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 customer service 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.

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 when 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 about contemporary strategies and methods of customer service can optimise procedures to deliver efficient and cost-effective support while 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 outsource your entire operation either. For instance, if you find it hard to acquire overnight cover without paying additional costs, you can outsource those areas first.

2. Cost-saving and budgeting

In-house employment can be much more expensive than just a standard salary. In the UK, for example, NI contributions, pensions, management structures, quality assurance, workforce management, business analysts, hardware, software, holiday cover, bonuses, and office space can all add to the true cost. You can also review our guide on how much it costs to outsource customer service for a deeper breakdown.

An offshore outsourcing partner can mitigate these costs by using labour in lower-cost countries. 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

Customer service outsourcing partners are often tasked with improving CSAT and can provide practical recommendations for quick results, such as:

• Improving response times
• Increasing opening hours
• Providing strong training
• Keeping up to date with modern support channels
• Using technology to improve team performance

4. Better flexibility and scalability

It is often difficult to scale and 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 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. A flexible outsourced model can use a mixture of full-time and part-time agents to achieve this quickly. It is much easier to get four 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 at short notice.

5. Access to new technologies

Using the right tech can be the extra step that turns a team from mediocre to the best. Key technology areas include:

1. Capturing feedback, surveys and reviews at peak engagement
2. Increasing agent accountability with agents' own Profile
3. Quality assurance
4. Training, including using AI to provide initial insights into training gaps
5. AI tools to provide live tips and improvements to agents on spelling, grammar, sentence structure and brand tone of voice
6. Data collection, such as reason-for-contact tracking
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.

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, being aware of these benefits also makes it easier to choose the right outsourcing setup if you do decide to work with a partner. Here are the points to consider:

1. Brand awareness

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

2. Collaboration

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 teams managed by an external agency. This means changes could take longer to put into action if you are 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 to keep internally. These could include:

• Quality assurance
• Workforce management
• Training
• Supervision and coaching
• Management
• Software solutions
• Reporting
• Back-office tasks
• Out-of-hours cover

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 keep customer service in-house.

• 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. If you choose to outsource, you need to find a partner that puts the time and attention into deeply understanding your business. If you decide to do this in-house, you need to invest heavily in training and support.
• Size and resources of the company: Outsourcing customer service can be a cost-effective option for any size of business. It often makes more sense for a business to focus on its core products and services instead of also trying to become customer experience and customer service specialists. However, some businesses may choose to allocate internal time and effort to this part of the business too.
• Tasks at hand: Some businesses may want to keep complex and ever-changing front-line customer services in-house because they feel it gives them better brand representation. On the other hand, they may have time-consuming back-office tasks, such as processing claims, which can be handled by 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 more competitive pricing. Meanwhile, an onshore outsourcing partner can provide the benefit of local market understanding.

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.

If you want help deciding whether outsourcing or in-house support is right for your business, get in touch with Resolvable or book a demo today.