Costs of an In-House Contact Center

This is a question we are often asked, and it is a difficult one to answer. It is difficult to make a real comparison between in-house and outsourced contact centers, especially if there are intangible effects such as brand damage, if the transition is not perfect. However, we know that you are trying to create a business case here, and the hard numbers are important. So we’ll give you a comprehensive overview of the operating costs of your internal contact center – both intangible and tangible – and how they compare to the cost of outsourcing.

Although there are several types of pricing models for an outsourced contact center, it’s likely that many of the estimates you receive when evaluating potential partners will have a price per agent hour. If you’ve never outsourced before, it’s tempting to look at this figure and think you can hire contact center agents at a lower price! Yes, you can. But the truth is that an agent hour is much more than basic labor costs – and compensation is just the beginning. And that’s the beginning – PayScale shows an average of 10 €/hour for a customer service representative. Of course, the average wages for a contact center employee vary greatly depending on your geographic region, your industry and your required skills and experience, which is why Payscale also spends a range of €8.62 to €16.78 on the same position. If you’re based in a large metropolitan area, you’ll quickly find that not only are salaries much higher than the median, but it’s also hard to find people willing to work for this compensation. In particular, if you look into the suburbs where it is more affordable for the employees you are looking for to live – and many of them will not be willing to commute to town every day. Smaller cities, on the other hand, have a more affordable cost of living, which in turn provides a larger, more affordable talent pool. But, as I said, wages are just the beginning. They must also take into account the cost of taxes and social benefits, which account for over 30% of total costs. So even if you use agents with the average hourly wage, your cost will be around €13.5 per hour. In addition, you need managers, supervisors, coaches and trainers to manage your frontline agents, not to mention the extra staff time and financial investment in their support. This includes the tools and resources required for each of these roles to function properly, such as training programs, project management tools, licenses, job ad platforms, and more. Each of these elements adds up quickly in terms of cost. However, when you return to investing „per agent hour“ (or sometimes „per minute“ or „per transaction“) in a Customer Care Outsourcer, every factor is already taken into account.

Next, we look at the physical space in which your contact center is located. Again, costs vary greatly by location, but the average rent per square meter for city offices is €20 (between €8 and €80), and rents are constantly increasing. Moreover, rent is just one piece of the puzzle – don’t forget the cost of maintenance, heating, cooling, lighting and workplace furnishings. And then there is the technical infrastructure. Although the technology has become cheaper over the years, the number of technical elements needed to support each contact center agent has actually increased. Once upon a time, agents just had a phone. Today they are connected to their computers and work with contact center software that combines call distribution with a number of other integrated functions such as CRM, IVR, call recording and data analysis. The price per workstation adds up quickly. And don’t forget the need for backup servers and emergency power generators to ensure business continuity. Even if your solution uses work-from-home agents and eliminates the need for physical office space, the costs are not fully consumed. These agents continue to require computer hardware, software licenses, telephony, and access to backup servers. (And management, HR and IT support, as mentioned in the above paragraph…) The cost of the agent hour for an outsourced partner once again includes all these costs – and the right partner is also strategically positioned to evolve its technical infrastructure as trends and new technologies come into play.

There are other intangible costs here, which are no less important. The commitment of the employees is decisive for loyalty. Success is the result of innovative leadership and human resources managers and concrete initiatives to ensure that every employee is involved in his or her work. So, consider the cost of the small, simple things, such as office benefits – coffee, holidays, recognition programs, etc. – as well as the larger ticket positions, such as career development opportunities – training programs, certifications, tuition fees, etc. – and the cost of the larger, more complex things, such as the cost of the more complex things, such as the more complex things that are involved. When efforts to retain and engage employees are lost sight of, there are even higher costs – those of fluctuation. A Gallup survey found that companies with allegedly low levels of commitment generated 35% to 75% more revenue than companies with high levels of commitment. Given that the cost of replacing an employee is about 16% of the position’s annual salary, your company’s success can be significant. The right outsourced partner invests heavily in customer retention and commitment. They are familiar with the impact of contact center fluctuation and always put their employees first. And their investments in this area are once again fully integrated into their pricing model.

The numbers above do not lie, and it may be cheaper to outsource your growing contact center. From the cost of the people and tools they need, to the cost of your facility and support initiatives, each position adds up to a large sum. Not to mention the intangible, but important, costs you incur when you lose focus as a business, rather than focus on your core competency.