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How Much Does It Cost to Outsource a Call Center?

By: Bryan Overcash on January 8th, 2019

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How Much Does It Cost to Outsource a Call Center?

Contact Center Management

Call center staffing is critical to the success of your contact center. Whether you are hiring for inbound customer service or outbound sales, people make the difference. They impact the customer experience; they also impact your company budget. By how much will depend on the way you chose to structure your call center operations.

There are almost limitless ways to design a call center staffing model. If you're considering hiring a staffing agency, there are many factors that can influence the cost of hiring a call center staffing agency. We take a look at two popular configurations – completely outsourced centers and in-house center vendors – and the different factors that impact the cost.

KEEP IN MIND THERE ARE NUMEROUS VARIABLES AFFECTING COST, PERFORMANCE, AND QUALITY. IT IS BEST TO DISCUSS YOUR NEEDS WITH AN EXPERIENCED VENDOR BEFORE MAKING A FINAL DECISION.

 

Comparing US Outsourced vs In-house Contact Center Costs

*Costs are highly variant and depend on many factors not all are captured below.

 

Outsourced Contact Center

In-house Contact Center

Agent Time 

Paying for Productive Time ONLY

By the minute: $0.70 - $1.20 / min

By the hour: Ranges from Low $20 - $50   

depending on the complexity 

Paying for Productive Time AND Non-Productive Time 

By the hour: Ranges from $15 with no benefits to $55 or more fully loaded

Agent Type 

Dedicated

Shared – reduce cost 

Blended – reduce cost

Dedicated 

Other Costs 

TYPICALLY INCLUDES

  • Ongoing training of agents
  • Facility Cost
  • Manages Facility & IT Infrastructure
  • Oversees HR Support
  • Manages Payroll & Benefits Administration
  • Telco charges 
  • Agent replacement and training 
  • QA Software
  • Workforce management 
  • Audits
  • Licensing & Certification

NOT INCLUDED with in-house agent

  • Ongoing training of agents
  • Facility Cost
  • Manages Facility & IT Infrastructure
  • Oversees HR Support
  • Manages Payroll & Benefits Administration
  • Telco charges 
  • Agent replacement and training 
  • QA Software
  • Workforce management 
  • Audits
  • Licensing & Certification

 

 

Completely Outsourced and Contractor Run Centers

 

The first staffing scenario is when you hire a call center or back office outsourcing vendor to completely run your call center. In this option, your company can be completely removed from the daily center operations. You set the performance goals and the vendor delivers.

You also avoid all the headaches associated with managing the facility, overseeing HR, managing the staff, and calculating payroll. The employees belong to the contractor. Depending on your contract, those workers may be dedicated to your project or shared. Shared agents are trained to work on another project for you or someone else. When your call volume is low, a portion of agents can be assigned to other programs. Likewise, your program gains workers when call volume is high. This is a cost-effective way to manage spikes.

Pricing for a completely outsourced call center is highly variant. It depends on several factors:

 

Agent Factors

The first issue you will encounter is agent quality. Domestic call center agents can range from low 20’s for simple tasks to over $50 an hour depending on experience, skill or education level, certifications required, and job demands and complexity. And they are often worth every penny. Normally, customer service agents are paid somewhere between the two extremes. However, keep in mind that the more the agent -costs the more effective overall. Cheap often negatively influences performance, turnover, and capability.

Type of Work

Type of work should also be in your calculations. If you only need your call center to function as an answering service, you typically pay by the minute. for a high-quality domestic agent. In contrast, if you want a dedicated customer service representative who is based in the United States, you will normally pay $25 to $35 per hour.

The Impact of Location

Location matters too, so consider where you would like your call center to be located very carefully. Offshore and nearshore locations are less expensive, but they come with their own unique challenges, like language, complexity, and management barriers.

It is not unusual to see low-ball off-shore prices to attract clients. But when you try to find a competent vendor, problems arise. If you are looking off-shore, consider a domestic partner with off-shore centers or the experience to manage programs in other countries.

Domestic locations vary widely as well. The wages a contractor pays will need to be competitive enough for the area to attract quality call center agents. The more location specific you need to be will often impact pricing. Government-Mandated Costs

The starting point of any price model for a domestic call center agent is going to be the minimum wage for the area in which your facility is located – and they are going up more municipalities attempt to guarantee workers a living wage. While that is a noble goal, if you have location flexibility, you could save a considerable sum by putting your call center in an area with lower government-mandated costs.

 


The Complete Call Center Outsourcing Guide

Get all your questions on outsourcing your call center answered! 

Learn more


Staffing In-House Facilities Through Contracted Relationships

Some organizations like to hire a call center outsourcing vendor to oversee the operations of their in-house contact center so they can focus on everything else. In this scenario, the customer service agent is an employee of the vendor. The vendor pays their wages and manages their performance. It is just in the client’s center.

If the client just wants the vendor to staff a portion of the center, while they retain overall management, this is often called a temporary-to-permanent staffing model.

Permanent Staffing Fees

In a typical temporary-to-permanent model, the vendor’s employees can earn the opportunity for you to hire them directly after a contracted amount of time. Should you opt to do so, you will generally have to pay a permanent staffing fee. This amount is usually 10 to 25 percent of that worker’s projected first-year wages. In exchange, the vendor guarantees that the employee will continue to work for you for a minimum of one year. If that employee leaves your company before the year is up, you would receive part of the permanent staffing fee back.

Understanding Markups

Under a pure staffing model, your staffing vendor will charge a markup to the agents’ hourly wages. For instance, if your call center staffing company pays your agents $15 and charges you a 40% markup, you can expect to pay $21 which is the hourly wage $15 plus the staffing markup of $6 ($15 x 40%). Call center staffing companies can vary considerably on their staffing markups but look past the percentage quoted. There are other fees involved. Sometimes these additional costs can outweigh any cost savings on the staffing markup and vice versa.

Payroll and Benefit Administration

The call center staffing agency will oversee payroll and benefits administration for the contracted workers. Sometimes this is included in the staffing markup, other times it is not. Make sure you know what you are getting before you commit. Often, contract workers are heavily monitored while they work for you because the staffing agency wants the employee to be successful and eventually move onto become a full-fledged employee at your company.

 

Conclusion

KEEP IN MIND THERE ARE NUMEROUS VARIABLES AFFECTING COST, PERFORMANCE, AND QUALITY. IT IS BEST TO DISCUSS YOUR NEEDS WITH AN EXPERIENCED VENDOR BEFORE MAKING A FINAL DECISION.

Consider the type of customer service your customers would like to receive and which characteristics of that service they will appreciate most. While the costs can be high, having the right customer service in place can also be very valuable to your company and worth every penny through customer retention, brand identity, and realized performance.

Next, consider your current budget and estimate how much your perfect center staffing solution will cost. Get help figuring out a solution that meets your customer service standards as well as your budget here.


The Complete Call Center Outsourcing Guide

Get all your questions on outsourcing your call center answered! 

Learn more