In-House or Outsourced Call Center
Today’s business environment can only be described as volatile and unpredictable. Changes take place so fast that they could make even the heads of the most seasoned businessmen and strategists turn. In order to adapt to these fast-paced changes, business organizations have to employ various tools and methodologies.
One of the current trends that businesses find themselves adhering to is the increasing importance of call centers. If you look at the number of call centers all over the world and compare it to that of, say, ten, twenty, years ago, you will notice a drastic increase. This alone denotes how call centers are becoming more and more indispensable for business processes across industries.
Today, you’ll learn about 1) a simple definition of a call center, 2) the two types of call centers, 3) the major considerations when choosing to use an in-house or outsourced call center.
DEFINING THE “CALL CENTER”
A call center is essentially a physical centralized division, office or facility specially designed – and equipped with all the necessary resources, technologies and tools – to receive, manage and process large numbers of customer requests, queries or concerns over the telephone. Their tasks cover both inbound and outbound calls, covering a wide area that includes marketing, sales, customer service, technical support, telemarketing and financial management. The most common examples of call centers today include telephone service facilities set up to provide assistance in technical matters, sales promotions and marketing campaigns.
Call centers have definitely come a long way from the earliest on record, which was said to be the call center belonging to the Birmingham Press and Mail in the UK. This was in 1965 and, at that time, the call centers were called “Private Automated Business Exchanges”. It was only in recent years that the name became “call center” and caught on.
The fast pace at which technology advanced in the recent decade also meant that the call center industry evolved just as quickly. Today, call centers have become more automated than ever. Their reach has also widened because, thanks to virtual centers, they can now set up satellite offices in different areas all over the globe.
In the past, call centers were tasked with performing only one function: to handle calls. Nowadays, call centers have turned into contact centers, performing various roles and responsibilities. They also handle other forms of correspondence or communication, on top of telephone calls. Some BPOs even offer dispatch and remote diagnostics services.
Another significant change in how call centers work is that they now operate 24 hours a day, 7 days a week. The usual setup was assigning people on shifts, or choosing only certain hours in a day for calls to be entertained. Today, customers can make their call at any time of the day or night.
Roles of a Call Center
If we are to put things in general terms, the main operation of all call centers is “Customer support”, and that can be further broken down into “customer service” and “technical support”. We have briefly touched on what call centers usually do. Let us take a more in-depth look at the roles or functions of call centers today.
- Handle outgoing calls for the sale of products and services
- Handle outgoing calls for debt management (collection, mainly)
- Handle inbound calls for assistance and inquiries regarding products and services
- Handle massive volumes of correspondence such as letters, faxes, emails and live chat conversations
- Perform remote diagnostics activities
- Perform dispatching activities
Taking all these, by acting as the direct representative between a business and the customers, the call center is given the ultimate role of serving as the bridge between the two, actively cultivating a harmonious, productive and profitable business-customer relationship. Customer satisfaction is definitely high on the list of priorities, as this will result to customer loyalty and, naturally, retention.
Components of a Call Center
- Specialized management. Automated processes, skilled and highly qualified manpower, and other cultural components will all be for nothing without quality leadership. Call center management shares many similarities to other business or organizational setups, but the workflow within the company calls for specialized forms and styles of management of people, processes, and resources.
- Agents with specialized skills. Call center agents undergo rigid training before they can be certified to deliver call center service to clients. Having certified professional call center agents increases the level of trust that customers have in businesses that utilize their services.
- Call Center automated processes and technologies. Call centers do not rely on their agents alone. They also make sure they are equipped with the proper technology in order to optimize their functions and their workflow. There are no standardized technologies, however, since they are made to be adaptable to different types of businesses, depending on the industry or field that the business’ operations fall under.
- Support and integration. This is the actual operation of the call center. Customer service refers to the efforts and activities provided by the call center in order to cultivate relationships with customers and subsequently maintain and preserve them. Technical support, on the other hand, involves the rendering of hardware or software support, especially in the face of increasing automation across industries. These two are then integrated into the business operations in order to maximize results.
TWO TYPES OF CALL CENTERS
There are several types of call centers today, but we will focus on the two types according to management and location: in-house and outsourced call centers.
#1: In-House Call Centers
Many businesses decide to set up their own call centers, within their business premises, and staffed with their own people. These are called in-house call centers.
- Direct and full control over the call center operations of the company. This is probably the biggest advantage of setting up your own in-house call center. You call all the shots, and you make all the decisions. In short, you have direct control over how you handle your relationship with your customers.
- Exclusive branding and personal touch. Customers appreciate brands that are clearly and obviously putting a lot of their personal touch to their processes. Thus, many are impressed when they know that they are talking to call center agents that are practically brand ambassadors of the business. They also feel more at ease getting support from people who “are actually part of the organization”, since they come across as more sincere and knowledgeable. After all, they are not paid or are bound by a contract to perform call center functions.
- Tightened security. Having your call center in-house means you get to keep a tighter rein on all data and information. Everything stays within your business, with members of the organization being the only ones privy to it. You do not risk exposure of this information by sharing it with a third-party call center service provider.
- High initial investment. This is one of the harshest realities of having in-house call centers: they are expensive to set up, from the infrastructure to the initial staffing and agent recruitment.
- Higher administrative and maintenance costs. You have already invested significantly in setting up a physical location for your in-house call center. Do not forget that it will not run itself. Your call center needs to have its own management team in place, which means you have to hire supervisors, program managers and team leaders, not to mention coaches who will guide the call center agents along. Overhead costs are also considerably higher, since you have to take into account the cost of utilities, facilities and even support staff. There is also a need for high contingency funds, in anticipation of upgrades and updates that may be required in the future.
