Imagine you’re at the helm of a business. Your customer base is growing, and so are the demands on your time. You realize it’s time to outsource your customer service, but where do you start, and what will it cost? I found myself in this exact situation earlier this year.
To make sense of it all, I turned to Google and Reddit, piecing together what you might expect the outsourced customer service cost to be in 2024. This blog distills my findings – so you can save time on your research.
Whether you’re exploring outsourcing for the first time or looking to optimize your existing setup, this blog is your roadmap to savvy spending – no surprises, just plain savings by using a customer service outsourcing company.
Comparing In-House vs. Outsourced Customer Service Costs: A 2024 Perspective
When it comes to customer service, you have two main options: keeping it in-house or outsourcing. In-house means you hire and train your own staff. Outsourcing means you pay another company to handle it for you.
Let’s take a look at the cost difference between hiring in-house and outsourcing to a reputable call center.
| Country | Cost of Hiring In-House | Outsourcing to HiredSupport | You Save | % Savings |
| USA | $100,742 per annum | $14,787 per annum | $85,955 | Save 85.32% |
| UK | $213,840 per annum | $14,787 per annum | $199,053 | Save 93.09% |
| Canada | $31,722 per annum | $14,787 per annum | $16,935 | Save 53.39% |
| Australia | $38,438 per annum | $14,787 per annum | $23,651 | Save 61.53% |
You might be asking, why is there such a huge difference? Here’s why:
Salaries and Benefits
In-house customer service means paying salaries and benefits. You’ll cover healthcare, retirement plans, and other perks. These add up quickly. For instance, a full-time customer service representative in the U.S. can cost you around $40,000 a year in salary alone. Add benefits, and you’re looking at $50,000 or more per employee.
Infrastructure
With in-house teams, you need to provide infrastructure. This includes office space, computers, phones, and software. Office space costs depend on location, but it can be significant. Equipment and software licenses also add to your expenses.
Outsourcing Fees
Outsourcing customer service often starts at around $7 per hour at HiredSupport. This rate covers everything: salaries, benefits, and infrastructure. You pay the outsourcing company a flat rate, which can be much cheaper than maintaining an in-house team.
Cost Factors in Customer Service Outsourcing
I’ll break down the essential cost components you need to consider, from direct charges like per-hour rates to often overlooked incidental costs. Whether you’re considering outsourcing onshore or offshore, this detailed analysis will help you foresee the financial implications and make an informed decision.
- Per-Hour Rates
- Per-Month Charges
- Incidental Costs
Per-hour Rates
Hourly rates for outsourced customer service are as varied as the services offered.
Basic customer support tasks like answering calls or managing queries start around $7 per hour in regions like Pakistan.
More specialized services, such as technical support or bilingual customer support, command higher rates, ranging from $25 to $50 per hour in the U.S. or Western Europe.
Understanding what these rates include is crucial – it’s not just about finding the lowest price but ensuring you get the most value for your investment.
Per-month Charges
Monthly charges function like a subscription for comprehensive service packages that include 24/7 support and multi-channel communication.
These packages are priced based on the scope of services provided and can offer significant cost savings compared to hourly billing.
For instance, a package that costs $2,000 per month might cover 80 hours of service.
Examining the additional services included in these packages, such as ongoing training and analytics, is essential, which can greatly enhance your customer service capabilities.
Incidental Costs
Incidental costs often catch businesses by surprise.
These can include overtime rates for after-hours services, higher rates for holiday work, and fees for quickly scaling up service capacity. These are like the unexpected charges that can show up on a bill – unpleasant surprises that can strain your budget if not planned for.
Awareness of these potential extra costs helps craft a more accurate and robust budgeting strategy.
Impact of Outsourcing Model on Pricing
Traditional vs. Distributed (Remote) Call Center Models
Call centers have evolved exponentially over the years. The choice between traditional and distributed call center models has BIG implications for your outsourcing costs. Let’s dive into each model’s practical and financial realities and why many businesses, including mine, are leaning towards the distributed/remote approach.
Traditional Call Center Model
Traditionally, call centers operate from a physical location, housing all agents under one roof. This model necessitates significant investment in infrastructure – from office space to hardware – which inherently drives up operational costs.
While centralized call centers facilitate easier direct supervision and potentially foster a cohesive team environment, they can be expensive. In regions like North America or Western Europe, the high costs of real estate and labor add a considerable burden to companies.
