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Why outsourcing your customer service is cheaper than having in-house team

Why Will Outsourcing Customer Service Cost You Less Than Your Own Team

Can you imagine a group of people working in the office non-stop? Who will manage their activities round the clock or at night? When you have thousands of customers around the world, how will you deal with all of them?

Your best solution is outsourced customer support. Such agencies take care of your customers while you do your business, make money and work on your service/product development. In this article, we will answer the classic outsourcing vs in-house question and will show you why outsourcing your customer service would be more financially beneficial than having an internal team.

What does call center outsourcing cost include?

How much does it cost to outsource customer service? Let’s start with looking into what’s included in the cost of hiring an outsourced call center:

  • Recruitment costs + payments;
  • Onboarding and training;
  • Software license purchase;
  • Performance monitoring software;
  • Analytical tools;
  • Payments to support agents;
  • Costs of administrative processes;
  • Office rent and hardware supply (depends on the call center). 

The costs also depend on whether the call center is available for your business needs, or a team of dedicated agents will be hired as per your business requirements? In the latter case, an additional preparation phase is needed for recruiters to hire more customer service agents.

This recruitment activity can take from two weeks to a month, and you will have to pay the recruiter for the time and number of call center agents hired. Also, outsourced call center costs may include administrative or other resources that are not available in the existing call center but are required by your business.

Outsourced call center pricing

You may be wondering how much do companies save by outsourcing? The answer is – it depends. The final call center cost depends on many factors like:

  • The number of customers
  • The number of communication channels provided
  • The working schedule of the customer service
  • The number of people engaged in the process
  • Other factors that can be negotiated

The amount of money that you will have to pay will vary. However, it’s much more affordable than hiring an internal customer service team in your office. You will spend much more resources on the training and equipping the team’s workspace than you would on outsourcing.

The call center rates are very flexible, and they depend on many factors. The easiest and fastest way to achieve your business goals is by defining a monthly amount that you are willing to pay for the customer service. 

How many CSRs does your business need?

Is there a way to identify how many customer support agents your business needs? The answer to this question mainly depends on the daily workload (emails, calls, chats) and the approximate duration of one conversation with the customers. 

Here is a basic formula: you need to take the number of contacts in your contact base and multiply this number by the average duration of a call, then add approx intervals between calls/chats to the received number. This will give you an approximate number of man-hours that you may expect.

Next, you need to divide this number by the workday duration to find out the needed number of support agents. If you plan to arrange 24/7 customer support, you will require more than one support team for covering all the hours, so consider this point, as well.

It’s worth noting that if you hire fewer support agents that will be able to deal with a workload greater than the calculated one, the wages of such employees will be higher compared to customer support representatives that work within the expected workload and don’t go the extra mile.

Types of customer service agents

There are different types of pricing options in call center solutions. One of them is when a customer support agent makes works for a couple of different businesses. It’s called a shared agent or shared team if we are talking about a group of agents. Such an option works great for companies with a low workload. 

Another option is a dedicated call center agent that includes longer onboarding, high-end programs, strategic approaches, etc. The dedicated agents are focused on your business only and provide more in-depth assistance to the customers. 

And lastly, there are also outbound call centers that charge for the outbound hours, respectively. It’s also worth noting service providers that charge based on performance or earn from commissions. 

How to estimate client support costs

Does outsourcing save money? Based on the information above it most definitely does. But to really get to the bottom of this let’s look at how the cost of customer support is estimated. There are more than ten approaches to calculating the cost of customer service operations. 

First of all, it depends on whether you want to pay hourly, daily, weekly, or monthly. Let’s consider sales per hour. Think about how much your staff generates per hour of work. Define the current rate, factors that might make it higher, and estimate the possible income. Also, you should consider the factors listed below:

  • How much the customer acquisition cost

In most businesses, it is way easier to motivate loyal customers to buy or order your goods or services than to find a newbie. At the same time, it is more expensive to retain the existing customer base. That is the primary mission of a customer care representative.

You may evaluate the effectiveness of retention measures as well as several newly obtained clients when deciding on the appropriate wages for your support agents.

  • The physical costs of having an in-house

Even though the support operations will cost you less, you still should take into account a cost per call along with monthly fees to pay off. The expenses of an in-house support department include equipment, tools, furniture, premises, utilities, internet, etc.

  • Sales returns and average order value (AOV)

Just like in a financial pyramid, it is necessary to consider how many orders were completed and paid thanks to the specific customer support agent. That is when an average order value (AOV) will come in handy. Also, a recruiter should keep in mind the potential costs of extra training unless the in-house employees with vast experience would agree to share their skills and knowledge at no charge.

Let’s discuss your business model to find the best solution​