Over 65 percent of people have higher expectations for customer service today than just three years ago—and it shows. Just 10 percent find customer service convenient. Despite this, 83 percent of consumers rank good customer service as the most essential factor besides price when deciding what to purchase.

In short, if you can do what your competitors aren’t doing and meet your customers’ high expectations, you can win more business. The question is, how? How can you ensure your customer service is convenient and effective at resolving customer concerns? Do you opt for costly in-house customer service? Or do you invest in call center outsourcing? While in-house customer service allows for greater control, outsourcing to a call center can offer cost savings and specialized expertise.

In this article, we will perform a cost analysis of maintaining an in-house customer service department versus outsourcing to a call center. By understanding the costs and benefits of each option, you can make informed decisions that align with your goals and budget.

The Costs of In-House Customer Service

Maintaining an in-house customer service department can be pricey, with various expenses to consider. Here are some of the main costs:

  • Salaries and benefits for customer service representatives: One of the most significant expenses of maintaining an in-house customer service department is hiring and compensating customer service representatives. The average salary for a customer service representative in the United States is around $57,000 per year.
  • Infrastructure and technology costs: In addition to wages, you must consider the costs of providing infrastructure and technology for your customer service team. This includes things like office space, computers, phones, and software.
  • Training and development expenses: Customer service representatives require ongoing training to ensure they have the skills and knowledge to effectively serve your customers. Training and development programs can be expensive and time-consuming, especially in complex or highly regulated industries.
  • Other hidden costs of maintaining an in-house customer service department: Additional costs associated with in-house customer service may not be immediately apparent. These include management and supervision fees, as well as the cost of recruiting and hiring new customer service team members when turnover occurs.

The Costs of Call Center Outsourcing

Outsourcing customer service to a call center can be a cost-effective alternative to maintaining an in-house customer service department. Outsourcing providers typically offer a variety of pricing models, including pay-per-call, pay-per-minute, and pay-per-hour. The right pricing model will depend on the specific needs of your business and how you plan to utilize their services.

Regardless of the pricing model, call center outsourcing can reduce your overheads in several ways:

  • Outsourcing to a call center saves you money on salaries and benefits for customer service representatives.
  • Outsourcing allows you to reduce infrastructure and technology costs. Call center outsourcing providers already have the necessary equipment and software to support your customer service operations, eliminating the need for these resources in-house.
  • Outsourcing to a call center can also save you money on training. Outsourcing companies have specialized expertise in providing customer support and can often provide a more efficient, effective, and tailored training program than an in-house department.
  • Outsourcing enables you to accurately forecast your expenses and budget accordingly. With the right service provider, you won’t come face to face with unexpected charges or hidden fees, so you can make informed financial decisions that empower sustainable success.
  • Finally, call center outsourcing can lead to cost savings in management, supervision, recruiting, and hiring. Call center outsourcing companies provide these functions as part of their service, giving you the freedom to allocate resources to other growth-driving areas of your business.

Compared: In-House Customer Service vs. Call Center Outsourcing

The table below details the key cost differences between in-house and outsourced customer support.

Cost Category In-House Customer Support Outsourcing to a Call Center
Salaries and benefits High – Customer support representatives require competitive salaries and benefits to attract and retain top talent. Low – Outsourced customer support includes salary and wage expenses in the pricing model.
Infrastructure High – Businesses must invest in a physical office, equipment, and software to support customer service operations. Low – Outsourcing companies provide the necessary infrastructure, equipment, and software.
Technology High – Businesses must invest in technology solutions to manage customer support operations. Low – Call center providers have the technology solutions to manage customer support operations from day one.
Training and development High – Businesses must pay for developing training programs and materials to ensure that customer support representatives are knowledgeable and up-to-date. Low – Call center outsourcing companies have specialized expertise in providing customer service. Some will tailor their training programs to meet your business’s specific needs.
Management and supervision High – Businesses must invest in management and supervision to ensure that customer support representatives are performing. Low – Management and supervision is included in a call center service.
Recruiting and hiring High – Businesses must fund recruiting and hiring efforts to attract and hire customer support representatives. Low – Call center outsourcing companies provide recruiting and hiring services as part of their service.
Scalability Limited – In-house customer support operations have limited scalability, as businesses must purchase additional resources to expand operations. High – Outsourcing providers can easily scale operations to accommodate changing business needs.
Overall cost High – Maintaining an in-house customer support department can be expensive due to salaries and benefits, infrastructure, technology, training and development, management, supervision, recruiting, and hiring costs. Low – Outsourcing to a call center can provide significant cost savings across multiple cost categories.

What About Quality?

While cost is undoubtedly an important factor to consider when deciding between in-house customer service and call center outsourcing, it’s not the only consideration. Quality customer care is paramount, and you need to be confident that your outsourcing provider can meet your customers’ expectations.

One of the common concerns about call center outsourcing is that it may result in a loss of personalization and lower quality customer care. However, this is not necessarily the case—many call centers specialize in providing highly personalized customer service that can rival or even exceed what you could achieve in-house.

Do your research to ensure that your outsourcing provider can provide exceptional customer support. Look for providers with a track record of success, a reputation for delivering high-quality customer service, and a commitment to ongoing employee training and development. Ask for references from other clients, and read reviews and testimonials.

In addition, set clear expectations and guidelines for your outsourcing partner. Communicate your brand values, customer service standards, and any unique requirements or preferences for your customer service operations. Work with your outsourcing partner to develop a training program that ensures their employees are fully equipped to provide the level of personalized service that your customers expect.

Ready to Explore Call Center Outsourcing?

Customer service plays a crucial role in the success of any business. Making the right choice for yours can improve customer satisfaction and drive revenue growth. So, take the time to evaluate your options and make an informed decision that will support your long-term goals.

Ready to take the next step and explore call center outsourcing options for your business? Want an accurate quote? Contact us, and let’s discuss your needs.

By Last Updated: February 27, 2024Categories: Blog6 min read