Understand Financial Advantages of Outsourcing Customer Service

ClearSource CFO Laresa McIntyre
ClearSource CFO Laresa McIntyre

When a company is contemplating the decision to outsource, cost can be one of the determining factors. Managing an in-house customer service team can carry large expenses that extend beyond basic hourly wages paid to representatives. Some of these costs may not be obvious. Nevertheless, they still impact the company’s bottom line and should not be overlooked.

Here is a quick list of the costs that might become discovered upon further analysis:

  • Payroll related costs such as payroll taxes (including unemployment insurance), workers’ compensation insurance, health benefits, 401(k) contributions, paid time off, holiday pay including premiums when work is done on the holiday, and paid breaks
  • Direct and indirect support costs including team leads, coaches, trainers, quality assurance personnel, human resources, workforce management, talent acquisition, and management support
  • Additional expenses like attrition training, software licenses, computer hardware, IT support, and real estate costs if your agents are in-office.

Once consideration is given to these costs, a company paying an agent $18 per hour might need to budget double that or more to sustain an in-house operation, depending on the span of control for managers. And with wage rates on the rise, costs will continue to grow.

Expertise Pays Off

This is where outsourcing can help by providing significant cost savings. Customer service is a core competency for BPOs (Business Process Outsourcing), and they can enhance your revenue through improved customer support. Since BPOs service other customers just like you, they can take advantage of economies of scale and heightened efficiencies to provide a cost-effective solution. They also have access to innovative technology which would require significant investment and reduce the resources available for other business activities if you had to acquire these technologies.

Location Matters

The most substantial savings are realized when a company is open to outsourcing in nearshore or offshore locations. Outsourcing could cut customer service costs by 40% for nearshore, and up to 65% for offshore, all without degrading service. For example, the Philippines offers notable advantages such as proficient English speakers, familiarity with American culture, and a robust infrastructure featuring an excellent telecommunications network.

True Partnerships Thrive

While saving money is a significant consideration, the crucial factor when outsourcing is that the interests of both your company and your customers are valued by your BPO (Business Process Outsourcing) partner. A BPO that operates as a true extension of your brand can provide the competitive edge you need in today’s business environment.

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