Distributed/Remote Call Center Model
Conversely, the distributed or remote model, which has seen a surge in adoption since the pandemic, cuts down on many of these costs. Agents work from various locations, often in their own homes, which slashes expenses tied to physical offices.
This model leverages digital tools to maintain efficiency and connectivity among team members. For instance, platforms like Freshdesk support robust email customer service by streamlining communication and workflow, costing between $9 to $29 per user per month – a fraction of the cost of maintaining a traditional call center.
Cost Implications of Each Model
Traditional Model: The upfront and ongoing expenses include rent, utilities, equipment, and in some cases, higher wages dictated by local standards. These costs make it a less flexible option, especially for businesses scaling up or down rapidly.
Distributed Model: This model offers significant savings on overhead costs and the flexibility to hire talent from regions with more competitive wages. Tools that facilitate remote work, like live chat platforms and knowledge bases from providers like HiredSupport, reduce costs and enhance service capabilities.
Advantages of a Distributed Model in the Current Work Climate
Adopting a distributed model aligns with the shift towards more agile and resilient business operations. It allows businesses to provide 24/7 services by employing agents across different time zones without additional costs.
The use of omnichannel support, integrating email, live chat, and self-service via platforms like Freshdesk, enables businesses to offer seamless customer experiences. This model not only meets modern customer expectations for fast and efficient service but also positions companies to manage fluctuating demand better.
Pros and Cons of In-House & Outsourced Customer Service
In-House Customer Service
Pros:
- Complete control over training and quality.
- Easier to align with your company’s culture and values.
- Faster communication and problem-solving.
Cons:
- Higher costs due to salaries, benefits, and infrastructure.
- Time-consuming to hire, train, and manage staff.
- Limited scalability, especially during peak times.
Outsourced Customer Service
Pros:
- Lower costs, especially starting at $7 per hour.
- Flexibility to scale up or down based on demand.
- Access to specialized expertise and technology.
Cons:
- Less control over training and quality.
- Potential for communication delays.
- Cultural and language differences might impact customer experience.
The ROI of Outsourcing Customer Service: Is It Worth the Investment?
ROI (Return on Investment) measures the benefits you get from your investment. For customer service, this includes cost savings, improved customer satisfaction, and increased revenue.
Calculating ROI
Cost Savings
Outsourcing customer service can significantly reduce your costs.
You pay a flat hourly rate instead of paying full-time salaries and benefits. At $7 per hour, the savings can be substantial.
For example, outsourcing 24/7 customer service with a team of five costs about $306,600 annually. Compare this to the cost of in-house teams, including salaries, benefits, and infrastructure, which can easily exceed $500,000 per year.
Customer Satisfaction
Happy customers are key to your business’s success. Outsourcing can help you provide better service by leveraging specialized expertise.
Outsourced teams are often highly trained and equipped with the latest technology. This can lead to faster response times and higher customer satisfaction rates. Positive customer experiences can increase loyalty and lead to more repeat business.
Revenue Impact
Good customer service directly impacts your revenue. Happy customers are more likely to make repeat purchases and recommend your business to others. Outsourcing allows you to provide consistent, high-quality service without the high costs of maintaining an in-house team. This can improve your bottom line.
For instance, increasing customer retention by just 5% can boost profits by 25% to 95%.
Real-World Examples of ROI from Outsourced Services
Example 1: E-Commerce Company
An e-commerce company outsourced its customer service to handle high call volumes during the holiday season. By paying $7 per hour, they reduced their overall costs by 40%. Customer satisfaction scores increased by 15% due to quicker response times. The company saw a 20% increase in holiday sales, translating to a significant revenue boost.
Example 2: Tech Startup
A tech startup outsourced its customer support to manage rapid growth. They chose a provider with specialized knowledge in their industry. The cost savings allowed them to reinvest in product development. Customer feedback improved, leading to a 30% increase in user retention. This helped the startup secure additional funding from investors.
To determine if outsourcing customer services worth the investment, consider these steps:
Assess Your Costs: Compare the costs of in-house versus outsourced customer service. Include salaries, benefits, infrastructure, and hidden costs.
Measure Customer Satisfaction: Evaluate how outsourcing could improve your customer satisfaction rates. Consider the training and expertise of the outsourced team.
Analyze Revenue Impact: Look at how better customer service can increase customer retention and sales. Calculate potential revenue growth from improved service.
Choose the Right Provider: Select an outsourcing provider that aligns with your business needs and values. Ensure they have a proven track record in your industry.
