How much does it cost to outsource customer service?

How much does it cost to outsource customer service?

When you’re competing on a global scale, making sure your prospects and clients have access to the customer support they need, any time of the day or night, becomes crucial. Offering this yourself poses a major challenge – especially for smaller businesses – which is why many companies look at outsourcing their customer service to a third-party provider.

But how much is all this likely to cost you? What factors do you need to consider? How do you choose the right provider for your customer base and target audience? Read on to find out!

Types of customer service you can outsource

The most common customer contact method which companies look at outsourcing is their call centre. However, it’s also possible to outsource functions like…

  • Email support – have client’s email and enquiries answered outside of office hours.
  • Technical support – specialized support services that require some expert knowledge.
  • Live chat support – ensure customers can reach you via chat anytime, anywhere.
  • Peak time support – helps to deal with any overflow from your own contact centre during your busiest hours.
  • Ecommerce support – may include various contact methods including email, chat, phone, and social media support so potential buyers can get their questions answered quickly.

In addition, call centres can be inbound – meaning they handle queries coming from customers – or outbound – meaning they initiate the contact with the prospect.

In-house vs outsourced customer service costs

Now let’s get down to the numbers! Before you can work out whether outsourced customer service is right for you, you need to get an idea of what your costs to provide the same service in-house would be.

Obviously, these figures vary greatly from country to country, and whether your reps need specialist knowledge or training.

But as a ballpark, the average base salary for a customer service representative in the UK is about:

£20,000 per year.

If you need a customer service manager to run your team, you’re looking at a base salary of:

£29,000 per year.

Let’s imagine you need 5 customer service reps and 1 customer support manager to run your in-house contact centre. This gives you a total cost of:

£129,000 per year.

Remember this figure is excluding other costs like social security contributions, renting office space and phone / computer equipment, software licenses, etc.

Now let’s take a look at the average costs for outsourced customer service in different regions:

Geography  Per-hour costs
 North America  £15 – £30
 Western Europe  £15 – £35
 Eastern Europe  £10 – £20
 Africa/Middle East  £10 – £15
 South America  £5 – £15
 South-East Asia  £5 – £12
 India  £3 – £7

The first thing you’ll notice is that outsourced customer service providers tend to work off an hourly rate. Depending on the company you choose, you’ll likely start off with a minimum service agreement, with any additional hours billed as extra.

So how do these costs compare? For the sake of argument, let’s say you decide to outsource your customer service function to a company in Africa that’s in a similar time zone to most of your UK customers.

Each of those 6 potential employees you’re replacing (5 x reps and one CS manager) work an 8-hour day. That equates to 48 manhours a day, or 240 hours a week – roughly 1,000 hours a month, or 12,000 hours a year.

Based on the above rate of £10 an hour, outsourcing this function would cost you about £120,000 a year – not that far off from the £129,000 we calculated to do the same thing in house.

But here’s the difference – that £120,000 is your total cost.

  • You don’t need to pay for premises, social security contributions, phone and internet bills, equipment, software licenses, office supplies, sick leave, benefits, holiday pay, or severance pay.
  • In addition, outsourced CS staff will be available to your customers on holidays when your in-house staff wouldn’t be at work in the first place.
  • You also don’t need to interview, hire, train, manage and onboard outsourced CS reps.

When you factor that into the equation, outsourcing is almost always a much cheaper option.

Factors that can influence the costs of outsourced customer service

Quality

You should never outsource your customer service to a provider that doesn’t have a proven track record of quality. Make sure you take the time to get some verifiable testimonials from current clients.

While high quality customer service contracts will cost you more, having happy and satisfied customers is generally well worth it.

Language

Language is an important consideration for a number of reasons. If many of your customers speak Spanish, for instance, it doesn’t make much sense to outsource your customer support to a company in Asia.

Some languages are also in more demand than others, which will affect pricing as well.

Channel

Remember that digital contact methods like live chat, email and social media support typically cost less than telephone support, as the provider’s overheads are lower.

Labour costs

Finally, the geographical location of the CS service you use also has a significant impact on the price. For instance, English-speaking support staff in Asia, Africa, or the Middle East are cheaper than those based in the US or UK.

You do need to bear in mind though that reps with strong accents can be difficult for your customers to understand, so this needs to be balanced against any cost savings.

Please note:

As you can see, there are many factors which may affect how much you pay for outsourced customer service. This post is intended as a rough guide to help you decide whether outsourcing is the right choice for your business.

If you’d like to get more accurate pricing, then we’d be happy to assist you with a quote based on your specific needs! In fact, with us you will pay per conversation, so during quiet hours of the day you won’t be paying the full price. Get in touch today.

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