An outsourced customer service representative works from home and offers assistance on the phone.

Pros and Cons of Outsourcing Customer Service


Outsourcing customer service can save money and increase efficiency, but may have some drawbacks. Here's what to know.

To most companies, the benefits of customer service are clear: fostering the loyalty necessary to attract and retain clients. But many leaders might be surprised to learn the flip-side consequences when customer service goes awry. An astonishing 78% of consumers have changed their perception of a company based on just one contact center interaction, according to a study from Qualtrics.

With that much at stake, you might be wondering the best way to level up your customer service so that it is personalized as well as consistent and effective. Will remote customer service accomplish your needs, or should you keep it in-house? While outsourcing can be an effective way to cut costs and increase efficiency, many organizations learn there may be some inherent drawbacks.

Read on for some pros and cons to both approaches.

Benefits of Outsourcing Customer Service

1. Increased Ability to Meet Demand

Respondents to Deloitte’s 2019 edition of the Global Contact Center Survey said that offering their customers convenient access was their top priority, and outsourcing can fill the bill. Remote customer service gives you the ability to improve satisfaction by meeting increased demand around active periods, such as during holidays or busier times of day. You can scale your customer service as appropriate without running the risk of over-hiring and losing money if those extra agents sit idle when volume slows.

2. Lower Operational Costs

Today’s consumer expects to have multiple avenues to reach customer service—they might want to talk to an agent who can view their purchase history or prefer to engage with a chatbot. Savvy organizations are also implementing call monitoring software to provide the oversight needed for better performance and adherence to regulation.

Still, sophisticated analytics-based technology can be expensive to develop and deploy. Outsourcing allows you to leverage an agency’s existing tools to improve the customer and employee experience at a lower cost.

3. More Options to Address Issues with Niche Services

Anyone who has staffed a service department knows that providing internal 24/7 coverage can be a challenge—and can also be wasteful if the calls aren’t rolling in. Outsourcing not only provides agents around the clock but also allows you to tap into those who speak different languages or have specialized skill sets or technical knowledge. That way, you can offer personalized service your customers will appreciate.

4. Reduced Turnover

There’s no question that customer service can be a stressful position, as agents deal with thorny issues and exasperated callers. That leads to call center turnover ranging from 17% up to 44%. With outsourcing, you can put the hiring and management in someone else’s hands. In turn, you can then empower your own workforce by redeploying employees to more creative tasks aligned to your strategy and mission.

Drawbacks of Remote Customer Service

1. Minimized Control

There may well be some aspects of managing customer service where you’d be delighted to give up control, but it also can be precarious. Outsourced agents may not demonstrate the same level of commitment to the customer experience, which the Deloitte survey identified as a key way to differentiate yourself from competitors. In fact, respondents ranked “customer trust”—as measured by accuracy, consistency, quality of information and follow-through—as their second-highest priority. With someone else in charge, it can be challenging to manage performance.

2. Potential Barrier to Information

Three-quarters of respondents to the Microsoft “State of Global Customer Service Report" said they expected an agent to know their purchase history. However, a remote customer service model can damage that relationship if agents don’t have adequate insight and access to past purchases and preferences at their fingertips. In addition, an internal employee might be more tied to the company values and have more background about products and services that allow them to better answer questions, meet needs and ideally upsell corresponding items.

3. Still Requires Supervision

While it might seem appealing to merely hand off customer service to another firm, remember there will still be internal obligations. You’ll need to identify a point person to administer the ongoing education and training that will enable a remote team to provide seamless, engaging, on-brand customer service, as well as coordinate with the outsourcing agency to manage logistics. And of course, there will still be direct costs involved in paying the company, which can chafe, given that you are also ceding an element of quality control over agents’ performance.

4. Potential Legal or Security Exposure

If you are allowing external parties to access your databases or dashboards, it's critical to be aware of the risks and how to reduce them through robust controls. That includes looping in your IT team to ensure they have vetted the technology that the outsourcing business is using and tasking your group with creating protocols to balance proper security with the ability to connect the remote team to the information they need. As external agents don’t have the same brand loyalty that a direct hire might have, it’s more important than ever to ensure they can’t access proprietary company details or customer data.

Making the Call on Outsourcing

While the hazards might appear daunting, they can be mitigated with thorough oversight and training of your contracting team, if you decide that outsourcing is your best option. Before engaging a provider, conduct due diligence to find out:

  • What technology they use and how it can interface with yours
  • How much turnover they have and what sort of tenure you can expect for your assigned team
  • Metrics they track to make sure service remains high
  • What training and refreshing you can and should provide to the team, especially for new agents
  • Their attention to detail on safety protocols and confidentiality
  • How they collect feedback on agent performance and how you can access it to monitor how they treat your customers

Outsourcing customer service has many advantages, but it’s crucial to understand the inherent risks, especially with something as pivotal as maintaining customer satisfaction. Organizations need to weigh the options and decide which model will best suit their unique needs.

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