Customer Service: In-house vs Outsourcing

Introduction

Customer service is a crucial aspect of any successful business, as it is often the first point of contact between a company and its customers. Providing high-quality customer service can help to build customer trust, improve customer satisfaction, and drive business growth.

When it comes to customer service, companies must decide whether to handle it in-house or outsource it to a third-party provider. Each option has its advantages and considerations, and the decision should be based on the company's needs and resources. In this article, we will explore the advantages and disadvantages of both outsourcing and in-house customer service and discuss factors to consider when making the decision.

In today's digital age, customers expect to receive excellent service whenever they interact with a company. They also expect to be able to reach out to customer service 24/7, and if a company has a global offering, they may expect support in multiple languages. As a result, companies must invest heavily in training, technology, and 24/7 operations to meet customer expectations and provide a seamless customer experience. According to a survey by the American Customer Satisfaction Index, companies with high customer satisfaction scores experienced a 16% increase in shareholder returns over a 10-year period. On the other hand, poor customer service can lead to a loss of up to $75 billion in annual revenue for U.S. businesses.

The decision to outsource or keep in-house customer service should be based on the specific needs and goals of the business. While outsourcing can offer cost savings and access to specialised skills if not done correctly, in-house customer service can provide a more personalised and localised experience for customers. In this article, we will compare the pros and cons of both approaches to help you determine the best approach for your business.

Definition of customer service outsourcing and in-house customer service

Customer service outsourcing refers to the practice of hiring a third-party company or vendor to handle customer service tasks, such as answering customer inquiries or handling complaints. This can be done either domestically or internationally, and may involve customer service representatives working remotely or at a company's facilities.

On the other hand, in-house customer service refers to customer service that is handled by employees who work directly for the company. These employees may be based in the company's headquarters or in local offices around the world.

There are pros and cons to both approaches, and the decision to outsource or keep customer service in-house should be based on the specific needs and goals of the business. Companies may choose to outsource customer service to save cost, access specialised skills, or scale up or down quickly, while companies that opt for in-house customer service may prioritise personalised and localised experiences, better integration with the rest of the company, and greater control over the customer experience.

What are the Advantages of outsourcing your Customer Services?

1) Access to Expertise:

Partnering with an experienced provider who is knowledgeable of the contemporary strategies and methods of customer service, can optimise their procedures to deliver efficient and cost effective support whilst upholding quality. This collaboration can tap into the partner's proficiency and familiarity, allowing you to concentrate on other areas of your business.

Furthermore, outsourcing can raise customer satisfaction by providing a committed team of professionals that are devoted to providing excellent service and customer experience. You don't need to resort to outsourcing your entire operation, for instance, if you find it hard to acquire cover overnight without paying additional costs, look to outsource these areas first.

2) Cost-saving & Budgeting

In-house employment can be way more expensive than just a standard salary, take the UK for example; NI contributions alone are over 15%, pensions are 3%; there’s then a whole management structure of Team Leaders, Quality Assurance, Workforce Management, BA specialists,  that’s before you get to hardware, software, holiday cover, bonuses, office space… The list really does go on ( just check our cost calculator to understand the true expense). An Offshore outsourcing partner can mitigate these costs by using labour in lower cost counties. Your outsourcing partner should understand these costs and have optimised solutions in place to deliver a great Customer Experience regardless of location

3) Improved customer satisfaction

CS outsourcing partners are often tasked with improving CSAT and can provide great tips for quick results, such as; improving response times, increased opening hours, great training, keeping up to date with modern channels and the use of technology to improve all areas of the team.

4) Better flexibility and scalability

It’s often difficult to scale and especially flex according to volumes. Outsourcing partners get access to efficiencies at scale making it much easier to scale both upwards and downwards according to your volumes.  They also design their entire workforce strategy with this in mind. Offshore outsourcing partners can also benefit from the time-zone differences and usually do not charge higher fees for off-hours.

