Episode timestamps

00:16 Introductions

02:00 What is operational excellence?

3:39 What is customer service outsourcing?

6:59 Why outsource? What are the benefits? (4 pillars)

17:39 Do I have to train the outsourcer? How quickly can they get set up? Lots on training and speed of outsourcing.

20:58 Why don’t people outsource? What are the misconceptions? What are the risks? How can they be mitigated?

25:00 Will my customer data be secure? What about security in general?

29:46 How to make sure you choose a good outsourcer

Outsourcing guide: 4 benefits and 2 risks every support leader needs to know about

Outsourcing customer service is undoubtedly popular.

Companies that have outsourced their customer service often cite benefits like lower costs, improved responsiveness to customers, and increased efficiency.

For many companies, outsourcing is not an option but rather a necessity in order to compete with other businesses and stay afloat.

However, many people still associate outsourcing as a cop-out. And one steeped in risks.

This blog post will explore the benefits of outsourcing, and will go over the risks you should be aware of and how to mitigate them.

Our stance, and that of our guest Roman Siepelmeyer, is that outsourcing is sensible approach and one that's better both company and customer—as long as you choose the right partner.

First, what is customer service outsourcing? 

Outsourcing is the business practice wherein a company hires third-party organizations to provide a service. Given this, customer service outsourcing refers to hiring an external partner to tend to customer service-related operations.

It's not an uncommon practice, with the global outsourced customer experience market amounting to around $75.1 billion in value. And this is primarily due to how it benefits businesses.

What are the benefits of customer service outsourcing?

There are four core benefits when it comes to customer service outsourcing.

Scalability

Businesses seeking to upscale or expand their reach often face problems in staffing in the customer service department. A growing organization requires more hands to attend to client enquiries. However, recruitment teams may not be able to keep up with the demand for new employees. In this case, outsourcing is the best option as it allows businesses to focus on upscaling, without sacrificing the quality of their customer service.

Customer Loyalty

Outsourcing your customer service representatives also ensures that trained professionals are attending to your clients. This then translates to customer loyalty, as customers who have a positive experience with a company tend to stay loyal to it.

Moreover, it boosts customer satisfaction. An article on customer satisfaction by Ben Goodey emphasises the importance of customer satisfaction because it drives sales and overall business growth. Research from Invesp supports this notion as it reveals that former customers are 50% more likely to take interest in new products. They also spend 31% more than new customers.

Cost-efficiency

Cost-efficiency in this context refers to how outsourced customer service is a sustainable option for growing companies. For one, you're saving on the physical space and technological tools needed to run an in-house customer service department. But more than that, outsourcing is an investment that pays dividends in the future.

By investing in competent outsourced customer service, you ensure that your customers are happy with their experience, which is good for company image and sales. Additionally, outsourcing allows you to devote more time to perfecting your product and shipping it out to your customers.

Competence

Finally, outsourced customer service brings in high talent density. These professionals are already experienced in customer service. Thus, they can do the work efficiently and could potentially improve your current model.

They might, for instance, suggest focusing on customer interaction on social media. Later's article on using Instagram for customer service highlights how 65% of people feel stronger brand loyalty when a company responds to them on social media.

Plus, a study by Bain & Company shows that consumers who get ample customer service on social media platforms tend to spend between 20-40% more money on the company. This is just one way to improve the company's customer service model, and outsourcing can grant you the talent needed to fully optimize it.

What are the risks of customer service outsourcing?

Outsourced customer service brings about multiple benefits that improve business performance. Though some risks come with it, these can easily be mitigated with careful planning.

Lack of Knowledge

One potential risk of customer service outsourcing is decreased efficiency due to undertrained hires. This can easily be fixed by ensuring that there is an effective transfer of knowledge from your company to the outsourced staff.

The Global Trade Magazine highlights the need for knowledge management in all businesses, across all sectors. This is because knowledge empowers organizations to solve problems and improve business performance. In this context, proper knowledge management also facilitates the transfer of knowledge necessary to build a competent customer service team.

When outsourced staff can combine their industry knowledge with the specifics of their client company, then under-training won't be a problem.

Security Risks

Another big issue stems from potential data security risks that come with introducing an external company to internal business operations. However, this supposed risk isn't exclusive to the outsourcing community. The same problem could easily arise from an in-house team. Consequently, companies should simply uphold their data privacy and cybersecurity guidelines for in-house employees and outsourced staff alike.

When to start outsourcing customer service

Given the upsides and downsides of customer services outsourcing, it's worth discussing when businesses should opt for this method.

Generally, companies should consider outsourcing when they have critical business operations — such as upscaling or strategizing— that require more attention. Inc writes that outsourcing can be a game-changer for growing companies. So long as the business considers the skill gap and keeps an eye on outsourced operations, they can maximize productivity and boost their performance.

How to choose an outsourcing partner

Last but not least, if your company is looking to outsource, here's how you can go about it.

Talk to an Outsourcing Professional

The quickest way to go about this process is to get in contact with someone who knows the outsourcing field. This could be a full-time employee or a consultant. With their expertise, you can easily narrow down the best choices from a whole list of options because your professional already knows what to consider and what to look for. Additionally, your outsourcing professional can help in educating employees and stakeholders regarding the need for outsourced customer service. This ensures that everyone is on the same page even before you get in contact with your third-party company of choice.

Scout for Potential Outsourcing Companies

You could also manually scout for potential outsourcing companies. Once you've compiled a list, send them a form with questions about their company. These questions should be about their operations, their values, and, overall, should help you pinpoint whether they'd be a fit for your business. For example, you can include questions such as,'What is your internal employee satisfaction rate?' and 'What are your cybersecurity standards?' Gather all the answers and run them through data analyses to find the outsourcing company that's the best fit for your business.Note that this doesn't mean that the other outsourcing companies are of less quality. The results simply show that certain outsourcing companies fit your criteria better than others. Therefore, they're a better fit for you, in particular.

Despite being extremely beneficial, the process of customer service outsourcing is long and meticulous. You'll need a solid grasp of what your company needs as well as what each potential partner can bring to the table. Taking all of these factors into account helps in ensuring that your outsourced customer service can work in tandem with your in-house teams. Moreover, it paves the way for what could be a long and effective partnership.

This guide was written by Rose Joseph, exclusively for SentiSum.