Pros and Cons of Outsourcing Customer Service

Customer service is critical to the success of your business, but what happens when you are too busy to handle every communication channel? You cannot ignore customer service calls, but you also cannot sacrifice operations. You may be asking yourself, "What is my best option if I am not able to hire in-house customer service staff?" As your business grows, you may consider outsourcing your customer service.

Businesses of all sizes outsource their customer service. Prominent companies like NBC and PNC Bank outsource their customer service. The same is true of many small businesses, which can reap the same benefits of outsourced customer service as larger companies.

What is outsourced customer service?

Outsourced customer service is when management of customer-facing communication channels is transferred to a third-party service provider. Typically, customer service is outsourced through a call center service, which maintains agents who are trained to handle a business's incoming calls.

Weighing whether you should reassign your customer service to a third party is complex, and for many business owners, can cause unease. After all, you want to ensure that your business can continue to provide quality customer service to keep up with consumer demand.

How much does it cost to outsource a call center?

The cost of outsourcing your customer service to a third party can vary depending on the services you need. Basic answering services cost 70 cents to $1 per minute, while dedicated call center agents (professionals who work exclusively on behalf of your company) cost up to $25 per hour.

"Outsourced call center costs are made up of several items such as … employee training, IT infrastructure expenses, incoming info analytics, agents' payments, maintaining administrative resources, office rent, and technical needs, etc.," said Joe Wilson, senior career advisor at MintResume.

"Cost[s] also depend on whether there is a team ready to take a project on right away or will it be created anew, according to specific requirements? In the second case, an initial preparatory stage is needed, during which the suitable staff has to be recruited," he added.

Determine whether you need live answering and message-taking services, because the more cost-effective option – shared agents – can handle those functions. The more expensive option – dedicated agents – are needed for advanced tasks, like outbound calling campaigns, complaint management and customer win-back services.

What are the pros of outsourced customer service?

The ability to outsource customer service for small businesses can be highly beneficial. Some of the pros include:

Reduced workload: Small business owners and staff typically wear many hats. Responding to customer phone calls and emails detracts from more profitable activities, such as sales. Outsourcing customer service can free up your time and your employees' time so that everyone can focus on larger sales drivers.

Cost savings: When you hire contract workers, including call center employees, you don't pay them a fixed salary or employee benefits. Additionally, you don't need to furnish customer service reps with equipment, further saving you money. A computer and all the necessary software could cost upward of $1,000, while a good headset can cost more than $60. When you factor in office space, a desk, chair, an additional monitor, etc., you could spend $5,000 on equipment for just one customer service rep.

After-hours coverage: Many consumers expect to reach companies' customer service departments during off-hours. Call center staff can be available 24/7 if that is something that your consumers expect of your business.

Multilingual service: If your customer base is likely to speak another language, such as Spanish or Chinese, by utilizing outsourced customer service, you can gain access to reps who speak these languages, and other languages too. As a result, your customers feel more confident doing business with your company, knowing that their questions are answered properly because there are not any communication barriers.

"Outsourcing helps you save resources and create better coverage. If your company operates on an international level, it would be easier to hire a local call center office instead of forcing an in-house team to learn a foreign language. The bigger the audience you cover, the bigger chance you have to satisfy your customers" said Wilson.

What are the cons of outsourced customer service?

While outsourcing customer service offers some great benefits, before choosing a provider, understand the cons, and address them with the provider you are considering.

A lower rate of customer satisfaction: Many business owners are worried they will lose customers if they switch to call center or answering service. However, to address this concern, business owners can scrutinize the call center's track record or can ask the service to provide references.

Outsourced employees tend to not be as knowledgeable about your company as an in-house team: Because outsourced reps are not in trenches with you day in and day out, it makes sense that a common concern among business owners is that they may not be as knowledgeable about products and services as you or your in-house reps. To overcome this concern, clear and consistent communication with your outsourced customer service team is imperative. Update them on new product launches, price changes, policies and more. For more advanced services, dedicated agents can be hired to focus only on your business, learning the ins and outs of everything you do.

Your business may not be their top priority: A call center rep may be handling a customer service inquiry for a clothing retailer one minute and then a few minutes later answer a consumer's questions about home loans. While you will want outsourced reps to be passionate about your company and make your customer service calls a priority, due to the number of clients they work for (and juggle), it is not a guarantee. Again, hiring the more expensive, dedicated agents could ameliorate this problem, but it will cost you.

Security concerns: The very nature of some businesses involves the exchange of personal info, such as a credit card number, names, addresses – information that needs to be secure. If this is the case with your business, interview call centers about their technical security measures and practices. However, many call centers have layers of protection in place to ensure your customers' data remains private and safe.

Are there outsourced customer service companies in the USA?

There are outsourced customer service companies in the U.S. Below is a list of customer service providers that are based in the United States.

Who are some of the top customer service providers?

These 10 companies are all based in the U.S. and can help your business with your outsourced customer service needs:

What do I need to know before hiring customer service providers?

Before hiring an outsourced customer service provider, know what you want in terms of their expertise, quality control, security and training, and have the company you are considering hiring explain how they address these issues.

What is their expertise? Has the call center worked in your industry before? Are they familiar with regulations in your industry and the particular concerns consumers have? If they never worked for other companies in your industry before, consider how that might affect service. To deter any potential issues a lack of expertise may cause among your customers, hire a provider that has experience in your industry.
How do they maintain quality control? Interview call center companies about how their agents deal with angry customers and keep them happy. Additionally, you should be able to maintain visibility into their customer service with frequent reports and call recordings you can listen to. Ask companies what reports they provide and whether they offer actual recorded calls that you can listen to.
What security measures do they have in place? To mitigate the risks of your customers' personal information being exposed, you need to understand what their security protocols are. Their inbound and outbounds networks need to be secure. Also, ask who manages their network and has access to it.
Whom do they hire and how are they trained? Some businesses require specialists to handle customer service inquiries. Ask about their hiring process and what their training program is like. How do they keep up with the company and technology as it evolves?

All of this information should help you make an educated decision should you chose to move forward with hiring an outsourced call center. For further assistance with your search, read our article, The Best Call Center Services for 2020.

The Pros and Cons of Outsourced Customer Service

Is outsourcing customer service right for your business? Before you outsource your customer service to a call center, understand the pros and cons.