Is outsourcing customer service cheaper than keeping it in-house?

OABPO Blog Team Published on September 30, 2013
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Since the 1990s, many companies have been outsourcing their customer service functions instead of keeping an in-house department.

There are many reasons for this, but it’s safe to say that one of the most important reasons is cost savings: having an outsourced team of customer service representatives is considerably less expensive than operating in-house.

How it reduces costs

Many believe that financial savings are mainly driven by low-priced wages. After all, as reported by Australia Network News, the monthly salaries of call center agents in popular offshoring destinations can start with just a few hundred dollars.

Call center agents in India, for instance, can have a starting salary of $250, and those in the Philippines, $300. These figures are a far-cry from the $3000 monthly income of agents located in the United States, not to mention other associated daily business costs.

Instead, cost savings are realized in terms of how the company saves on recruitment and training as well as costs associated with maintaining an in-house staff such as benefits and allowances. Moreover, it does not have to invest in high-end infrastructure and technology such as computers and other call center tools.

Although the hourly rates of outsourcing may often be lower the true savings come in the currency of time and operational logistics.
This capital savings can be invested back into the company. Also, internal resources can be freed up and assigned to other business-critical tasks.

Moving beyond costs savings

Competitive prices should come with high quality customer service. Ultimately, businesses really won’t save cash when customers are dissatisfied with the performance of the call center outsourcing provider. In fact, it may even lose profits in the long run.

Outsourcing becomes a worthwhile investment when the offshore call center is efficient and capable of delivering topnotch-quality customer service. This way, the company not only cuts significant operating expenses, but also improve efficiency, focus on core competencies, and increase customer satisfaction and loyalty.

In conclusion: can this practice save costs? Yes, given that the factors mentioned above are met. To accomplish this outcome, one should first compare the costs between managing an outsourced team and creating an in-house call center department. It should also look for an offshore vendor that offers low price points without the dreaded tradeoff in quality.

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