Imagine having to dial up 50% for a flash sale when all your employees are already working 40 hours per week. We use a mixture of full-time and part-time, to achieve this quickly. It’s much easier to get 4 students currently working 10 hours per week, to work 15 hours next week, than it is to get a full-time 40-hour per-week member of staff to do 60 hours on short notice.

5) Access to new technologies

Using the right tech can be that extra step that turns a team from mediocre to the best. Here are some key areas we use technologies, and maybe you could too;

1. Capturing feedback, surveys and reviews at peak engagement
2. Increase agent accountability with agents' own Profile (link to profile)
3. Quality Assurance
4. Training; utilising AI to provide initial insights into training gaps
5. Ai tools to provide live tips and improvements to agents on things such as  spelling, grammar, sentence structure and tone of voice configured by brand.
6. Data collection; such as the reason for contact.
7. Gamification, allowing agents to earn badges and collect rewards.

If you’d like to understand more about how tech can improve efficiency, accountability and CSAT check out Profile here!

What are the Advantages of In-House Customer Services?

At first thought, there appear to be benefits of keeping your customer service team in-house. However, we believe that being aware of these, allows us to provide efficient solutions. Here are the points we believe you should consider;

1) Brand awareness

The main advantage of in-house CS representatives is brand. Having your agents under one roof, allows you to be in full control over elements such as tone of voice and allows you to make the agents truly representatives of your business.

2) Collaboration

Better integration with the rest of the company: In-house customer service teams can be more closely integrated with the rest of the company, which can help to improve communication and collaboration across departments.

3) Policy Changes

An in-house call centre is often able to distribute information regarding policy modifications more rapidly than those managed by an external agency. This means that changes could take longer to put into action if relying on a third-party agent.

If you’re going to create a partnership to manage your customer service department, make sure to shop around, book calls and see who fits your brand. A good partner will work with you to create the perfect solution.

Think about what elements you want them to manage and what elements you’d like them to take care of. These could include; Quality assurance, workforce management, training, supervision, coaching, management, software solutions, reporting etc and go slow if you’d like. Start with outsourcing back office tasks, or out-of-hours cover and make sure they’re a great fit.

Factors to consider when deciding between outsourcing and in-house customer service

There are several factors that businesses should consider when deciding whether to outsource or insource customer service. These include:The Nature of the business and customer base: Different industries and types of customers may have unique customer service needs and preferences. For example, a business that sells complex products or services may require more specialised customer service skills. In contrast, a business that serves a global market may need support in multiple languages. Meaning if you do choose to outsource, you need to find a partner that puts the time and attention into deeply understanding your business, and if you decide to do this in-house you need to make sure you invest heavily into training and support.

Size and resources of the company: Outsourcing customer service can be a cost-effective option for any size of business and I believe resources are key here. It often makes much more sense for a business to focus on its core product and services, instead of also trying to become Customer Experience and Customer Service professionals. However, some businesses may wish to allocate this time and effect to this part of the business too.

Tasks at hand: Some businesses may want to keep the complex and ever-changing front-line customer services in-house as they feel it gives them a better representation of their brand. On the other hand, they may have time-consuming back office tasks such as processing claims etc, which can be done via a partner much more cost-effectively.

Offshore vs Onshore: if you’re a global business, offshore labour can give you access to native languages and better time-zone support. It also often provides much more competitive pricing. Whilst an onshore outsourcing partner can give you the benefits of understanding the local market.

By carefully evaluating these and other factors, businesses can make an informed decision about whether outsourcing or in-house customer service is the best fit for their needs.

Conclusion

In conclusion, the decision to outsource or keep in-house customer service should be based on the specific needs and goals of the business. Outsourcing customer service can offer cost savings and access to specialised skills, as well as the ability to scale up or down quickly. However, in-house customer service can provide a more personalised and localised experience for customers and can allow for better control and integration with the rest of the company. Factors to consider when making the decision include cost, control, quality, specialisation, and scalability. Ultimately, the best approach will depend on the unique needs and resources of the business.