68% of US-based businesses outsource some of their business processes—including, commonly, customer service. But is outsourcing your customer service a smart business move?
For many companies, the answer is clear. Outsourcing customer service allows your business to scale effectively, manage customer demand, save time and money, and improve customer trust, loyalty and retention. However, outsourcing any business process must always be undertaken carefully to avoid potential pitfalls.
In this article, we’ll explain some of the benefits and potential downsides of outsourcing your customer service, how to know whether you should pursue or avoid outsourcing, and how to ensure you find a great partner.
What Is Customer Service Outsourcing?
Customer service outsourcing is a type of business process outsourcing (BPO) that offloads your customer service to an external partner. This outsourcing partnership can cover anything from strategy and management to execution, call answering, inbound and outbound customer communications and more.
Typically, outsourcing customer service gives you access to expertise, software and team management that would be difficult to maintain in-house. It also ensures that you have access to the number and quality of employees necessary to maintain and scale your business with excellent customer service.
There are three main ways to outsource customer service: offshore, onshore, or nearshore.
Offshore: Offshore outsourcing refers to outsourcing your customer service to a team or center that is located far away from the country where the business is headquartered. For US-based companies, offshore customer support is generally located in India or Southeast Asia.
Onshore: Onshore outsourcing refers to outsourcing your customer service to a team located in the same county as the principal business looking for outsourcing. While they are typically thought to deliver a higher quality service, they’re also more costly.
Nearshore: Nearshore outsourcing refers to outsourcing your customer service to a team located in a different country from the one where the business is headquartered, but in one that is geographically and culturally similar. For example, a US-based business may use nearshore outsourcing in Mexico or Latin America.
But which of these options is right for your brand—or should you outsource at all? We’ll discuss the pros and cons of customer service outsourcing in the next section so you can make the right decision for your organization.
Customer Service Outsourcing: Pros
Customer outsourcing has many benefits for organizations of all sizes. Whether you’re a global corporation looking to provide multilingual, 24/7 omnichannel support or a small startup looking to get the occasional call answered by someone familiar with your brand, outsourcing can help you provide exceptional customer service at scale.
Build customer trust
Outsourcing can help you build trust, loyalty and retention among customers through improved customer experiences. By partnering with experts who are focused on your goals, needs and KPIs, you can begin to offer standout customer experiences that leave customers feeling heard, understood and valued.
Business leaders agree: 64% of business leaders surveyed in 2022 said that customer service has a positive impact on their company’s growth, and 60% said that it improves customer retention. Excellent customer service drives customer loyalty and retention, which in turn increases revenue.
Save time and money
Outsourcing is a great way to save time and money for your internal resources without sacrificing on quality. After all, internal teams are typically focused on core competencies of your business such as product, sales and growth. Working with an outsourcing partner allows your internal teams to focus on making the best products or services possible, while the partner provides excellent customer service.
In addition, outsourcing is generally much more cost-effective than hiring in-house. Not only is the sourcing, hiring, training and maintenance of the team taken care of, but there’s less overhead, software costs and other hidden costs that add up over time.
Scale is difficult to achieve in any area of business—but scaling customer service has many unique challenges. Outsourcing makes scaling customer service effortless, due to the large volume of workers available in nearshore and offshore locations and the high resources of large-scale customer service and call centers.
Need to scale up for the winter holidays or other peak shopping seasons? Your outsourcing partner will be able to easily accommodate seasonal hires and new hire training.
Managing a merger that increases the scale of your operations significantly? Outsourcing ensures you have the team size available to meet your needs.
Growing your business quickly and in new regions? Get additional support and multilingual agents easily with an outsourcing partner on your side.
More coverage and language support
Customers today want to communicate with brands on their own timetable. The standard 9am-5pm coverage isn’t good enough. Instead, instant answers and round-the-clock support are becoming the norm.
An outsourcing partner can ensure you offer extended hours or even 24/7 support for your customers. In addition, if you have multilingual customers, operate in a variety of time zones or regions, or operate a bundle of brands, outsourcing your customer service can ensure you—and your customers—get the service they need, whenever and wherever they need it.
Expert project management and strategy
When you outsource your customer service, you’re not just getting a service—you’re also getting access to a team of customer service and support experts, who know the best practices and biggest trends in customer support.
A good outsourcing provider works as more of a partner: providing strategy, ensuring you’re on the right channels for your customers, aligning with your brand and culture, and tracking key metrics and KPIs to measure growth and improve.
Access to higher-quality technology and resources
Do you have access to a CXO and high-level customer experience strategists, QA managers and well-trained agents in-house? If not, are you up for sourcing, hiring and training all of them?
