The age-old customer service (CS) question — to outsource or not to outsource?
Outsourcing brings lots of benefits, but it also means letting go of complete control. And the fear of low-quality offshore call centres leaves many brands wondering what they should (and shouldn’t) outsource.
The truth is that outsourcing can be a quality-driven decision whilst still being cost-efficient. But effective outsourcing requires careful and selective engagement with the right providers. Here, we are going to explore this…
Why outsource at all?
Outsourcing, in this context, means obtaining some (or all) of your customer service functionality from a third party. It’s a quick and easy way to scale customer service whether you’re a startup that wants to focus on growing, or an established business that is becoming overrun.
If you want to ensure that your customers are embarking on a seamless customer experience, you need a CS function that is high-quality and responsive. There are myriad reasons to outsource within a CS context, but we believe there are 3 core considerations:
Reason 1: High quality CS skills:
Outsourcing customer service can (when done right) be a quality-driven decision — if you want the best, you go to experts. So, it makes sense that if you want the best CS agents, you go to a provider that specialises in providing high-quality agents tailored to your specific requirements. In order to address preconceived ideas of outsourcing resulting in low-quality work, it is prudent to highlight the difference between ‘outsourcing’ and ‘offshoring’.
- Offshore outsourcing: seeks to reduce cost by relocating a service to another country/region. While this has been a solution heavily relied upon by many companies in the past, the end result is often a depreciation in quality as well as cost. Customers are regularly left unappeased due to language barriers and the general lack of experience that these agents have.
- Onshore outsourcing: Onshore is a solution motivated by all the same motives as offshore — reduced cost, scalability and on-demand expertise. While offshore is cheaper, onshore is the best way to gain access to cost-effective CS agents who are experienced in your industry.
Through outsourcing you can gain access to an abundance of CS experts, on-demand, and at a low cost. Beyond this, another way to ensure high-quality agents is by opting for a distributed onshore-outsourcing model over a traditional one:
- Traditional model: This is a customer service function that is based out of a physical contact centre.
- Distributed model: This is when your customer service agents are part of a work from home set up. The bottom line is that there is not a single physical location to house all your agents, they can work from anywhere.
The distributed model gives you access to an exponentially wider talent pool that is not restricted by geography or accessibility — for example, you can approach stay-at-home parents, people with disabilities, retirees. This approach gives you the ability to use agents that are more experienced and more specialised.
- In-house vs Outsourcing Customer Service: What’s Better for Your Business?
- Customer Service Outsourcing Pricing Guide for 2021
Reason 2: Flexible access to resources:
Having access to customer service agents drives business efficiency as you are able to more closely match agent capacity to demand. If your business is going through a quieter period and your demand for CS support is lowered, you can alter your contract with your customer service provider to reflect that, and vice versa. However, it’s worth noting that the speed at which this can happen will depend on the outsourcing provider you choose.
Full disclosure: Odondo is an on-demand outsourced customer service provider, which differs from traditional outsourcing (which is static) due to the ability to rapidly scale up and down to match demand.
Here are some scenarios where outsourcing can help your business be flexible:
- Seasonal peak times: You may need to ramp up general customer service support as demand increases (e.g. around Christmas time), and equally, you may need to scale down your CS function in quieter times so as not to waste resources. With Odondo, you get spare capacity ready to jump in, but you only ever pay for what you actually use.
- High-growth periods: If your business is launching in a new location, or you’re releasing a new product or service, then you’ll need the freedom to focus on that launch going smoothly, not on a lengthy recruitment process to set up an in-house customer service team. You have constant, on-demand access to the services you need when you need them.
Reason 3: Cost-efficiency:
Any in-house function will require a lot of resources. Consider, if you are looking to grow your customer service function in-house, you will need to:
- Hire the relevant agents: Ensuring that they are high-quality, specialised and capable of meeting all your CS needs.
