Customer support function is one of the most discerning and deciding factors of business that helps any organization to prosper or succumb. Although this may be true, businesses often confront this dilemma, whether to outsource the customer support functions or to handle it in-house. Well, there are few strategic advantages of outsourcing which should be equated along with the pros and cons of the proposition. The key considerations for taking this important decision is discussed below.
Evaluate Organization Strengths and Weaknesses
All the organizations may not be having the advantage of customer support services as their strength. A business may be strong in areas like product development or may be in analysis or providing the services they are engaged in. Furthermore, the chances of small businesses to have a dedicated customer service function is comparatively lesser. The obvious result is, the sales people are sometimes called for addressing customers’ problems or resolving issues, while in practice they should be busy in selling. This can cost a company more and in such cases depending on the inherent strengths of the company, it is always profitable to outsource the customer support function. The reason is continuing to serve the customers in an unprofessional way can cost the company its business. This can be easily avoided by entrusting the job of customer support to the specialists who does the job effectively supplementing the organization’s skills and helps it to grow faster.
The Essence of Personal Touch
It is undoubtedly a fact that customers need a personal touch in order to feel satisfied and this human touch seems to enhance the overall customer experience. On outsourcing the customer support functions, the company inevitably gets the benefit of the services of a specialist empowered with knowledge, skills, and the expertise required to handle customers’ requirements. Customer support functions of an outsourcing company often have specialized teams to handle queries of customers like the technical team, support team, accounts, collections, complaints, etc. This helps in delivering better services with more focus on customers’ problems. Over and above that, this enables any firm to deliver effective and more customer friendly services and helps a firm to satisfy the customers more on a personal level and retain them.
Evaluating the Cost Advantage:
The cost advantage is a major cause of outsourcing, on a global scale. Outsourcing can be done in a plethora of business activities like manufacturing, payroll, customer service, and so on. If the business function to support customers happens to be complicated, as in service-based industries like banking, mortgage, insurance, or even telecom, it is always profitable to outsource. On a cost-benefit analysis of outsourcing of the customer support functions, the benefits have to be carefully weighed with the cost of outsourcing. Although the pricing of the contact centers may vary based on factors like volume, technical requirements, operating hours, etc., the average cost can be around $ 25 to $ 40 per hour. If the company has to avail cloud-based services, the minimal would be somewhere around $ 150 to $ 220 per month. Although the services can be availed through other sources, the real benefit is of course in the retention of customers and in fulfillment of the customer satisfaction metrics. Most of the outsourcing companies also shell out penalties in case the service level agreement metrics are not met. This is, of course, a sound assurance that your customers will be provided with reasonably fair services and in contrast, a bad customer service can cost you the business.
Other Strategic Advantages
There are other short-term and long-term benefits of outsourcing as well. While the short-term benefits may include the tangible economic returns like reduced overheads and operating costs, increased flexibility and accountability, and shortening the response time, there are often overlooked long–term benefits as well. Although less tangible, outsourcing brings with it more expertise, technological advantage, specialization, quality, and consistency. It also counters the availability of resources that is scarce in the United States, Europe, and other continents where there is a need of outsourcing. The cost advantage, negation of risks, and the advantage of quality, that can be reaped from outsourcing makes it a very feasible decision for the organizations. Apart from all these advantages, the companies that practice in outsourcing also consider the cost involved in continuous improvement with tools like six sigma, lean production, supply chain management, and so on.
Other Deciding Factors
Although, outsourcing may have its numerous advantages but even then there are other factors which needs to be considered. These factors are ethical, moral, social, political, and factors related to the brand image. These are also deciding factors that a company should weigh carefully before taking the decision of outsourcing. Businesses operate under the social forces and in a social matrix involving various stakeholders like employees, shareholders, consumers, suppliers, and others. The questions that arise before taking the decision to outsource is: will the customers buy more if the result of outsourcing is lesser prices or would the sales go down because of negative feelings towards the company? The political and social implications are also factors to decide before taking the decision. Thus, for taking the decision of outsourcing, the companies should equate the tangible pros and cons of the decision and take the step with caution.
- A business should leverage its strong points and if customer support is not one of its strong points, it’s profitable to outsource.
- It’s a fact that personal touch enhances customer satisfaction and is instrumental in customer retention.
- Most of the outsourcing companies shell out penalties in case service level agreements are not met which is an assurance of reasonably fair services which is quantifiable.
- Although outsourcing may have its advantages, there are other factors which are ethical, moral, social, political and the brand image of the company which needs to be considered.