Yes this is possible. Given that you don’t have access to the hosted site VMWare environment, you would use the Physical to Azure replication architecture. Ref: to - https://video2.skills-academy.com/en-us/azure/site-recovery/physical-azure-architecture
If the customer is only replicating VMs from the hosted environment, you would install the Configuration Server as a VM in the hosted environment and use that to replicate the hosted machines to Azure. In this scenario it is ideal that the customer have a direct connection to Azure over the internet or over Expressroute from the hosted environment so the replication data does not need to travel first over the customer VPN.
If the customer is replicating VMs in bot the hosted environment and from on-premises, you would install the Configuration Server in your choice of on-prem or hosted environment, and in the other location, you would install a scale-out process server. This is so replication data can be processed by the appropriate server in each datacenter before sending to Azure without facing a VPN bottleneck for network traffic.
Let me know if you have questions.
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