- Deploy tech/ops infrastructure: Opting for and implementing software and operational infrastructure to support your CS team, that is buying laptops, headsets, training materials, software subscriptions, and ultimately the space for them to work.
- Preempt capacity: In order to set up this function you will need to forecast the capacity of agents you require — most businesses, if successful, recognise that this fluctuates so you need to be prepared to meet your highest CS demand as well as ensure you’re not wasting capacity at the lowest.
However, if you opt to outsource your customer service then you can cultivate a more cost-efficient CS function. With reference to the points above, with the right provider you get:
- Uncompromised quality: You gain access to high-quality agents that you can tailor to your specialisms — your business sells point-cloud technology? Then you can request tech specialised CS agents. Your business sells skin care products? Then you can select beauty-specialist agents, for example. You can ensure they are high-quality, so will not lose you money through poor customer service.
- No commitment to infrastructure: A CS provider will not only supply you the agents, but with one like Odondo, all that is needed is software licenses and a brand training session.
- Scale capacity: The right outsourcing provider means you can match capacity to demand, and you don’t have to commit to ongoing resources. This means you’re never stretched, and you never have an agent surplus.
Suggested reading: For more information on how to prioritise cost when it comes to your CS function, check out our blog — How to Create a Cost-Effective Customer Service Solution
Types of CS support and what to do with them
Of course, there are various kinds of CS that all work to curate the best possible customer experience. For the most part, they are divided into four service levels — Levels 0-3. By categorising the different kinds of support, you can quickly and simply ascertain the requirements for each and will be best placed to decide what should or shouldn’t be outsourced.
|Type of CS support||What is it?||In-house or outsource?||Why?|
|Level 0: Self-serve and automated functions||These include providing FAQ pages, chatbots, password resets and onboarding documents for complex products. Implementing these will help you preempt problems, resolve issues efficiently and reduce the costs of unsatisfied customers.||It depends: Technical help creating chatbots on online tools is invaluable, but many of these resources can be built or maintained in-house.||If you have the technical expertise in-house, do it in-house. Otherwise, get support. But this is the kind of thing that you put in place and just let it do the work for you.|
|Level 1: Front-line support||This is your first port of call for problems that can’t be solved by automated tools. These agents need good interpersonal skills, but are addressing common problems that require less in-depth brand or product knowledge to deliver positive customer outcomes.||Outsourced: Front line support should almost always be outsourced or partially outsourced.||Level 1 CS sees the greatest number of queries and the greatest variability in volumes. It’s also your primary contact point, meaning quick response times are critical. The on-demand flexibility, exclusive to an outsourcing partner, is critical to creating a cost-effective solution that aligns with the needs of your customers.|
|Level 2: Problem solving||Senior agents are key here to give customers detailed responses and to fix more complex issues brought to your customer service teams.||In-house or hybrid: The level of brand and product expertise required for Level 2 support increases the benefit of keeping some of this function in-house.||Scalability is less important when it comes to Level 2 support. A small team of specialists will likely be enough to fill this function when supported by outsourced Level 1 customer service. However, for simple and straightforward products, it can make sense to outsource this function as well.|
|Level 3: Technical support||This is the most complex level of customer service and requires intricate communication between customer-facing technical support and engineering teams able to help refine a product and implement technical fixes.||In-house: For most businesses, keeping these teams in-house makes the most sense.||As Level 3 support is intricately connected to your product team. It makes sense to keep this in-house as you can more easily assure technical adeptness and facilitate communication with engineers. However, if you outsource your product team to a provider, it makes more sense to also outsource your Level 3 support to the same one.|
Hybrid vs. fully outsourced customer service
Although outsourcing can have a role in most CS functions, there is no one-size-fits-all approach when considering what you should and shouldn’t outsource. Particularly when it comes to Level 1 front line support, outsourcing delivers critical flexibility — in some cases, only Level 0 and 1 would be relevant for you to outsource, in others, all four may be better. It’s a division that needs to be made case-by-case, not as a standard.