If (like most companies) you’re not, then outsourcing is an easy way to instantly get access to the expertise and experience of these roles for your brand. In addition, customer service outsourcing partners typically have higher-quality technology—from enterprise software to AI tools to quality chatbots—that provide better experiences for customers but likely aren’t in budget to develop in-house. Not to mention an outsourcing partner will also have the internal staff needed to maintain, iterate on and manage all of that tech for your goals.
As you can see, customer service outsourcing has a lot of benefits, no matter what stage your organization is in.
Customer Service Outsourcing: Cons
Although outsourcing has many benefits, that doesn’t mean it’s completely risk-free. Like anything in business, it’s essential to weigh the pros and cons carefully, and use the potential downsides of outsourcing to guide your decision about an outsourcing partner. When outsourcing goes wrong, it’s usually due to one of these reasons.
Reduced quality of offshore support
While customer service is tangential to your core business, it’s still an essential business operation—one that you shouldn’t cut corners on. Whether you choose an offshoring, onshoring or nearshoring outsourcing partner, ensure that the quality meets your standards so you aren’t losing money in the long run.
Ready to perfect your CX?
Unfortunately, offshore outsourcing in particular may not always be up-to-par in terms of customer expectations and customer service standards in 2023. Difficulty understanding, or being understood, by customer service agents, culture or language barriers, low brand or product knowledge or other problems can lead to negative customer experiences.
Difficult communication or collaboration
When you’re working with an outsourcing partner on the other side of the world, managing goals, projects and other communications can be difficult. Not only are there widely varying time zones to manage (2am conference calls might become your new normal), but different communication standards can make misunderstandings more common.
In addition, a lack of proximity also leads to a lack of control, in many cases. Without being able to see and interact with the facility on a regular basis, it’s more difficult to manage quality assurance, work standards and so on. While this is commonly a downside of outsourcing, working with an outsourcing partner located nearer to your place of business—whether a domestic partner or by nearshoring—can reduce or eliminate this difficulty.
Getting locked into an inflexible contract that no longer suits your needs is an obvious downside of outsourcing—but there are ways to prevent this. For example:
- Ensure you understand what you’re signing up for and what your contract entails (including any hidden clauses or fees) before you sign the dotted line. Although this seems obvious, this oft-overlooked step can lead to a lot of problems down the line.
- Look for a partner who offers flexible solutions and allows you to scale support up or down over time to meet your changing needs. Think about possible future needs as well as your current ones, since many contracts are 3-5 years.
- Find reviews or testimonials from other clients of this provider, and see what their experience has shown. Was the provider inflexible? Did they work together for only a short time? Or did they change their support over time and develop a long-term partnership?
Lack of brand connection
Customers need—and expect—a consistent experience across all brand touchpoints. Whether they’re visiting you in-store, browsing your website or social media feeds or calling in to ask a question of one of your brand representatives, the experiences should be congruent and highlight the value and support your brand offers.
However, when outsourcing, this can be more difficult to achieve. After all, outsourced agents are not internal representatives, immersed in company initiatives and brand culture day-in and day-out. As a result, it’s essential to look for an outsourcing partner that hires and trains customer-obsessed agents to become brand experts. Ideally, your representatives are only assigned to your customers and brand, allowing them to become fully immersed in your vision and voice.
When Should You Outsource Your Customer Service?
While outsourcing isn’t for everyone, for many companies, the pros definitely outweigh the cons. There’s too many outsourcing use cases to outline them all, but if you’re still on the fence, consider these key indicators that it’s time to outsource your customer service.
- You’re growing more quickly than you can manage.
This is a problem every executive wants to have! And yet, when orders or requests for services are pouring in faster than ever, it can be difficult to keep up with customer demand and customer communications. However, being able to do so is essential: recent studies have shown that 61% of customers would leave a brand after just one bad experience. When you simply can’t manage in-house, outsourcing can help you meet demand and customer expectations.
- Your support needs vary throughout the year.
If you’re constantly juggling the hiring process for seasonal support staff, outsourcing can save you valuable time that can be directed towards core company processes and initiatives. Outsourcing allows you to scale quickly and efficiently as your business grows, or to scale up and down seasonally as your support needs change. Either way, it’s all taken care of for you so you always have the support you need.
- You need more coverage or specialized skills.
Your competitors are offering extended hours service, or you’re expanding into new markets—sometimes an internal team just won’t have the bandwidth or skill set to match your company’s expanded growth. Working with an outsourcing partner more easily allows you to offer more coverage during peak hours, round-the-clock service, or specialized skills such as multilingual agents or advanced technical support.
- You want access to more expertise, forecasting and/or software on a limited budget.
