receives compensation from some of the companies listed on this page. Advertising Disclosure
BDC Hamburger Icon


BDC Logo
Search Icon
Updated Nov 06, 2023

The Pros and Cons of Outsourced Customer Service

author image
Marisa Sanfilippo, Contributing Writer

Table of Contents

Open row

Good customer service is critical to the success of your business, but what happens when you’re too busy to handle every communication channel? You can’t ignore customer service calls and messages, but you can’t sacrifice operations either. If you can’t hire in-house staff to handle all the key elements of customer service, consider outsourcing customer service as your business grows. 

Businesses of all sizes outsource customer service, including prominent enterprises and small firms. We’ll look at the benefits and disadvantages of outsourcing customer service and share what you should know before hiring a call center

What is outsourced customer service? 

Outsourced customer service is when management transfers customer-facing communication channels to a third-party service provider. Businesses typically outsource customer service through a call center, which maintains agents trained to handle an organization’s incoming calls. 

Weighing whether you should reassign your customer service to a third party is complex and causes unease for many business owners. After all, you want to ensure your business continues providing quality customer service to meet consumer demand. 

Did You Know?Did you know

According to a PWC report, 73 percent of all consumers say a great customer experience is a critical factor in their purchasing decisions.

What are the pros of outsourced customer service? 

The ability to outsource customer service for small businesses can be highly beneficial. Here are some of the pros of outsourcing: 

  • Outsourced customer service reduces workload. Small business owners and staff typically wear many hats. Responding to customer phone calls and emails distracts from more profitable activities like sales. Outsourcing customer service can free up time for you and your employees so everyone can focus on increasing sales.
  • Outsourced customer service can save money. When you hire contract workers, including call center employees, you don’t pay a fixed salary or employee benefits. Additionally, you don’t have to furnish customer service reps with equipment. A computer and all the necessary software could cost upward of $1,000, while a good headset can cost more than $60. When you factor in office space, a desk, a chair, an additional monitor and so on, you could spend $5,000 on equipment for a single customer service rep.
  • Outsourced customer service provides after-hours coverage. Many consumers expect to reach companies’ customer service departments during off-hours. Call center staff can be available 24/7, providing efficient customer service when your customers need it.
  • Outsourced customer service can provide multilingual service. Many businesses have customer bases that speak languages other than English. Outsourced customer service platforms give you better access to reps who speak multiple languages. As a result, your customers will feel more confident doing business with your company, knowing their questions will be answered properly without communication barriers. 

“Outsourcing helps you save resources and create better coverage,” noted Joe Wilson, senior career advisor at MintResume. “If your company operates on an international level, it would be easier to hire a local call center office instead of forcing an in-house team to learn a foreign language. The bigger the audience you cover, the bigger chance you have to satisfy your customers.” 

Bottom LineBottom line

Slow service is a significant customer service pitfall. The PWC report reveals that nearly 80 percent of consumers value speed, convenience, knowledgeable help and friendly service as crucial customer service elements.

What are the cons of outsourced customer service?

While outsourcing customer service offers some excellent benefits, before choosing a provider, understand the cons and address them with the provider you’re considering.

  • Outsourced customer service may reduce customer satisfaction. Many business owners worry they’ll lose customers if they switch to a call center or answering service. However, to address this concern, business owners can scrutinize the provider’s track record and references to ensure they use one of the best answering services or call centers.
  • Outsourced customer service reps aren’t familiar with your company. Outsourced employees may not be as knowledgeable about your company, products and services as an in-house team because they’re not in the trenches with you daily. To overcome this concern, maintain clear and consistent communication with your outsourced customer service team. Update your provider on new product launches, price changes, policies and more. For more advanced services, hire dedicated agents that focus only on your business, learning the ins and outs of everything you do.
  • Your business may not be an outsourced provider’s top priority. A call center rep may handle a customer service inquiry for a clothing retailer one minute and answer a consumer’s questions about home loans the next. While you’d like outsourced reps to be passionate about your company and make your customer service calls a priority, that’s not a guarantee if they work for multiple clients. Again, hiring more expensive, dedicated agents could ameliorate this problem, but it will cost you.
  • Outsourced customer service may present security concerns. The very nature of some businesses involves exchanging personal info, such as credit card numbers, names and addresses — information that must be secure. If this is the case with your business, interview call centers about their cybersecurity and risk management practices. However, many call centers have layers of protection in place to ensure your customers’ data remains private and safe. 
TipBottom line