By looking at who benefits most from outsourcing, in terms of business scenarios, you can work out whether a hybrid or a fully outsourced approach is right for you.
Fully outsourced customer support:
Simply, this would mean moving all CS activities from in-house to an outsourcing provider.
Going fully outsourced will award your company with flexible, scalable, on-demand CS support that is highly specialised and cost-effective. Here are the best use cases for fully outsourced support:
- High growth (and variable growth) businesses: As outsourcing offers scalability and flexibility to match your business’ growth pattern, steady or variable.
- Small-to-medium sized businesses: Setting up an in-house CS function can be time-consuming and expensive, companies at this stage in their growth would benefit from the freedom to focus on other elements of their business. Founders may also lack the necessary expertise to set up a CS function, so an outsourcers’ expertise would be invaluable here.
- Businesses with failing offshore CS functions: Simply put, if offshoring isn’t working for you, but having an in-house team is unattainable, then onshore outsourcing is the solution to creating better customer experiences whilst keeping costs low.
- Businesses with ageing technologies: Keeping up with the technology of tomorrow is difficult — keeping up with it across all functions in your business is even more difficult. CS providers do all of the technological leg work for you, so your customers receive the most advanced level of support and you avoid the technical headache!
If you fall within any of these business scenarios and your current CS function (in-house) is limited or your offshore function is failing, then fully outsourcing is wise.
While hybrid-outsourcing will benefit the same business scenarios as highlighted above, these benefits will be piecemeal compared to fully outsourcing. Mainly because of the administrative downfalls of running your CS internally and externally simultaneously — working out how they will interact with one another is an extra task for you to do. However, going hybrid does have its benefits too — namely, control. By still having a hand on the wheel within your CS function, you have the autonomy to direct your chosen provider however you wish. But, if you have done your homework, and chosen one of the best CS outsourcing companies, this desired control is redundant. They know what they’re doing, they’re experts — so let them take the wheel and relax! The top use case for hybrid outsourcing models are below.
- eCommerce brands: For these companies, it’s all about brand loyalty. Hybrid-outsourcing their CS allows companies to supplement their existing CS functions with scalable agents throughout seasonal peak times for their business. Brand loyalty is integral for these businesses so they cannot compromise on CS, nor can they become stagnant with company progression. With a hybrid model they can put the customer first, always and regardless of the wider business’ aspirations. But, they can also grow while building an intrinsic trust that forms brand loyalty. For more guidance, see our guide on eCommerce customer service outsourcing.
- Brands with an existing CS function: In this case, it is not obvious that you would benefit from outsourcing your CS support. But, adopting a hybrid strategy that, for example, just outsourced your Level 1 services could take the pressure off of your support staff, leaving them free to focus on the technical, specialist queries.
- Businesses who want a low-risk solution to scaling: Companies like this, do not want to commit the resources to setting up the infrastructure within their CS function as they are preempting scale and growth. If they commit the resources early on, then they’re tied in and less free to adapt as their business grows.
Outsourcing is the answer…
All in all, outsourcing has a place in any customer service function. With outsourcing you can experience the responsive, flexible and cost-effective nature of customer service whilst still driving quality outcomes. While it is not a solution that fits all immediately and universally, the advantages attached to outsourcing your CS function are immutable.
Odondo provides pay-as-you-use onshore customer service outsourcing that offers high quality, flexible customer service at a low cost. So if you’re looking to take advantage of an agile customer service model, whether it’s fully outsourced or a hybrid approach, you can book a no-obligation call here.
Aamir is one of the Co-Founders at Odondo, where he obsesses over the details to deliver a strong and compelling proposition for each of his clients.
Prior to Odondo, he was CTO at one of the UK's largest price comparison websites, with contact centres in the UK and India. In his spare time, he loves reading, politics, tennis, and playing the piano (badly).