Is Outsourcing Really Cheaper Than Internal?

Let’s be real, running customer support operations today is a headache. Customers expect 24/7 availability and seamless omnichannel experiences. That means complex tech, specialized skills, and the constant pressure to deliver personalized, empathetic service – all of which drive costs through the roof. It’s a tough spot to be in.

So, how can businesses get a handle on these rising expenses without sacrificing customer experience? This post takes a hard look at the real cost of internal vs. external support, going way beyond just the sticker price. We’ll uncover the hidden costs and show you how outsourcing can actually save you serious money while improving support quality and CX.

Decoding Support Costs: Internal vs. External Outsourcing

Okay, so we know support is expensive. But how expensive? Let’s break down the costs of keeping things in-house versus outsourcing with a BPO provider. This section focuses on the often-overlooked expenses of internal support.

The Real Cost of Internal Support:

Internal support costs aren’t just about labor salary. They’re a complex web of expenses that can quickly spiral out of control. Here’s a closer look:

• Employee Costs: Think beyond just base salary. We’re talking agent salaries plus bonuses, ongoing training and up-training, payroll taxes, and the hefty price tag of benefits like health, dental, vision, and retirement plans.
• Technology Costs: Software is essential, but it’s not cheap. Factor in licenses and maintenance, communication tools (phone systems, chat platforms, etc.), quality monitoring and reporting software, and all the necessary hardware (computers, headsets, desks – the list goes on).
• HR & Hiring Costs: Finding and keeping good support agents is a challenge. Consider recruitment costs (job boards, agency fees), onboarding and training materials, background checks, and the significant expense of employee turnover (replacement, training, and lost productivity).
• Real Estate & Facilities Costs: Don’t forget the physical space! Office rent or lease, utilities (electricity, internet), and ongoing maintenance and repairs all add up.
• System & Hardware Maintenance: Keeping everything running smoothly requires dedicated IT support for employee workstations, regular software upgrades and patches, and ongoing system maintenance.
• Overtime Costs: Unexpected spikes in demand can lead to costly overtime hours, further straining your budget.

Comparing Support Models: Costs at a Glance

Brick and Mortar vs. Outsourced Support Costs (30 Agents + 2 Team Leads)

This table shows how much it really costs to have a support team in your own office versus hiring an outside BPO company to handle it. It looks at all the expenses, not just what you pay people. Sure, the base pay might be the same either way, but when you add everything else up – like finding people to hire, training them, office space, and dealing with turnover – it gets way more expensive to have an in-house team. 

Work From Home vs. Outsourced Support Costs (30 Agents + 2 Team Leads)

This table compares the costs of having a work-from-home support team versus outsourcing it. Just like the last one, it’s not just about the base pay. While the actual salary you pay someone is the same whether they’re at home or working for an outsourced company, all the other costs disappear when you outsource. Things like finding and training people, the tech they need, and even the costs of dealing with people leaving – all that goes away. 

The Hidden Costs of In-House Support

The Quality Quagmire:

Beyond the visible costs, every support operation holds untapped potential for enhanced efficiency and customer satisfaction. Recognizing and addressing these opportunities can transform your support from a functional necessity to a powerful strategic asset.

• The Stats Don’t Lie: A McKinsey study revealed that companies outsourcing customer service achieved a 10% to 30% reduction in handling time and a 20% to 40% increase in first-call resolution rates. These improvements translate directly to faster issue resolution and happier customers.

The CX Advantage: Building a Thriving Brand Through Exceptional Support

Investing in high-quality customer support creates a powerful positive ripple effect, amplifying your brand’s success.

1. Positive Reviews Ignite Growth: Delighted customers become your strongest advocates, sharing their positive experiences online and within their networks. This organic word-of-mouth creates a powerful engine for attracting new customers and building a stellar brand reputation.
2. Loyalty Flourishes: Customers who feel valued and supported are far more likely to become loyal, long-term partners. This fosters a stable customer base, reduces churn, and significantly lowers customer acquisition costs.
3. Revenue Soars: Increased customer retention, lower acquisition costs, and the positive impact of strong brand advocacy all contribute to substantial revenue growth. In today’s competitive landscape, prioritizing exceptional customer support is not just a benefit—it’s the key to unlocking sustainable growth and a thriving future.

Loss of Control? Think Again. Gaining Flexibility:

One common concern about outsourcing is the perceived “loss of control.” But that couldn’t be further from the truth. Reputable contact center outsourcing partners are deeply invested in your success. They’re committed to understanding your specific needs and tailoring their services to meet them. They work with you, not against you.

In reality, outsourcing isn’t about losing control; it’s about gaining flexibility and scalability. Need to ramp up support during peak seasons? Outsourcing allows you to do that quickly and efficiently. Facing unexpected growth? Your outsourced team can scale with you. This agility lets you adapt to changing business demands without the headaches and expenses of managing an ever-fluctuating internal team. It frees you to focus on your core business, knowing your customer support is in capable hands.

Maintaining Your Company Culture Through Outsourcing:

A key concern for many businesses is whether outsourcing will dilute their company culture. However, with the right approach, outsourcing can actually enhance and reinforce your values. Here’s how:

• Partner Selection: Choose a partner that aligns with your company’s values and understands your brand’s voice. Look for partners who prioritize cultural fit and are committed to your customer’s experience.
• Comprehensive Training: Ensure your outsourcing partner receives thorough training on your company’s mission, values, and brand guidelines. This ensures they represent your company authentically.
• Consistent Communication: Maintain regular communication with your outsourced team. Share company updates, celebrate successes, and solicit feedback. This fosters a sense of belonging and reinforces your company culture.
• Integration, Not Isolation: Integrate the outsourced team into your overall support ecosystem. Provide them with access to internal resources and encourage collaboration with your in-house teams.
• Quality Assurance: Implement robust quality assurance measures to monitor interactions and ensure they reflect your company’s standards. This includes regular feedback sessions and performance reviews.
• Emphasis on Shared Values: Explicitly communicate your company’s core values to your outsourcing partner, and ensure that those values are incorporated into the daily workflow of the outsourced team.

Conclusion: The Smart Choice for Support

We’ve talked about all the hidden costs of having your own support team, whether they work in an office or from home. The key point is that outsourcing can reduce your customer support costs by over 50% while also improving your customer service by hiring a strong BPO partner.

When you’re figuring out how much your support team costs, don’t just think about how much you pay them. You also have to think about finding new people to hire, training them, the computers and phones they use, office space (or money for their home offices), and the money you lose when people quit and you have to train new people. When you add all of this up, you’ll see that outsourcing can save you a lot.

The money you save from outsourcing isn’t just a number on a piece of paper. It’s real money you can use to make your company better. You can keep track of how much less you’re spending and use that extra money to make your products better, get more customers, and improve how your company works. This lets you grow your business and try new things.

Outsourcing also means access to the newest technology and a team that wants to keep improving. Your outsourcing partner will stay up-to-date on the best support tools, so you don’t have to.

Ready to see how much you could save? Contact us today for a free consultation. We’ll assess your support needs and explore potential cost-saving opportunities by leveraging outsourcing. Let us help you optimize your support strategy and free up your resources to focus on what you do best: growing your business.