Customer service training costs for in-house and outsourced reps can be prohibitively high. Training software and online training can mitigate the expense.

Are there outsourced customer service companies in the U.S.?

There are highly recommended outsourced customer service companies in the U.S. The following eight companies are all based in the U.S. and can help your business with its outsourced customer service needs:

What do I need to know before hiring customer service providers?

When evaluating your outsourcing partner, find out about their expertise, quality control, security and training. Consider the following questions:

  1. What is the outsourced customer service provider’s expertise? Has the call center worked in your industry before? Is it familiar with regulations in your industry and the particular concerns consumers have? If it hasn’t worked with other companies in your industry, consider how that might affect service. To deter any potential issues a lack of expertise may cause among your customers, hire a provider with experience in your industry.
  2. How does the outsourced customer service provider maintain quality control? Ask call center companies how their agents deal with angry customers and keep them happy. Additionally, you should be able to maintain visibility into their customer service with frequent reports and call recordings you can monitor. Ask companies what reports they provide and whether they offer actual recorded calls that you can listen to.
  3. What are the outsourced customer service provider’s security measures? To protect your business from a data breach, you must understand your provider’s security protocols. Its inbound and outbound networks must be secure. Also, ask who manages their network and who can access it.
  4. How does the outsourced customer service provider hire and train reps? Some businesses require specialists to handle customer service inquiries. Ask about any potential provider’s hiring process and training program. How does it keep up with technology as it evolves? 

How much does it cost to outsource a call center?

The cost of outsourcing your customer service to a third party depend on the services you need. Basic answering services cost 70 cents to $1 per minute, while dedicated call center agents (i.e., professionals who work exclusively on behalf of your company) cost up to $25 per hour. 

“Outsourced call center costs are made up of several items such as … employee training, IT infrastructure expenses, incoming info analytics, agents’ payments, maintaining administrative resources, office rent and technical needs, etc.,” Wilson explained. 

The complexity and immediacy of your needs also play a role. “Cost[s] also depend on whether there is a team ready to take on a project right away or will it be created anew, according to specific requirements?” Wilson noted. “In the second case, an initial preparatory stage is needed, during which the suitable staff has to be recruited.” 

You must also determine whether you need live answering and message-taking services. The more cost-effective option — shared agents — can handle those functions. The more expensive option — dedicated agents — is needed for advanced tasks, like outbound calling campaigns, complaint management and customer win-back services. 

FYIDid you know

If you prefer to keep your customer service in-house, check out our reviews of the best call center software to evaluate costs and features. Start with our review of GoTo Contact Center, our pick as the best call center software for small businesses.

Outsourcing customer service is a big decision

Outsourcing customer service to a third-party provider is a big decision with broad ramifications. However, it may be the right choice to help your business grow, maintain operations and provide quality customer service. 

Choose a provider you’re comfortable with that can address your customers’ most pressing needs expertly and efficiently.

Jennifer Dublino contributed to the reporting and writing in this article. Some source interviews were conducted for a previous version of this article.

author image
Marisa Sanfilippo, Contributing Writer
Marisa is an award-winning marketing professional and contributing writer. She has worked with businesses large and small to help them drive revenue through integrated marketing campaigns and enjoys sharing her expertise with our audience.
BDC Logo

Get Weekly 5-Minute Business Advice

B. newsletter is your digest of bite-sized news, thought & brand leadership, and entertainment. All in one email.

Back to top