Published : October 26, 2023When deciding whether to outsource a call center, businesses must carefully weigh both strategic and financial factors. To help you make the best choice, let’s discuss the typical costs involved, what you can expect for inbound and outbound service pricing, and the various pricing structures out there.
Reducing costs and improving the return on investment requires an understanding of call center pricing. This article will shed light on the financial aspects of outsourcing a call center, regardless of the size of the company you represent. Let’s start!
What Is The Cost of Outsourcing A Call Center?
Call center outsourcing is the practice of contracting with a third-party service provider to manage several kinds of client interactions, like telemarketing, outbound sales, inbound support, and technical help.
Call center outsourcing costs are influenced by various factors, including:
- Type of Service: Inbound vs. Outbound Call Center
- Provider Location: Domestic vs. Offshore
- Call Complexity: Basic Support vs. Advanced Technical Help
- Pricing Model: Hourly, Pay-Per-Minute, or Pay-Per-Performance
In the United States, you may pay between $25 to $65 per hour for each agent. If you opt for an offshore call center in countries like India or the Philippines, the cost can drop to $8 to $18 per hour.
But the hourly rate is not the only factor. So, while outsourcing can be cost-effective, understanding the full pricing landscape is crucial.
Real-World Example: Collaboration Of iQor And Fortune 500 U.S Energy Company
One compelling example of successful call center outsourcing is the collaboration between iQor, a leading business process outsourcing provider, and a prominent Fortune 500 U.S. energy company. Customer service expenses were reduced by $14 million annually as a result of this partnership.
The energy company struggled with high attrition rates and increasing recruitment expenses that hurt customer satisfaction.
Outsourcing to iQor allowed them to move assistance to nearshore and offshore sites while using automation and advanced analytics to increase productivity and customer engagement.
: How to Establish a Successful Call Center in PhilippinesAverage Outsourced Call Center Cost
On average, the outsourcing call center cost breakdown varies across industry benchmarks. When organizations start looking into outsourcing options, these average expenses can be a good place to start. Inbound and outbound call center service costs are broken down by geography, service complexity, and service quality in this section.
For instance, because labor costs differ, U.S.-based centers are usually more expensive than offshore centers in nations like the Philippines or India. Here’s a short call center pricing guide:
Inbound Call Center Cost
Inbound call center agents are typically essential to customer satisfaction because they specialize in handling customer complaints, support requests, and inquiries.
For basic tasks, inbound call center services in the United States usually cost between $26 and $30 per hour. Rates can increase to $30 to $50 per hour, though, if your company needs more specific capabilities, such as tier 2 technical assistance.
Rates for offshore contact centers in nations like India or Pakistan are significantly lower; they often start at $6 to $9 per hour and average between $10 and $12. Additionally, some providers bill by the minute, which may eventually match comparable hourly pricing.
Outbound Call Center Cost
Strategic consumer communication is handled by outbound call center services, usually for marketing, sales, or follow-up objectives. Tasks like telemarketing, lead generation, consumer surveys, and collections may be carried out via these centers.
Additionally, center outsourcing costs mention how variables like success rates, call length, and agent experience can affect the total cost, especially for performance-driven campaigns.
In the United States, outbound call centers typically charge $26 to $28 per hour for routine services like appointment scheduling and sales. Programs for advanced skills usually pay between $30 and $50 per hour.
On the other hand, offshore outbound call center providers in the Philippines and India often charge $5 to $12 per hour.
Call Center Pricing Models
Call center pricing models determine how companies are charged for outsourced services. There are a number of well-liked models, and each has pros and cons based on the type of work and the company’s financial limits.
This section explores the three most popular pricing models: Hourly, Pay-Per-Minute, and Pay-Per-Performance.
According to a Gartner study, companies that match their pricing models to their specific service needs tend to achieve better outcomes in cost-efficiency and customer satisfaction.
1. Hourly Pricing Model
Businesses pay each agent a set hourly rate under this approach, regardless of the number of calls handled or the results of those calls. It is simple to use and frequently applied to inbound and outbound services with consistent and predictable call volumes.
For example, you pay for 750 hours if you have 25 call center representatives who work 30 hours a week.
Pros
- Easy to budget and predict costs.
- Effective for services that require dedicated agents.
Cons
- No flexibility if call volume fluctuates.
- Less incentivized to improve performance since pay is based on time rather than results.
Businesses that prioritize the customer experience and handle a lot of calls are the best choices for this strategy.
