, multiple offices, call centre operations, or you want the flexibility of running your own phone system, 3CX is outstanding. The feature set rivals systems costing several times more, and the management interface is genuinely well designed.

Teams Phone is not a bad product. It is a convenient product for large enterprises that already have the right Microsoft licensing. For UK SMEs, there are almost always better options that save money and deliver more.

If you are not sure which route is right for your business, get in touch for a free comparison. We will look at what you are paying now, what you actually need, and give you an honest recommendation.

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Further Reading

• Hosted VoIP for Business UK: Complete Guide covers the full VoIP landscape including providers, features, and costs.
• VoIP Problems and Solutions addresses common issues businesses encounter and how to resolve them.
• Replace Landlines with VoIP is our guide to the PSTN switch-off and migrating from traditional phone lines.
• Business VoIP Comparison explains how our free comparison service works.

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Frequently Asked Questions

Is Microsoft Teams Phone worth it for a small business?

For most small businesses under 30 users, no. The combined cost of the Teams Phone licence and a Calling Plan works out at £17.50 to £19.50 per user per month, which is significantly more expensive than standalone VoIP alternatives that start from £6+VAT per user per month. You also get fewer telephony features. Teams Phone becomes more cost effective for larger organisations on Microsoft 365 E5 licences, where the Teams Phone licence is included.

Can I use Teams for chat and video but a different phone system for calls?

Yes, and this is exactly what we recommend for most SMEs. Teams for chat, video meetings, and file sharing works on any Microsoft 365 licence. Your external phone system operates independently. Many VoIP platforms and 3CX integrate with Teams to sync presence and calendar data, giving you a joined up experience without the Teams Phone cost.

What is Direct Routing and is it worth it?

Direct Routing connects Microsoft Teams to the phone network through a third party SIP trunk instead of Microsoft's own Calling Plans. It reduces the calling cost but still requires the Teams Phone licence (£7.50/user/month) and a Session Border Controller. It is worth considering for businesses with 50+ users that want to keep calls in Teams but save on calling costs. For smaller businesses, the complexity usually outweighs the benefit versus just using a standalone VoIP system.

How do 3CX and hosted VoIP compare for a 10 person office?

For a 10 person office, hosted VoIP is typically simpler and may be slightly cheaper. You pay a straightforward per user fee and your provider manages everything. 3CX gives you more features and long term flexibility but requires either in house IT knowledge or an IT provider to manage the system. If you have someone who can handle the initial setup and ongoing management, 3CX often works out cheaper over time and is more customisable.

Will my Teams integration break if I switch to a standalone phone system?

No. Removing Teams Phone licences only removes the external calling capability from Teams. All other Teams functionality, including chat, video meetings, channels, file sharing, and collaboration features, continues working exactly as before. If you set up presence integration between your new phone system and Teams, your colleagues will still see when you are on a call.

Can I port my phone numbers away from Microsoft?

Yes. Phone numbers hosted with Microsoft can be ported to any other UK provider. The process follows the same regulated number porting procedures as any other provider switch. Your new VoIP provider handles the paperwork. It typically takes 5 to 15 working days, and there is no gap in service if the port is managed correctly.