In-house call centers seem like the easiest and most efficient option—but are they cost-effective?
According to a Deloitte survey, 70% of companies said “cost reduction is a primary objective” for outsourcing. When managing an in-house call center, costs can compound and balloon quickly, whereas outsourcing presents a stable, cost-effective option.
However, since outsourcing is often a cost-related choice, many companies make the mistake of simply choosing the cheapest option. After all, the old adage, “You get what you pay for,” holds true in outsourcing as well.
So how can you make a choice that’s both cost-effective and drives powerful results for your company? The key is choosing an expert partner who can bring strategy, direction and clear results to your call center team and customer service efforts while also providing a cost-effective deal to reduce your capital expenditure.
In this article, we’ll walk through the types of call centers and contact centers and the general costs of outsourcing as compared to in-house call centers. If you’re currently working in-house—or don’t have a call center option yet—you’ll see how to weigh the cost of various providers and understand which option will be most cost-effective for you.
Types of Call Centers & Contact Centers
Of course, there are many different types of call centers and contact centers, and which one you choose will obviously make an impact on the cost. For example, here are some of the types of call centers and contact centers you might choose from, depending on your needs:
Inbound call centers: Inbound call centers typically handle customer and/or technical support, answering inbound calls from customers, as the name suggests. They’re one of the most basic forms of call centers and often have lower rates.
Outbound call centers: These call centers handle outbound calling, which can include marketing calls, research and surveys, sales and so on.
Full contact centers: Full contact centers can handle both inbound and outbound calls. In addition, many contact centers handle more customer communication than simply calls—often handling chat, email or social media messaging as well.
Omnichannel contact centers: An omnichannel contact center may handle many of the same channels as a full contact center, but takes a more strategic approach. These centers are typically equipped with the technology necessary to deliver a seamless experience to customers, using databases and integrated systems to sync every channel for a true omnichannel experience. Since they provide fuller service coverage and a better customer experience, they often have higher rates.
In addition to differing service levels, the location of your call center will also make a difference in rates (and, depending on the location, in quality of service as well). There are three main types of call center locations: offshore, onshore and nearshore.
Offshore call centers: Offshore call centers are located in a country far from the country where the business is headquartered. For US-based companies, offshore call centers are typically located in India or Southeast Asia.
Onshore call centers: Onshore call centers are located in the same country as where the business is headquartered. They often deliver a higher quality of service than offshoring, but their costs are much higher.
Nearshore call centers: Nearshore call centers are located in a different country from the one where the business is headquartered, but one that is nearby and often shares a similar culture, time zone, and/or languages. For example, a US-based company may use nearshoring call centers in Mexico or Latin America.
While outsourcing in general tends to be a lot more cost-effective than running a call center in-house, nearshore and offshore call centers are much more affordable than onshoring.
In-House Call Centers vs Outsourced Call Centers
When considering whether or not to outsource a call center, many business leaders tend to operate on a wage-first cost analysis: which is cheaper, in-house or outsourced? While this can be a helpful place to start, the actual cost analysis is much more complex, and should be considered carefully to determine the most cost-effective option.
Beyond just agent wages, it’s essential to consider the costs required with both in-house and outsourced call centers.
In-House Call Centers
An in-house call center requires you to pay your agents, of course, but there’s also a variety of other costs—as you likely know well—accompanying this model. For example:
- the cost of sourcing, recruiting, hiring, training and managing a team of agents
- additional staff to manage your call center, such as HR & Recruiting, Facilities, team leads and managers, CX experts, and so on.
- overhead costs, such as office and desk space
- technology costs, both personal, such as phones and technology for the agents, and corporate, such as software licenses, database software and other systems.
- security and compliance costs—both preventing issues and dealing with any as they come up
- providing employee benefits and training
The list goes on. In addition, many companies see seasonal changes in staffing, which compounds these costs—expending additional resources and costs to hire new employees and then the ballooning costs of additional office space, software licenses and so on.
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Not to mention that all of the above is made more difficult by the current labor market and labor shortage in the US. When finding good employees is harder, it costs more not only to source and find them, but also to hire and retain them. As a result, in-house employees may occasionally be cheaper hourly than other outsourcing options, but the overall cost is much higher, and fluctuates throughout the year.
Outsourced Call Centers
On the other hand, outsourcing provides a much more stable and scalable option for call centers, preventing ballooning costs and unpredictable labor by outsourcing the building and maintenance of your team.
Of course, when you’re outsourcing your call center, you need to invest the time and strategy to maintain that partnership, but overall it’s much more cost-effective and efficient. You don’t have to spend as much time maintaining or building the team and can be involved with the strategy and results without having to actively manage each piece of the process and the day-to-day systems.
With an outsourced call center, you can also scale much more easily, without having to incur compounding costs of overhead, training and so on—simply pay for additional agents in peak seasons.
Call Center Pricing Methods
In general, there are two ways that outsourced call centers will charge for services: either per minute or per agent (hourly). If your company receives a high call volume, then an hourly rate probably makes sense. However, if you receive a lower call volume, or your call volume is very inconsistent, then you should consider making use of a per minute pricing model.
With per minute pricing, agents are typically part of a shared, or blended, call center model, where agents work for multiple companies, or across a variety of channels, inbound or outbound campaigns, so they’re not sitting waiting for a call.
With all costs considered, outsourcing is generally a much more cost-effective option than running your own call center in-house. However, not all outsourcing is created equal. Onshore call centers have become more expensive since the Covid-19 pandemic due to the labor shortages and higher costs of hiring domestically.
As a result, nearshoring and offshoring are good ways to keep costs down when outsourcing your call center. The average nearshoring option is 30% – 50% cheaper than onshoring or hiring a team in-house. For example, compare industry averages for outsourcing call centers:
|Type of Call Center||Average Range, Per-Seat Cost|
|Offshore||$8 – $14/hr|
|Nearshore||$13 – $23/hr.|
These ranges obviously depend on a variety of factors, including complexity, services offered, agents skills and expertise, location, accent reduction and comprehension levels for offshoring, and so on.
Understanding The True Cost of Call Center Outsourcing
So, which is right for your business?
There’s no one right answer, but only the best answer depending on your budget and goals. The most important thing is to ensure you understand the true cost of both outsourcing and hiring in-house before making a decision.
Ultimately, in-house will be the expensive and time-consuming option, but also provides the most control. In-house is also difficult to scale, and includes dozens of related cost expenditures that can drive up costs and compound quickly in peak seasons where more support is needed.
With outsourcing, it’s essential to understand your contract fully before signing. Different providers may charge differently for certain packages, and you sure ensure you have a clear breakdown of any fees and cost savings available.
Keep in mind as well that outsourcing is (ideally) a long-term partnership—don’t shortchange yourself and your business by simply choosing the cheapest option. Instead, look for a provider that can provide a valuable partnership with expertise, management, results, insights, data and processes and so on. You may be paying slightly higher per-agent fees, but you’re also paying for expertise, training, software and facilities. What’s more is that you’ll receive consistent pricing over time, while also being able to scale up and down easily as needed. This can be a huge benefit and cost-saving over in-house if this is an option you’ll need.
To learn more about outsourcing and the services and pricing available to grow your company’s customer service, contact an expert at Global Response today. Our customer-obsessed support delivers customer experiences that create loyal customers that will come back to your brand again and again.