How Much Does It Cost to Outsource Customer Service?

Customer service outsourcing has become an increasingly popular strategy for businesses looking to reduce overhead costs and streamline their operations. Recent research conducted by Deloitte shows that outsourcing customer service can result in a 30-60% reduction in operational costs. When a business employs internal contact center agents, they are typically paid by the hour, which includes both productive and unproductive time. This also means that staffing, training, and management of employees, HR, and tech upgrades are also handled in-house. When a brand outsources its contact center support, the costs for these functions are managed by the outsource provider.

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Contact center outsourcing can provide businesses with access to an experienced and skilled team of professionals for a fraction of the cost of hiring full-time staff. By outsourcing customer service, businesses can focus their resources on expanding their core services and marketing strategies while still providing high-quality customer support. With the potential for a positive return on investment (ROI), outsourcing customer service has become an attractive solution for countless businesses looking to increase their efficiency and bottom line. Outsourcing helps companies save time, money, and resources, as your partners manage everyday business needs so internal teams may focus on priority deliverables. And your company only pays for productive time. The average cost to outsource customer service is $2,600 – $3,400 per agent per month. This includes potential management fees and service fees, but doesn’t include factors like call volume, additional support channels (e.g., social, chat), or languages.

Factors Influencing Customer Service Outsourcing Costs

Aside from agent rates, there are other items to consider when calculating costs. These variables affect the monthly price of your outsourced call center and can fluctuate based on high-volume seasons in your business:

• Scope of Services: The range of services required—such as call handling, email support, and live chat—will influence costs. More complex services typically require higher-skilled agents, increasing expenses.
• Service Level Agreements (SLAs): Higher service level requirements, like faster response times and extended hours, generally lead to higher costs due to the need for more staff and better technology.
• Volume of Interactions: The number of customer interactions can significantly impact pricing. Higher volumes require more agents and resources, though economies of scale can sometimes reduce the per-interaction cost. Seasonal peaks may also increase costs due to additional staffing needs.
• Location of the Outsourced Partner: Costs vary based on whether the partner is based in the USA or offshore. US-based outsourcing tends to be more expensive due to higher wages, whereas offshore options like India or the Philippines offer lower rates but may involve trade-offs in time zones and language proficiency.
• Technology and Tools: Specific technology requirements and integration with your systems can affect costs. Advanced tools and seamless integration may involve significant initial investment but are crucial for efficient operations.

Pricing Models for Outsourcing Customer Service

There are several models to choose from and choosing the right one is typically based on your needs and company size. Inbound call centers handle incoming customer calls, often regarding order status or support with an app or website. The pricing models for inbound call centers include:

• Shared Pricing Model: Agents handle calls from more than one company. Typically, companies are charged per agent per minute, ranging from $0.40 to $0.90 per minute.
• Dedicated Pricing Model: Agents handle calls for only one business. Their hourly rate is $8 to $30 per agent. Dedicated agents are best for companies that have a steady, predictable influx of calls as rates are separated from agent talk time.
• Monthly Flat Rate Model: Rates for monthly services start at $100, while some outsource partners have an additional limit on monthly talk time.

The pricing model for outbound call centers differs from inbound services. Outbound agents proactively reach out to customers for sales opportunities, surveys, and polls. The primary pricing models for outbound call centers include:

• Hourly Agents: These agents are paid on an hourly basis, providing a predictable cost structure. This model is ideal for campaigns with consistent call volumes and durations.
• Commission Agents: Commission-based agents earn based on their performance, making this model cost-effective and motivating for sales-driven campaigns. This approach aligns agent incentives with your business goals.
• Hourly Plus Commission Agents: Combining both hourly wages and commissions, this model offers agents a stable income while rewarding them for meeting specific performance standards. It ensures a balance between consistent service and incentivized results, driving higher performance.

Cost Benefits of Outsourcing Customer Service

Balancing quality customer care with increased volume can be an uphill battle. Fortunately, customer service outsourcing offers a cost-effective solution that delivers quality service to customers while reducing overhead costs. Here are 5 cost-benefits of customer service outsourcing:

• Reduction in Infrastructure Expenses: Outsourcing customer service eliminates the need for investing in expensive equipment, software, and maintenance costs. With outsourcing service providers, businesses can leverage the latest technology without investing in costly infrastructure.
• Lower Employee Costs: Hiring, training, and retaining full-time employees can be expensive. With outsourcing, businesses can eliminate or reduce some of these costs, including recruitment, salary, training, and benefits packages.
• Operational Cost Savings: Customer service outsourcing can result in significant reductions in operational costs, such as rent, utilities, and office equipment.
• 24/7 Support: Outsourcing customer service enables businesses to provide round-the-clock customer support without incurring additional labor costs, overtime expenses, or resources.
• Scalability: Outsourcing your customer service operations enables your business to scale resources as needed without the expense of hiring new employees, training them, and investing in infrastructure.

Choosing the Right Customer Service Outsourcing Partner

Selecting the right outsourcing partner is crucial for success. Here’s what to consider:

• Experience and Expertise: Choose partners with a proven track record in customer service outsourcing. Experienced partners bring industry knowledge and best practices that can enhance your service quality and efficiency.
• Cultural Fit: Ensure the partner aligns with your company’s values and culture. A good cultural fit fosters better communication, smoother collaboration, and a unified approach to customer service.
• Technology Integration: Verify their ability to integrate with your existing systems. Seamless technology integration is essential for maintaining operational efficiency and providing a consistent customer experience.
• References and Reviews: Check references and read reviews to gauge reliability and service quality. Testimonials from other clients can provide insights into the partner’s performance and trustworthiness.

FAQs on Customer Service Outsourcing Costs

1. Is It Cheaper to Outsource a Customer Call Center or Keep it In House?

In-house customer call centers are generally costly to maintain, given the need for salaries, benefits, insurance, overhead costs, technology, and training. Glassdoor estimates the average customer service representative earns $33,648 per year, plus $5,000 in benefits. When you add in fully burdened costs such as taxes, recruiting, onboarding, training, and allocable costs like supervisory, IT, HR, and others, the average per-hour rate for customer service agents in the US is between $30- $40 per hour.

When outsourcing customer service, these costs are all-inclusive. You don’t have to worry about payroll taxes, personnel, absences, or downtime. If a small business only needs one to two representatives to handle its call volume, outsourcing is more economical than hiring and paying two full-time employees. Likewise, a larger company may lower costs and raise production levels with more outsourced agents, who resolve problems expeditiously or identify trends in customer issues.

2. What are the typical costs associated with outsourcing customer service?

Costs can vary widely based on the scope of services, volume of interactions, and pricing model. On average, companies can expect to pay between $2,000 to $5,000 per agent per month in the USA.

3. How do I choose the best customer service outsourcing company?

Consider factors such as experience, cultural fit, technology capabilities, and client reviews. Conduct thorough due diligence to ensure the partner meets your specific needs.

Conclusion: Is Call Center Outsourcing the Answer for your Business?

Outsourcing customer service can lead to significant cost savings and operational efficiency. By understanding the factors that influence costs, the various pricing models, and the benefits of outsourcing, companies can make informed decisions. Contact us to learn more about how our services can help your company optimize customer service operations and reduce costs.