2. Pay-Per-Minute Model
Businesses are billed according to the actual amount of time agents spend on calls under the pay-per-minute model. For inbound call centers with variable or unpredictable call volumes, this is very common. It makes it more flexible by guaranteeing that companies only pay for active hours.
Charges are based on the total time agents spend on calls, typically ranging from $0.50 to $2.50 per minute.
Pros
- Cost-effective for businesses with fluctuating call volumes or seasonal demand.
- You only pay for the actual service time used.
Cons
- Costs can spiral if call volumes are unexpectedly high or calls run longer than anticipated.
- Potential lack of quality as agents may try to minimize call times.
Businesses with irregular center operations or low call volumes could gain significantly from this arrangement.
3. Pay-Per-Performance Model
Businesses base their payments on the effectiveness or result of the calls, like leads produced, successful sales, or issues resolved. Payment under this approach is based on reaching predetermined goals, like generating leads, resolving customer complaints, or closing deals. It is often used for outbound services, especially for lead generation and sales.
Pros
- Highly incentivized model to achieve results.
- Low upfront costs since payment is tied to outcomes.
Cons
- Can lead to high pressure on agents to meet performance metrics, which may impact quality.
- Defining and measuring performance can be tricky.
This strategy works well for companies with varying volumes or specific one-time outsourcing needs. The size of your company, the amount of calls, and your outsourcing goals all play a role in selecting the best price plan. When making your choice, be sure to consider both the costs and the service quality.
Cloud vs. On-Premises Call Center Costs
When choosing the infrastructure for a call center, businesses must decide between on-premises and cloud-based systems. An on-premises call center necessitates that companies buy and maintain their own hardware and software infrastructure.
In contrast, a cloud-based call center is housed on the provider’s servers and accessible online. Gartner said more than 85% of organizations embracing a cloud-first strategy by 2025, due to their flexibility and scalability.
To assist organizations in deciding which strategy best suits their requirements and financial constraints, this section will outline the advantages and disadvantages of each.
Cloud-Based Call Center Costs
Cloud contact centers use a subscription model in which companies pay each agent on a monthly basis. They are ideal for businesses that want to grow or have varying call volumes, as they provide flexibility, scalability, and lower upfront costs.
| Pros | Cons |
| Lower initial investment | Ongoing subscription fees |
| Easily scalable to match changing needs | Dependence on reliable Internet connectivity |
| Reduced maintenance requirements | Limited control over infrastructure and data security |
On-Premises Call Center Costs
The business owns and maintains all software and hardware when using an on-premises solution. Although this frequently requires a larger initial investment in hardware and IT personnel, it provides greater control over infrastructure and data.
| Pros | Cons |
| Full control over data security and privacy | High upfront investment in hardware and IT resources |
| Customizable system tailored to business needs | Ongoing costs for system maintenance and upgrades |
| No reliance on third-party providers for uptime | Less flexibility and scalability compared to cloud-based solutions |
Costs of Call Center Software
Modern call center operations depend heavily on call center software in addition to agent and infrastructure expenses. The many software pricing structures and the aspects that can affect total costs are explained in this section.
In addition to more advanced options that include CRM integration, AI-driven analytics, and omnichannel assistance, it also provides basic call center software for routing and queue management.
- Basic Software Costs: Depending on features like call routing, queue management, and reporting, basic software costs typically vary from $50 to $150 per agent per month.
- Advanced Features: Extra features like workforce management tools, AI-powered analytics, and customer relationship management (CRM) integration come at a higher cost.
- Enterprise-Level Pricing: Custom pricing is available for large-scale operations with complex needs, often involving features like multi-channel integration (voice, email, chat, social media).
Conclusion
Outsourcing a call center can lead to significant cost savings and enhanced operational efficiency. However, selecting the most suitable pricing model and infrastructure tailored to your company’s unique needs is crucial.
Performance-based pricing is more suited for companies that prioritize outbound sales and lead generation. Similarly, on-premises solutions offer more control, while cloud-based systems offer flexibility and scalability.
To achieve the ideal balance between price, quality, and performance, businesses should carefully consider these options.
Updated : November 26, 2024
Priya Naha is an experienced technical content writer who focuses on VoIP and telephony technologies. Her expertise in telecommunication and content marketing allows her to simplify complex topics with real-world knowledge, making her writing relatable, informative, and easy-to-read. Her direct involvement with VoIP products and solutions makes her a reliable voice in the field.
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