Call center outsourcing is an increasingly popular way to deliver cost-effective customer support, but with so many moving parts, it’s important that you weigh up both the benefits and the potential drawbacks before committing to this approach.
There are pros and cons to switching from an in-house contact center to an outsourced one. To get the best possible return on your investment, you need to understand the key factors that impact outsourcing costs and what you can do to optimize your expenditure.
Outsourcing involves allocating typical call center duties like customer service and technical support to an external organization located either domestically or offshore. You can outsource every aspect of contact center operations, or just specific tasks, depending on your needs.
While it’s not necessarily the best option for every organization, this approach can be particularly beneficial in several cases. Say you want to dedicate more time to core aims like product development, or you’re a small business with growing call volumes and no in-house support center. Outsourcing could be the answer.
Call center outsourcing costs can vary significantly depending on a range of factors, so it’s essential that you understand each one and weigh its importance before making a decision.
Geographic region is one of the biggest factors influencing the cost of outsourcing your call center. Owing to lower wages and favorable exchange rates, areas like India and Southeast Asia are cheaper to outsource to than North America and Western Europe.
Research from Forbes Advisor suggests that an outsourced call center agent in India or Pakistan will cost between $6 and $9 an hour, while one in the United States is considerably more expensive at $26 to $30 per hour.
In most professions, the more expertise required for a role, the more expensive it will be to hire someone for it. The same holds true for call center outsourcing. If you need reps to be extremely knowledgeable about your product or service, you will have to spend more.
This could be additional spending on coaching or call center training, or higher salary requirements for agents with expertise in specific industries. A rep with experience in highly regulated industries like legal or medical, for example, will likely cost more.
Broadly speaking, call centers are classified as either inbound or outbound. An inbound contact center handles things like customer queries, along with IT and technical support, while an outbound contact center makes outgoing sales and telemarketing calls.
You may carry out both functions, but If more than 50 percent of calls handled are incoming, then you are inbound—and vice versa. Given the different skill sets and knowledge required, whether you are inbound or outbound will play a part in determining the cost of outsourcing your call center.
There are different payment structures in call center outsourcing. You may pay an hourly rate, or by the minute, or it could be a flat rate agreed in advance. Rates are determined by the cost of staffing, operations, equipment, and other variables, and there are several pricing models:
The greater the scope of services you want the outsourcer to provide for your customers, the more expensive it will be to outsource your call center. A larger call volume means more agents, and, naturally, more agents mean a bigger spend on labor.
Putting a service level agreement (SLA) in place as part of your contract with the outsourcer will allow both parties to define the exact scope of services involved, along with performance targets and benchmarks to ensure satisfactory results.
Any transition from an in-house to an outsourced call center will involve transition and setup costs. This startup fee will typically cover items like a background check, legal considerations, administrative work, and all other due diligence.
In addition to this paperwork, the outsourcing company may need to provide agents with training in your industry, product, or services. This can add to the initial setup costs, but it may be necessary to maintain high standards of service and customer experience.
Does your contact center require any added services that could push up the price? Multilingual support, call recording, script building, and more can drive up the cost of outsourcing.
Depending on your aims, these added services may be essential to your success. While it may be simpler to take the “all-inclusive” package, some customization can ensure that you only get what you need and receive a better return on your investment.
As we’ll discuss shortly, one potential drawback of outsourcing your call center is decreased control over agent performance and conversation outcomes. To counteract this, many organizations invest in additional quality assurance measures.
If you do opt for outsourcing, you may need to bolster your own QA and quality monitoring team to support the transition and ensure that the switch does not negatively impact call quality and call center metrics.
If you’re thinking about outsourcing your contact center, you need to consider both the benefits and the potential risks and decide for yourself if the cost is too high—or if it’s worth the investment.
A 2022 Deloitte survey found that cost reduction was the main reason executives pursue outsourcing. By removing typical costs like salaries, benefits, facilities, software, infrastructure, hiring, training, and more, you can see huge cost savings from outsourcing your call center.
Call center outsourcing providers are solely focused on customer service and support, so they’re equipped with the latest technology and infrastructure. This is their domain, so they know the best practices to achieve optimal efficiency and positive interaction outcomes.
Generally speaking, an agreement with an outsourcer means that you’re only paying for productive time rather than full-time employees. This also means that you can easily scale up or down to meet changing call volumes or operational requirements.
