Should You Outsource?

Companies usually outsource a project when they can hugely save on operational costs. Reducing costs otherwise becomes very challenging and particularly in today’s competitive world, if you try to cut costs, you have to compromise on the quality of your service.

The decision to outsource customer service is largely a function of cost. However, it’s also a fact that most companies fail to estimate the in-house call center costs correctly.

As a result of this miscalculation, they have to bear the consequences of their wrong decisions. So, when you compare outsourcing vs. insourcing call center costs, it’s a good idea to gain insight into the actual costs required to operate an internal call center.

In this article, we will help you to identify all applicable cost components of an in-house call center so you can decide whether outsourcing is going to be a smart move for your business or not.

So, let’s get started.

All Applicable Cost Components

Let’s look at all the elements that need to be considered in order to arrive at an accurate calculation of your in-house call center costs.

Call Center Staff & Labor Budget

In addition to agents’ base pay, you have to consider a number of other line items. Benefits like health insurance, paid time off, annual leaves, taxes, and childcare are only a few of the examples of compensation costs that must be taken into account when calculating the staff budget.

Not to mention compensation costs for managers, trainers, and resources that are used to manage these agents from the day they are hired. All these are additional expenses that should be added to the total cost per hour per agent of an in-house call center.

If you outsource your customer service, however, these costs are usually included in their overall hourly rate.

Call Center Facility and Overhead Charges

While remote agent services have seen a sharp rise in recent years, many BPOs still use physical locations to operate their call centers. There is a need to take into account the expenses of these call center facilities and other overhead charges.

These may range from facility rent and leases to utilities and maintenance costs. Moreover, there are travel and upgrade costs, accounting, insurance, and corporate marketing expenses. Most in-house call centers also need compliance and other certifications to operate legally and all these things incur additional costs.

You may call these technology and maintenance costs and if we look at the call center vendor’s total cost per hour, they don’t charge anything extra for investments in equipment, technical support chargebacks, and contact-handling equipment.

Telecommunications and Networking Costs

From a dedicated internet connection and mobile contracts to VoIP and data storage, the telecommunications expenses have to be considered if you want to have an in-house call center.

Although these costs account for about 5% of the overall contact center costs, they are still an important consideration. When you will upscale your call center, these areas will also need to be adjusted.

Executive Management Expenses

The hourly rate call center vendors quote is inclusive of executive management costs. These include the cost of every leader, manager, and senior executive involved in running the internal call center.

Not to mention their training and skill polishing costs because professional call centers hire experienced leadership so they can enjoy success and get ahead of their competitors. If you want to develop an in-house call center, you will have to spend money on the hiring process as well in order to acquire the top talent and be able to achieve your goals.

If we consider all the above-mentioned costs, we shouldn’t compare the base pay of our agents to the hourly rate quoted by call center vendors. If they quote, for example, $15/hour and we are also paying our agents $15 an hour, the two wages are not comparable because we also have to add all those maintenance, management, HR, technology, and telecommunications costs.

The hourly rate after adding up all those costs is somewhere around $30 an hour. Now you can get an idea of how internal call centers are and should be managed.

Wrapping Up

While startups normally don’t have a good estimate of the operational costs of a service, even large organizations have been seen miscalculating their budget and getting into trouble because of this.

Whether you should outsource your customer service or develop an in-house or work-from-home call center is a decision largely dependent on the cost estimate.

In this article, we did a comparison of call center outsourcing vs. insourcing costs so you can arrive at a wise decision. If you have an in-house call center, you must already be paying wages to your agents and spend on their training as well. However, this comparison is not a wage-on-wage comparison.

You have to take into account all the costs required to run an internal call center. These include the cost of management, executives, technology and tools, hiring, training, and so on.

To avoid clouded decision-making about outsourcing, you have to arrive at accurate comparative cost data. This article will help you out in clearing the air and being able to make the best decision for your business.    

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