Calculating Contact Center Outsourcing Costs: Insights You Need Right Now

by Amy Bennet in Amy Bennet, Contact Center Budgeting

So, you’ve been handed responsibility for investigating the benefits of potentially outsourcing your company’s customer service for the first time. How do you start to compare your in-house apples to those outsourced oranges? What math should go into the business case around call center outsourcing costs? (Or if you’re keen on delegating that chore, skip this read and contact us today for a cost analysis of your center!)

Let’s break it down to the basics.

1. Pay Per Use Instead of Pay Per Person 
We are big fans of the transactional model in a strategic relationship. In this model, where you pay only for the contacts handled, the responsibility to manage efficiency and productivity lies with your outsourced partner. When you operate an in-house contact center, you are responsible for 100% of an agent hour: the employee’s hourly wage, and all associated benefits and taxes, are your responsibility. In an outsourced customer care model, you may choose to operate on a transactional or per minute basis. In those models, you’re not on the hook for agent time spent in ready, or in the coffee room.

2. Realizing a reduction in FTE. 
Successful contact center outsourcers have deep expertise in forecasting, staffing, and managing for maximum efficiency. In addition, a great contact center partner will:

    • Offer leading-edge contact-handling technology for efficient contact distribution,
    • Analyze contact drivers and make recommendations to maximize AI, self-serve, and/or streamline processes to deflect contacts, especially second-touch contacts when your outsourced partner commits to a first contact- resolution KPI.
    • Manage time-shiftable tasks for maximum efficiency, eg. Handling email or other back-office functions during lower volume hours of operations
    • Staffing for seasonal peaks and valleys. It’s on your outsourcer to reduce or increase head count to meet expected seasonal shifts. In an in-house model, you might find yourself in a scenario where you are overstaffing during the lulls to ensure you have available labor when volume increases for your peak season.

And the over-all result will be a reduction in FTE with no loss of service or quality. When calculating call center outsourcing costs for your business case, it is generally safe to assume, you will realize at least a 5% reduction in FTE.

3.  Understanding “All-In.”  

The per agent hour rate your contact partner charges typically includes operational management costs. In a typical Blue Ocean solution, for example, your program manager and program coordinator are included in that agent hour or per minute rate. Clarify with your potential partners whether or not coaches (team leads) are included in the agent rate too – so you make sure you are looking at apples to apples when you compare and contrast the costs of your in-house and outsourced options.

On-going technology costs are also generally included. In fact, we often see companies choosing to outsource when the need arises to invest in a new technology platform. Essentially, this represents risk mitigation. In a contact center outsourcing model, your partner is shouldering the risks of managing both human and technology resources.

4. Technology Advantages:

The cloud has certainly changed the economics of outsourcing. Not that long ago, when on-prem telephony infrastructure was the norm, working with an outsourced partner who bore the responsibility and cost of maintaining this infrastructure was a big selling point. With the evolution of cloud-based telephony platforms and other foundational technologies moving to the cloud, the picture is different but not irrelevant.

In an in-house model, you and your IT team are the ones subscribing to, installing, and managing those platforms. Typically, in an outsourced world, your partner is paying for, and managing the foundational platforms, and you are reaping the benefits – and that goes beyond just the telephony requirements.

Let’s look at conversational intelligence platforms, for example – sure, you can invest money and time in choosing, integrating, and managing a cloud-based conversational intelligence platform – and you can hire the in-house expertise to analyze and action the insights. OR – and hear us out – you can sign on with a partner who is already using this technology and who has the expertise to maximize its benefits for your program. It’s a win-win-win situation: you get the technology, the expertise, and the resulting benefits in terms of quality and CSat.

This table gives a quick snapshot of how to calculate costs when considering an outsourced customer service solution.

Basic Comparison Chart for the In-House Versus Outsourced Customer Care

  In-House Call Center Outsourced Call Center

Supervisor and/or program manager for Customer Service Agents

100% Included in agent hourly rate or per minute rate

Quality Assurance

100% Included in agent hourly rate

– Workstations/IT support
– Telephony platform

100% Included in agent hourly rate

Quality Assurance

100% Included in agent hourly rate

HR Support including:
– Recruiting
– Payroll
– Benefits Management

100% Included in agent hourly rate


Using the basic calculation of call center outsourcing costs, you will have the foundation for a more rigid business case, but that’s just the starting point in the contact center RFP process.

Still looking for some guidance on the math? We’re here to help – start calculating your call center outsourcing costs today.


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