10 Questions About Outsourced Customer Service Answered

Customer service outsourcing is a valuable way to improve outcomes while reducing costs and focusing on the core capabilities of your business. If you’re still debating whether to outsource, check out this blog: In-house vs outsourcing customer service: What’s better for your business?

But if you’ve already made up your mind, you likely still have questions. Picking the right partner is critical to getting positive outcomes. Quality customer service can grow your brand, while poor outcomes can drive away customers. You can’t afford to make the wrong decision.

This is our top list of questions we (Odondo) get about customer service delivery. It should help you craft the right customer service strategy and make the best choice for your business when it comes to selecting a strategic partner. Let’s get started.

1. Is outsourced customer service the same as offshore customer service?

No! Although these terms are often considered interchangeable, they are actually very different. You can have in-house offshore operations and outsourced onshore partnerships. The motivations for each are different.

Offshoring is specifically about reducing costs — generally at the expense of quality. Remember, customers rate not being able to understand a customer service agent as the most frustrating part of a customer service experience.

Outsourcing can be motivated by reducing costs. But it can also be about improving quality. Fundamentally, outsourcing is about delegating business functions in order to streamline internal operations and take advantage of specialisation and economies of scale. According to a Deloitte survey:

• 59% of businesses outsource to cut total costs
• 57% of businesses outsource to focus on core business functions
• 31% of businesses outsource to enhance service quality

If you have quality in mind, you need to look for onshore outsourcing partners. Other strategies (namely distributed customer service — see question 5) can help keep costs low.

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2. Does outsourcing guarantee on-demand access?

No, but with the right provider, it can.

When you make the decision to outsource your customer service operations, you want to look for the highest degree of flexibility possible. This means the ability to scale up or scale down your customer service operations at a moment’s notice.

On-demand scalability is offered by some customer service outsourcing partners, but not all of them. You need to check SLAs (service level agreements) and make sure that you understand these specifics. Watch out for:

• The ability to scale up volumes
• The ability to scale down volumes without incurring a penalty fee
• The ability to add and subtract support channels (e.g. phone support vs live chat vs email)
• Whether or not you will be subject to a fixed-term contract

Flexibility allows you to only pay for what you need when you need it, keeping costs low without compromising service delivery. This is a stand out benefit of outsourcing — and one that we take very seriously. Make sure not to get roped into a contract with minimum service agreements that will go underutilised. Look for contracts that allow you to scale and match growing (or variable) demand.

3. Can my outsourced team work with my in-house team?

Again, they should — but not all providers are willing to.

One of the main benefits of outsourcing is flexibility. The ability to bring onboard ad hoc outsourced elements to support an in-house function should be part of that flexibility. A lot of businesses find success engaging in hybrid-outsourced customer service models.

Look for this kind of flexibility in SLAs (service level agreements). Not only is it helpful, it demonstrates a commitment to flexibility — something that brings a number of benefits to an outsourced partnership.

4. Can an outsourced customer service partner cover all “Levels-of-Service”?

Levels-of-service is a term (with a number of definitions) that describes the different types of customer service that might be needed. Generally speaking, the right outsourcing partner will be able to provide you with a range of options that cover different types of outcomes.

To make this clear, customer service delivery can be pretty easily divided between four different “levels-of-service”. These are:

• Level 0: With level 0, clients are given access to self-service and automated functions. These might include FAQ pages, username and password reset tools, and even chatbots.
• Level 1: At level 1, clients receive access to front-line customer service agents who can address common problems that might arise with certain customers.
• Level 2: With level 2, there are senior agents who can handle a wide variety of issues, solve complex problems, and comprehensively address customer concerns with a deeper understanding of the brand and product/service.
• Level 3: At level 3, there are trained specialists who can act as a liaison with other departments, such as engineering teams, to address systemic issues related to products and services.

It’s worth noting that some brands will use these levels of service to divide responsibilities between limited in-house teams and outsourced partners — as per question 3. It’s most common for outsource providers to focus their expertise on Levels 1 and 2. However, you need to look for outsourced partners who provide the level of service you need, and demonstrate a willingness to learn the specifics of your brand necessary to deliver.

5. What is distributed customer service?

“Distributed customer service” might be a term that you’ve heard while investigating outsourcing, but it’s actually an entirely different customer service trend — albeit, one that complements many of the benefits delivered by outsourced partners. Simply put, it’s a transition away from traditional call centres towards work-from-home (WFH) as a new normal.

Distributed customer service adoption has been accelerated by social distancing, but was already an established customer service trend that provides a number of positive benefits. These include:

• Better agents: People like to work from home. Offering that flexibility provides access to better agents. It will also lead to the recruitment of individuals who would not traditionally work in a call centre — stay-at-home parents, retirees, people with disabilities. The outcome is a team with higher university attendance, more industry experience, and a higher average age.
• Reduces costs: The ability to save money on office overheads (rent, amenities, etc.) that can then be reinvested in better agents (therefore quality), or passed on as a reduction in cost.

The flexibility of distributed customer service complements many aspects of outsourcing. It helps reduce the costs of highly-skilled teams, letting quality-focused onshore customer service providers offer competitive prices against offshore outsourcing. It also creates more flexible internal structures, making true on-demand SLAs a more viable option.

At Odondo, we think distributed customer service will come to be a dominant force within the future of customer service delivery. It’s something that can be adopted in-house or within an outsourced context. If you want to learn more about this (and customer service best practices) check out our free ebook — A New Approach to Customer Service.