With an outsourcing provider handling the call center facet of your organization, you can dedicate more time and resources to core business aims like product development and sales expansion. A tech company, for example, could dedicate more time to building new software.
In financial terms, it can be difficult to run a 24/7 call center domestically. With the cost of wages and overtime, it isn’t feasible for most organizations. An outsourced call center, on the other hand, allows for 24/7 availability without having to hire a ton of new employees.
Outsourced agents may lack the specialized knowledge of an in-house team. They typically work as reps for multiple companies and so may not be as invested in your product or services. This can lead to weaker CX and, as a result, a worsened brand image.
As noted, outsourcing limits your control over interaction quality, so more QA may be required. You will need to establish clear expectations and review more often, placing an additional strain on your QA team and increasing their workload.
Customers share sensitive information with call centers. By outsourcing support operations, you are giving more people access to this data and, therefore, potentially increasing the chances of a breach. Rigorous security standards will be necessary to ensure compliance.
This can be an issue when outsourcing to a different region that doesn’t share the same first language as your customer base. If English, for example, is not an agent’s native language, it can be more difficult to resolve complex issues and keep customers happy.
Relinquishing control of your call center means losing an important source of feedback. While outsourcing providers will usually provide stats about queries and issues resolved, this won’t be enough to understand the finer details of customer needs and pain points.
Outsourcing limits the connection between the call center and other departments within your organization, removing opportunities for collaboration with sales, marketing, product, etc. If outsourcing to offshore companies, different time zones can further complicate matters.
If you do decide to outsource your call center, it’s important that you optimize the costs. By doing so effectively, you can save money while maintaining the same standard of customer service or, in some cases, even improving the quality of support.
Know your needs—what you want to outsource and to what extent. You don’t have to outsource everything. You can choose a hybrid approach where some aspects remain in-house and others are outsourced.
For example, you could limit outsourcing to specific days and hours or only use outsourced agents to handle inbound while leaving outbound to your in-house team. Determine what’s necessary and beneficial in the context of your budget and objectives.
When choosing an outsourcing provider, you want to make sure they’re reputable and experienced with a proven track record for call center outsourcing. You’ll also want to discuss their approach to implementation and make sure you’re aligned.
While bigger providers may offer more financially attractive packages in the short term, a smaller provider might be better able to personalize their offering to meet your needs, proving more cost-effective in the long run.
The scale of your operations and the scope of the work you wish to outsource will play a huge role in determining the overall cost. Broadly speaking, a small contact center with few agents and a lower call volume is cheaper to outsource.
Whatever is the case for your organization, you must clearly define the scope and your expectations before signing any agreement. Some businesses carry out more nuanced functions in their call center, so it’s important to clarify and avoid any misalignment.
We’ve outlined the various payment structures above—shared, dedicated, flat fee—and choosing the right approach for your goals can significantly optimize contact center costs. For many, this means choosing either the shared or dedicated model.
These two approaches can usually be configured to ensure that you are only paying for productive hours. This way, you can be confident that you’re not overspending on outsourcing.
Assigning an operations manager to take responsibility for the outsourcing program can help you retain greater control over operations and ensure that you’re getting the best possible ROI. This can be a new hire or you can allocate the task to someone within your company.
Even if it’s only for the initial period of setting up the outsourced call center function, a specialist operations manager can oversee the process to maintain quality assurance standards and avoid any hidden fees.
As with any other contractual agreement, it’s critical that you go through the details with a fine-tooth comb and make sure everything is in order. Legal fees, extra costs for added services, starting fees, and more can all add up and significantly increase your outlay.
Even if it increases the cost of the initial setup, a bigger investment in training, technology, and infrastructure can reap rewards in the long run, leading to the kind of high-quality CX that improves customer retention and attracts new clients.
With the right approach, outsourcing your call center can be a cost-effective way to streamline customer service operations and save a ton of money. However, you need to weigh cost savings against potential drawbacks and make a decision.
In the end, it comes down to your own unique objectives. Do you value lower operational costs more than a strong grip on brand image? Or maybe it’s the other way around? A clear sense of aims and priorities is essential for making the right decision.
Scorebuddy’s all-in-one contact center quality assurance solution can offset the potential downsides of outsourcing. With customizable scorecards and integrated business intelligence, you can maintain high standards and monitor the performance of your outsourced agents.
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