In this case, outsourcing is the best (and fastest) solution. Outsourcing allows you to optimize a limited budget by gaining access to advanced software or technological solutions, a team of experts, and detailed forecasting, data analysis and quality assurance—all in one package. If you’re looking to scale up your customer experiences and strategically improve your customer service, partnering with a team of experts is a surefire way to do so.
When Should You Avoid Outsourcing Your Customer Service?
Alternatively, there are several scenarios where it makes sense to keep things in-house. As mentioned above, outsourcing is not a one-size-fits-all solution, so it’s important to consider these key indicators that you should avoid outsourcing:
- You’re not big enough yet.
An important factor to consider when planning to outsource customer service is how many customer service calls you regularly receive. If you’re only receiving a handful of calls or messages each day, outsourcing may be difficult. After all, if your inbound volume is not significant enough to fill someone’s hour or day with consistent work, you’ll be paying for more than you’re really getting.If you still need outsourced support even though call volume is low, you can look into blended agent models that allow agents to “share time” across several companies. Companies are then billed on a per-minute rate, as opposed to a per-seat or per-agent rate.
- You are subject to strict regulations or government requirements.
Many companies or organizations who receive government support or aid, or are in specific industries, have regulations that stipulate that employees must reside in specific locations or have specialized certifications. This is worth looking into very carefully before outsourcing, as customer service agents do perform critical work for your company, and many outsourcing locations are non-US-based.
- You need more from customer support than just support.
This is often the case at smaller companies or startups. In these cases, the customer support agents don’t just handle calls and customer communication, but may also do sales, high-level account management or other projects that are best handled in-house. If this is the case for your organization, think carefully about the tasks and initiatives that need to be handled internally, and which can be outsourced. Then determine if the volume of outsourced tasks is significant enough to provide a time and cost savings for your organization.
How To Choose a Customer Service Outsourcing Service
Ultimately, choosing the right customer service outsourcing partner will make or break your outsourcing experience. A good outsourcing partner acts as a strategic guide, a tactical support and a communicative partner towards achieving your goals. A poor outsourcing partner bogs down communication, hampers projects and new initiatives, and wastes time and resources.
So how do you properly vet potential partners to make a choice you won’t regret? Consider these five factors as you vet possible providers.
How much proximity do you need to your outsourcing partner? This will depend on the level of trust developed, the amount of control your organization needs, your specific requirements, industry regulations and more.
However, also consider the difficulty of communicating across many time zones, the potential need for extended hours support and any cultural or linguistic barriers that may arise. By carefully considering what locations will and won’t support your goals and your customers, you can eliminate cost-effective but ultimately detrimental partners.
2. Agent Skills & Expertise
What are your goals for customer service—and do the agents at your potential vendors have skills that align with those goals? For example, if you’re hoping to eventually scale up in an omnichannel customer support system, and a particular vendor focuses primarily on inbound and outbound marketing calls, you will quickly outgrow their support.
Ultimately, any contact center partner should equip your brand with agents that have both soft skills—empathy, patience, stellar communication—and hard skills—technical understanding, bilingual support, that matters to them. Ensuring your call center agents have these skills and receive ongoing training to strengthen them will go a long way in delivering exceptional customer experiences.
3. Management Team & Expertise
The management of your contact center will make a big difference not only on your experience working with them, but also in the productivity and effectiveness of your agents, the quality of your service, and the level to which you can improve. Ask yourself:
- Are the managers here experts at what they do? Are they experienced and competent leaders and communicators?
- How is the communication process? If it’s difficult during the vetting process, it won’t get any easier once you sign a contract.
- Does this team know how to take us where we want to go? Are the leaders good at managing people and reaching your goals?
The more experience within the management team, the less hands-on you will have to be, freeing up time and energy to focus on other projects and responsibilities.
4. Tech Stack & Compatibility
In today’s digital world, having advanced technical solutions is a must. The question is which technology is most important for your team and goals. A great contact center will be able to explain the variety of tools, software and other technology they use and which is most important given your needs and goals.
In addition, you should ensure that their tech stack is compatible with yours and can integrate as needed with your current process.
Finally, any potential outsourcing partners should have ample experience—not just generally, but within your industry, audience demographic and desired support channels. Agents should be familiar with your audience’s demographic and preferred communication styles, and leaders should know how to drive results for your team.
Looking for or asking for client reviews, testimonials or case studies can be a great way to ensure that your potential partner has the expertise and experience needed to reach your goals.
If you’re looking for an experienced contact center that can support your customer service outsourcing needs, reach out to an expert from Global Response. With 30+ years of experience and a unique, human-first, customer obsessed approach, our team can provide the best customer support for your industry. Connect with an expert today to see how Global Response can transform your customer experience.