6. What happens to the quality of service if I outsource?

To be honest, it depends. You can engage in outsourcing for any number of reasons, and the outsourcing partner you pick will make a big impact on the quality and cost of service you receive.

Legacy outsourcing models depend on offshore labour to reduce costs, often at the expense of quality. However, outsourcing can also be done specifically to improve the quality of outcomes. Outsourcing partners can provide specialists and institutional expertise that you might not otherwise be able to access.

If you have quality in mind, you should consider the following criteria:

• Onshore partners: Outsourcing that is done onshore is generally focused on delivering access to specialists that businesses could not afford to hire full time. This stands in opposition to offshore partners that are generally focused on cutting costs (at the expense of quality) by taking advantage of low-wages overseas.

• Distributed call centres: Outsourcing partners that use a distributed customer service model have access to the best agents. This model also provides the ability to offer you better agents at lower costs.
• Reporting transparency: The more transparent an outsourced partner is when it comes to reporting on success metrics, the better. This shows a commitment to delivering on promises and driving successful outcomes.

Lastly, it’s important to look for partners who are willing to match your specifics. That means understanding your brand, your messaging style and getting into the details when it comes to your product or service. Consider the following:

• Do they ask questions about your brand? You want partners who want to learn your specifics during the procurement process.
• Are they committed to getting you the right agents? Some outsourced partners will align your brand with specific agents — matching the demographics of your customers, or providing you with agents who have specific industry experience.
• Are they committed to flexibility? The more flexible an organisation is, the more likely they are to align with your needs.

Fundamentally, you want a partner that is willing to work seamlessly with your organisation. They exist, you just need to ask the right questions before signing a contract.

7. How can outsourcing reduce costs (when it’s not offshore)?

Onshore outsourcing generally costs less than building an equivalent team in-house. But why?

The answer is two-fold:

• Economies of scale: Prices drop as you scale up production. The cost of building infrastructure is not recovered as well when operating on a small scale. Only the largest businesses can build customer service functions that are as efficient as those offered by outsourced partners.
• On-demand access: With the right outsourced partner, you will only pay for what you use. You do not have to worry about hiring and training new customer service agents as your demand changes because they are already present at the outsourcing centre. You don’t need to pay for a “weekend-team” to provide 24/7 access on the days when they don’t end up being used.

Outsourcing also allows for specialisation. You get access to people who are experts in running customer service functions, without having to build that experience yourself. Fundamentally, it’s just a more efficient system. The result is better outcomes and lower costs.

8. Are all outsourcing partners the same?

No! Not at all. We effectively already covered most of these differences.

They include:

• The degree of flexibility in the contract when it comes to the terms, the cost and the number of agents.
• The degree of flexibility when it comes to your ability to scale up and down an engagement on-demand.
• The distribution of the customer service centre with regard to where the agents are located, their degree of flexibility, and their degree of training.
• The use of onshore or offshore agents.
• A commitment to quality vs a focus on cost reduction.
• The expertise of the agents when it comes to technical support and problem-solving skills.
• The presence of omnichannel options ranging from chat to phone to email support.
• The willingness of your partner to align with your brand.

You need to look into all of these specifics when looking for an outsourcing partner.

9. How much does outsourced customer service cost?

Customer service outsourcing pricing is highly variable. A big factor is the difference between onshore and offshore outsourcing models. However, it also depends on your specifics. These include:

• Volume: The more customer service queries you need to be resolved, the more it will cost.
• 24/7 coverage: You will generally get charged a premium for weekend and evening support.

• Omnichannel: The number of channels you need (and how resource-intensive they are) will generally be reflected in costs.
• Complexity/agent skill set: Agents with specific skills can often command a premium. This might be specific technical skills, experience, or background. This could also be language skills. If you have a highly complex product, or require a very specific skill set, you will likely have to pay more.

As a rule of thumb, an outsourcing operation will cost slightly less than the cost of building the same operation in-house. You save on administrative overheads and tap into savings delivered by economies of scale. But, just as with an in-house operation, the overall costs can be quite variable.

It’s not uncommon for outsourced partners to charge by the hour for access to agents, particularly when services are offered on-demand. For high-quality agents, the figures generally range between £15 and £20 per hour — being impacted by the time of day and total volumes. This fee includes things like telephone costs, supervision, audits and reporting. Your total bill, then, will be calculated by how much total resource your support service requires.

10. What are the main benefits of customer service outsourcing?

The benefits you gain from customer service outsourcing depend on the partnership you strike. The outcome could range from a significant reduction in cost through to dramatic improvements in quality and flexibility. Equally, if you chose the wrong partner, you could get none of that.

With that said, the main benefits you should look to achieve by engaging in outsourcing are:

• Flexibility: Access to customer service resources on-demand, within an SLA that allows you to scale up and down your commitments to match real-world volumes.

• Specialisation: Access to high-quality agents without the need to build a customer service function, allowing you to focus on your core business operations.
• Savings: Cost savings should be delivered by economies of scale, on-demand access and specialisation.

The right outsourcing partner will allow you to get the most out of your customer service function, improving quality and reducing costs. The flexibility offered by outsourcing allows you to focus on growing your business without the need to constantly worry about supporting those new customers. If you want advice tailored to your specific needs, get in touch — we’d be happy to help.