- Less focus on core activities. Customer service and support, no matter how important, are still essentially of a support nature. They are not the core processes or activities of the business. A retail company’s core activity is sales and distribution. A manufacturing company is on production. An in-house call center runs the risk of eating up a lot of time that could have been devoted to the core processes. In the end, this will compromise the overall productivity of the business. Sure, you have a well-maintained and well-ran call center, and you have customers who are happy with your customer service and technical support. However, if you have less products to sell or the quality of your products has decreased, you can be sure that the customers will slowly start to disappear. That is not a trade-off that you want, is it?
- More non-productive agent time. Consider this: you will spend considerable time and resources when you recruit agents for your in-house call center. Once the recruitment process is over, you still have to let them undergo training and coaching. While all these are going on, you are paying for every minute of their time, and that includes the waiting periods.
- Vulnerability to management changes. Continuity also becomes a problem. Say, for example, that there has been a change in the management of the business, and the new management deemed an in-house call center to be low on its list of priorities. There is a chance that it could be discontinued. That means that all the resources that went into it are dismissed and wasted.
#2: Outsourced Call Centers
This involves looking for call center functions outside of the business, from companies that specialize in providing call center services.
- Straightforward financial planning. If you decide to outsource, you’re making the budgeting and financial planning aspect of your business much simpler. You do not have to maintain separate budgeting for your call center, because all the costs of infrastructure, maintenance and administration are already incorporated into the fee agreed upon between the company and the BPO.
- Scalability and Updated technology. BPOs are on the forefront of companies that make use of advanced and cutting-edge technology. You do not want to be bothered to monitor these advancements and see if your infrastructure needs an upgrade. That is the concern of the BPO, not yours.
- Optimization of Productivity. Think about this: there are various other areas of the business that need your attention, such as sales, research and development, and marketing. However, a lot of your time is occupied by the process of setting up and running a call center. Now imagine if you do not have to do all that. Imagine if you could leave it to others who are far more experienced and knowledgeable at it than you, then you can fully focus on those other areas that need your attention. In another aspect, outsourcing also means that you will only be paying for the productive agent time, since there is no longer a need to recruit and train call center agents.The outsourced call center already has these well-trained and highly qualified agents to get on the job immediately. This trickles down to the next advantage of outsourced call centers, which is cost savings.
- Reduction of costs. Compared to in-house call center operations, outsourcing is more cost-efficient. In fact, many claim that companies can save as much as 50% if they choose to outsource. If the company decides to hand over the management of all telephone-related matters to an external call center, all the expenses associated with maintaining its own call center will be eliminated. Some of the costs that will be reduced include cost of setting up and maintaining a communications infrastructure, operational charges incurred in running the call center, the salary of the call center staff, the cost of training and re-training agents, coaches and other personnel, as well as various maintenance and other administrative expenses. In its place, they will have to pay the contract fee, or regular charges agreed upon with the call center service provider, but it is bound to be lesser.
- Trained staff and reliable resources. Staff of BPOs are specifically trained to go about their tasks with high levels of efficacy, so they have less “dead time call”, or the unproductive hours, minutes or seconds that are usually spent involving the more “minor” aspects of the calling process, such as the act of dialing, letting the phone ring before answering the phone. In addition, they are also expected to have formulated their own technologies, programs or software to minimize these unproductive times. More importantly, however, businesses have greater assurance that their customer service and support are in great hands when left with these external call centers. After all, outsourced call centers have stringent recruitment and training standards and procedures for all the agents that they hire into their companies.
- Lesser control on the part of the business. The business is essentially handing over its “customer relationship reins” to the outsourced call center. Sure, they still make the most important decisions, but the day-to-day, smaller occurrences will be left to the call center agents handling them. Outsourcing is also often done in offshore locations, which makes it impossible for businesses to keep an eye on them.
- Geographical constraints. Outsourcing means looking elsewhere for a company to perform call center functionalities. Therefore, it also involves looking into the location of the service provider, because businesses would like to keep open lines of communication and contact with them at all times. Another offshoot of this issue is the language barrier. You will notice that some of the largest BPOs are based in countries in Middle and Southeast Asia, so there is that lingering doubt that these non-native English speakers might be unable to communicate smoothly with native speakers. It is imperative, then, that companies make sure they outsource to companies that can easily surmount any language constraint.
- BPOs spreading themselves too thin. Unless you are one of two or three clients of an outsourced call center, this will not be a problem. However, call centers often work with dozens (even hundreds, for the larger operations) of clients at the same time. That means you cannot be guaranteed their 100% focus. Their customer loyalty may also be put into question, especially when they serve clients belonging to the same industry.
CONSIDERATIONS IN CHOOSING A CALL CENTER
Before you can make a final decision on whether you should outsource a call center or set up your own within your business, you have to take the following into consideration.
- Your current resources. Can you afford to set up and maintain your own call center in the long term? Do you have enough to finance setting it up, and can your working capital cover the recurring costs of running it?
- Your priorities. Take a look at your core activities and assess if you can maintain an in-house call center without compromising them. There has to be a balance in order for the business processes to go as usual, while strengthening your customer relationship through your call center.
- Volume of calls. If your product is not complicated, then there will be fewer customer care calls. With a small volume of calls, it will not be prudent to spend money on a call center. The same applies if you don’t yet have very many customers.
Conducting a feasibility study is highly recommended in order to ascertain whether you can, and should, set up and run an in-house call center, or outsource it instead. Of course, if you go for the latter, there is a need to make your choice carefully. There are so many BPOs out there today, so you have a lot of choices. We suggest checking out their track record, the companies that they service and work with, their rates and their specialties.
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