The Cost and Benefits of Outsourced Customer Service

Back view of a woman talking on a headset

Is outsourced customer service worth the investment? What are the potential costs, and how do they measure against the potential benefits? What factors should businesses consider when making this significant decision? We delve into these questions and much more in this comprehensive look at the subject.

    Understanding Outsourced Customer Service

    The world of commerce is no longer simplified, and contemporary businesses are continually seeking strategies to achieve a competitive edge. Among these strategies is the popular business practice of outsourcing customer service.

    Concept of Outsourced Customer Service

    When a business chooses to outsource customer service, it is essentially hiring an external organization, a third-party vendor, to manage its customer service operations. This outsourcing company can be located anywhere globally and manages customer support across various channels, such as call centers, live chats, and social media.

    A well-managed outsourced customer service can enhance the customer experience, improve satisfaction, and in turn, boost customer retention rates. However, businesses need to consider the costs and benefits before deciding to outsource customer service. Unity Communications, for instance, has supported numerous companies with their customer service outsourcing requirements, dramatically improving their overall customer service levels.

    The Rising Trend of Outsourcing in Business

    According to Statista, the global outsourcing market was worth around $92.5 billion in 2019, which shows the magnitude of outsourcing in the current business environment. Various businesses are turning to outsourcing customer support due to its multiple benefits, including reduced costs, access to a global talent pool, increased operational efficiency, and potential for business growth and expansion.

    For example, e-commerce businesses that often face high call volume of customers seeking to address inquiries related to their orders. Subsequently, they require customer service support that can handle such high call volumes efficiently. Outsourcing call center services often emerges as a viable solution for these businesses.


    Find out everything you need to know about call center technology solutions that result in business success.

    Costs Associated With Outsourced Customer Service


    Direct Financial Investment

    Businesses considering outsourcing their customer support need to consider both the apparent and hidden costs associated with this decision. The direct costs comprise the payments made to the outsourcing firm or service provider. These costs may vary depending on the package selected, which significantly depends on the businesses’ customer support needs. For instance, an organization with a massive customer base may demand a larger team of agents, leading to higher outsourcing costs.

    Evaluating the Balance Between Cost and Benefit

    When exploring options like outsourcing customer support, it’s essential to understand the need to balance between costs and benefits meticulously. The cost and benefits of outsourced customer service can be a critical determinant of whether or not a business should retreat from its in-house team and seek the services of an outsourcing firm.

    Every company has to evaluate the financial implications against the potential benefits that the collaboration with a customer service provider can bring. This decision could invariably impact the overall customer experience, customer retention, and in the long haul, the company’s reputation.

    Assessing the Trade-Offs

    Despite the attraction of potentially reduced costs and increased efficiency, outsourcing customer support comes with inherent trade-offs. On one hand, an outsourcing company can manage high call volume, offer 24/7 support and handle multiple support channels more efficiently. On the other hand, there is the risk of compromised customer service level, lack of direct control over the support team members, and complications with coordinating with a remote team, especially if they are in a different time zone.

    These trade-offs require careful assessment. Companies need to discern the level of control required over their customer service, the importance of having the support team in close proximity, and the potential impact on customer satisfaction.

    Successful Case Studies

    Numerous companies across various industries have benefited from customer service outsourcing. For instance, a U.S.-based e-commerce business outsourced its customer support to a contact center in the Philippines. This decision enabled the company to manage its growing customer inquiries effectively, quickly, and cost-efficiently. The company saved on overhead costs, improved its customer services, and expanded its customer base in Southeast Asia due to the cultural and linguistic expertise of the outsourced customer support.

    Another case is a software company that opted to outsource customer service support to handle tech support queries. By doing so, they were able to focus on product development and marketing while the outsourcing partner took care of addressing inquiries related to installation, usage, troubleshooting, and more. This case study shows how a company can benefit from the specific technical expertise of the outsourcing firm. These cases underline the power of leveraging the capabilities of customer support outsourcing to reduce costs and streamline processes.

    Factors to Consider When Making the Decision

    Several factors require consideration when deciding whether or not to outsource customer service. These include:

    • Business Size and Needs: Small or mid-sized companies may find outsourcing a more affordable option compared to maintaining an in-house solution. Established companies may require customer service support that can handle a high volume of calls and offer round the clock service.
    • Customer Demographics: If a company’s customer base spans several time zones, a live chat or a 24/7 answering service may be necessary. Consideration of the customer’s preferred language can also be important.
    • Cost Implication: Outsourcing customer service is often cheaper than hiring, training, and maintaining an in-house team. However, the cost implication should be assessed in the long term.
    • Quality of Customer Service: The company needs to ensure that the service provider can uphold its standards of customer service. It can be achieved by setting specific KPIs and SLAs before entering into an agreement with the service provider.

    Is Outsourced Customer Service for You?

    Once all factors have been critically assessed, the question still hangs—Is outsourcing the best option for your customer service needs? The answer will vary from company to company. While outsourcing may be an excellent solution for some, it may not be perfect for others. The decision should be based on a careful assessment of costs, benefits, and specific company needs.

    Review of the Costs and Benefits

    Cost assessment should comprise both direct and hidden costs. Direct costs comprise elements like the outsourcing services fee, while hidden costs might include potential customer dissatisfaction due to a different level of service quality from an outsourced team. The benefits to be considered range from financial advantages to increased operational efficiency and potential for growth and expansion.

    Key Takeaways for Businesses Considering Outsourcing

    Outsourcing customer service can be a strategic business decision that can lead to substantial cost savings and improved service delivery. Businesses need to consider their size, customer demographics, cost implications, and required quality of customer service while deciding to outsource. The trade-offs have to be carefully assessed, and controls need to be put in place to monitor service quality. Although successful case studies demonstrate dramatic benefits, each business has unique needs and circumstances, making a careful evaluation imperative.

    Are you searching for top-quality outsourced customer service that goes above and beyond? Look no further than ListenTrust. With exceptional CRM technology and a unique process for handling calls, we consistently exceed client expectations. And with expert reporting systems, we can track trends and implement proactive solutions to stay ahead of your callers’ needs. Contact us today to learn more about our call center services.


    0 replies

    Leave a Reply

    Want to join the discussion?
    Feel free to contribute!

    Leave a Reply

    Your email address will not be published. Required fields are marked *