Call Center Outsourcing: What are the Hidden Costs and Commitments?

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    At a certain point in a business’s growth, outsourcing becomes a necessity. With the demands of the “NOW Customer” higher than ever, customer service is at the forefront of every business model. The economic benefits of high-quality customer experiences include an increase in revenue, longer customer lifetime value, and a better chance of outperforming the competition.

    Even if your product, marketing, and manufacturing are all stellar, your company has got to have the customer service to match! Maintaining a high caliber of support during rapid growth requires hiring more support and sales employees and, most likely, investing in outside resources.

    This is where call center outsourcing comes in.

    Traditionally, call centers have been the go-to outsourcers for phone support. They’ve been able to handle process improvements while fielding inbound calls (or, more recently, emails, texts, and live chats) at scale. Call center relationships are bound by Service Level Agreements (SLAs) stipulated in annual contracts.

    But, service levels have changed drastically over the years, particularly in ecommerce, where customer service expectations are being held to impossible standards set by the world’s best-in-class brands.

    Call centers can definitely help solve short-term problems around cost savings and scalability. However, do the benefits of call center outsourcing hold up in the long term in a drastically changing world? What should leaders be looking for?

    What to expect from this article

    We believe that there are hidden costs that might not be inked directly in the contract, but are clearly written on the wall.
    Outsourcing to any third party (call centers, business process outsourcers, service vendors, consultants) can be a daunting task for business managers. If you’re budgeting for a call center relationship in the next year, it’s important to know that there are costs and commitments that may not immediately appear in the business strategy. Considerations such as risk management, metrics, communication, efficiency, and even natural disasters should be taken into account when making this decision.

    In this article, we’ll explore what those are costs and the best way to avoid them!

    What is call center outsourcing?

    Call center outsourcing is the process of contracting labor from a call center to handle a business’s customer service ticket volume. Outsourced call centers can handle both phone and digital inquiries, depending on the contract.

    Why do companies outsource to call centers?

    Companies outsource to call centers when their call volume or rate of growth is too high to be handled exclusively by their in-house experts. For some businesses, handing over customer support to a call center provides economic relief and the tools to solve customer problems more efficiently.

    The Hidden Costs and Commitments of Call Center Outsourcing

    Call center outsourcing is often thought of as a way for companies to save money. However, there are many hidden costs associated with call centers that may not be explicitly written in the contracts, including:

    Outdated SLAs
    Ramp-up time
    Contingency plans for natural disasters

    1- Outdated (and costly) SLAs
    Call center success is typically measured on traditional metrics: customer satisfaction, first response time, first call resolution and average handle time on your website or phone. Today, many businesses see customer service as a revenue-generator rather than a cost center. Economically, call centers that don’t measure revenue-focused metrics could be costing their clients missed revenue.
    These metrics include: repurchase rate, customer effort score, the happiness of agents, and reduction in contacts per order (traditionally, there are incentives to drive more volume into a contact center. This is not, and should not, be the case anymore.)

    2- Cost of getting started with a call center
    As every business leader knows, time is money. The process of vetting a vendor via an RFP and negotiating a call center contract can take months. That’s time and resources that could be put towards other, revenue-focused business initiatives. Additionally, there’s the recruiting, training, and onboarding of customer support agents that can take weeks at a call center. Still, employee attrition remains a big problem in contact centers, and maintaining adequate staffing levels is a struggle.

    The time spent in this process is better spent finding staffing and technology solutions that can ramp up and down quickly, without affecting the quality of support (or even costlier: a brand’s reputation).

    3- Lack of contingency plans
    In 2020, like many other businesses, many call center operations in places such as India and Asia were brought to a halt by COVID-19. Due to the proximity of the workspace and the nature of the pandemic, many employees were forced to leave the office and work from home on inadequate internet. This was a major economic blow to many retailers and businesses who depend on the scalability and consistency provided by an established call center.

    More importantly, the pandemic has been a case study in the effectiveness of brick-and-mortar call centers. They are susceptible to natural disasters, which deeply affect the well-being of support agents and can cost your business dearly.
    Contingency plans must be in place in order to make sure that the unexpected doesn’t cost you millions in customer neglect. Better yet, explore distributed outsourcing models like the Human Cloud Network or intelligent agents.

    4- Inflexibility
    Today’s businesses require flexibility from their outsourcing partners. You never know when a marketing campaign will go viral and ticket volume will surge, nor can you forecast staffing needs 6 months in advance (during a very uncertain past couple years!). Call Centers can end up being much costlier than negotiated because of rigid minimums, SLAs, and requirements (ie overtime during an unexpected surge). It’s better to select a partner that prioritizes flexibility and doesn’t charge for the unexpected.

    Call centers may cost more than you bargained for

    Sometimes outsourcing with a call center presents hidden costs that don’t appear until it’s too late. These include outdated SLAs, time of ramp-up, lack of contingency plans, and inflexibility.

    With Simplr’s NOW CX solution, premium brands are eradicating customer neglect, turning browsers into buyers, and turning customers into fans. It’s an outsourcing solution that has today’s customers in mind!