Outsourcing customer service – should you or not?

Outsourcing is undertaken when a company wishes to offload some of the expenses and hassles of dealing with too much headcount. External agencies are given the responsibility of hiring, training and maintaining a headcount allowing the company to focus on other strategic processes. Outsourcing customer service is also a common practice. There are however, some disadvantages of outsourcing as well and both sides of the coin must be evaluated before making an outsourcing decision. This decision depends on your company’s goals and whether outsourcing would help to reach and further those goals. Another way is to analyze the core competence of your company and maybe outsource those portions within the company that are essential but not the forte of the company.

Support services within the organization are some functions that a business could probably outsource and many companies do. For example a web designing company might not have the expertise to deal with litigation or financial matters and it would benefit them to outsource these functions. Similarly a legal firm might not have the expertise to design their website and come up with content, outsourcing this task to an expert company would be prudent. However, there are some crucial portions of the business that a company should probably not outsource such as managing cash flow and customer service. These require constant monitoring and the success of a company often depends for example on the kind of service they provide to their customers.

Sometimes companies undertake outsourcing customer service or parts of it. The front office staff of any company very often is outsourced staff and saves the company time and effort to recruit and train such staff. The company has no liability and easily gets a replacement if any one were to leave. It is a common practice however, to take on-rolls some of the better outsourced staff. The company did not invest time on training but is able to get on board a well-trained employee who knows the way it functions.

Another reason for outsourcing customer service is when the company feels that the systems and processes are streamlined and the number of staff required is fewer. Outsourcing provides this flexibility as the outsourcing agency can use the un-utilized staff in another organization. Another way outsourcing provides flexibility to companies is that they do not need to employ subject matter experts for everything. Outsourcing to a third party often suffices.

The other reason that companies think of outsourcing customer service or other functions is because it is a cost saving. For example many companies outsource the labor and employee intensive function of administration. Since it is a rather wide area, the headcount and resultant issues also are many. Outsourcing this function reduces the amount a company would pay to each individual administration person on headcount than it pays to the third party. Companies can re-evaluate these decisions whenever they want and either make the function part of their company or outsource some other functions as well with significant savings.
As a disadvantage of outsourcing, the fact is that your company is placing a significant part of its business in the hands of someone else. The agency must be reputed and highly trustworthy and help a company to further the cause of the business. The agency must be able to adapt to your company’s needs, demands and provide a fairly stable and sustainable quality of service.

Customer service is a fairly large headcount department as well. Companies can look at outsourcing customer service with some advantages to their business.

– While customer service is a vital function for companies, the number of staff required and the expenses related to it can be quite high. It costs less to outsource since you pay the agency only for the number of hours worked by the staff and also do not need to worry about employee benefits, insurance, downtime and leave. It is an inexpensive way to augment the company’s human resources and yet have tasks accomplished.

– For businesses that are small or mid-sized the trap of handling customer issues might be overwhelming. The number of issues that need to be focused on with regard to customers just might not be possible and the company may not even have the infrastructure to support this service. Outsourcing customer service for such companies allows their customers to receive support and help when they need thereby increasing the customer satisfaction levels and leaving the company’s management team less stressed.

– Outsourcing customer service or parts of it gives your full time staff the ability and time to focus on more value added work. For example data entry within customer service is a task that should be outsourced rather than having already burdened customer service staff to handle this as well. This worked extremely well for a large insurance company. The outsourced staff managed the rote tasks of data entry, filing and other tasks that amply supported the work of the front-ending customer service staff. They remained with the company and some of them even received full-time job offers because they had displayed eagerness and sincerity and had become very good at their work.

While we have pointed out some advantages of outsourcing customer service, companies must also analyze the disadvantages of doing so.

– Customers could feel irritated and frustrated when speaking to a third party customer service representative since they may not have the industry knowledge or the know-how of resolving issues. Dissatisfied customers are potentially damaging for a company.

– A company would need to provide in-depth training from the company’s perspective to the outsourced staff. A complete understanding of the products and or services would be required if customer queries are to be responded to. Even if rote scripts are provided, the outsourced staff must be smart enough to not only follow it but also improvise depending on the situation and customer being attended to.

– More complex queries, problems or technical issues may prove to be limitations for outsourced staff. They would at best be able to handle routine queries and provide information based on the script. They would appear completely incompetent when dealing with problems, which can be frustrating for customers and even more so if they would need to repeat their issue to someone else. In addition, escalating issues or looking for ‘someone’ to help the customer increases each call time and wastes a lot of time for the customer. Customers demand and expect knowledgeable answers in the least possible time and the outsourced help is not accomplishing either in this case.

– To understand the company, its business and culture it is vital for an employee to spend time at the company. This does not happen with outsourced staff since they only remain on the premises during their ‘work hours’ and are often disinterested in knowing more than their basic job. They would not be able to know the company as thoroughly as a full time staff member. Understanding a new product, having the knowledge to talk about it and the likes, all take time and a thorough training and coaching process. Outsourced staff often is not up to speed on these issues and it ends up in providing sub-standard customer service.

Outsourcing customer service must be a carefully thought out effort just like any other function being outsourced. It is best that companies do what makes most business sense for them and avoid following trends with regard to outsourcing. Also if they do outsource, they must remember to keep the outsourced staff in the loop about all that it happening in the company with regard to the function they handle. The outsourced customer service staff can be more effective if they understand how the company works, know about new launches, changes to current products, the kind of customer base and customer history and data. Outsourcing customer service can be beneficial or disruptive – it depends on the company that undertakes it.

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