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Insourcing vs. Outsourcing Call Centers: Debunking Common Misperceptions


The call center is one of the initial points of contact between a brand and its customers. As such, it plays a pivotal role in shaping the customer experience (CX) strategy. Internal call centers, operated by a brand’s employees, offer a sense of control over the CX ecosystem. However, in-house operations are resource intensive and require a substantial investment.

Rising costs, staffing challenges, and rapidly changing technology lead us to the age-old question: What is the best strategy for your company’s call centers? Should you maintain and grow in-house call centers? Should you outsource to third-party business process outsourcing (BPO) companies? Or perhaps a well-balanced combination of in-house and outsourced operations?

Outsourcing, once seen primarily as a cost-saving measure, has transformed into a strategic catalyst for growth across companies of all sizes. Modern outsourcing practices go beyond the traditional benefits of cost reduction and staffing assurance. When implemented effectively, an intelligent outsourcing model with the right BPO partners can foster efficiencies, scalability, and growth, allowing the brand to concentrate on its core competencies.

Let’s proceed by dispelling some of the myths about outsourcing.

Outsourcing Myth No. 1: We Will Lose Control of the Customer Experience

Outsourcing is a “four-letter word” at many companies, and we get this. The apprehension associated with entrusting customer communication to a third party is understandable.

Successful outsourcing starts within your organization and the absence of certain foundational requirements may in fact result in a negative experience. It’s crucial for brands contemplating outsourcing to ensure that their internal CX groundwork is strong, stakeholders understand and embrace outsourcing, appropriate support resources are allocated, and a capable vendor management team with the right experience, is in place.

Once the brand has the right structure, controls, and clear expectations, only then should CX leaders start the process of finding the right BPO partner(s). Outsourcing “anxiety” or concerns over loss of control can be alleviated by partnering with innovative and elite level BPOs that understand and enhance your brand’s CX strategy.

BPO Selection Is Key

The right partner(s) can be an extension of your brand, working in harmony with your culture, ethos, and business practices. BPOs can deliver top-tier CX, but not in a vacuum. The brand and BPO must work in concert to drive the best outcomes for the end consumer, and the only way to achieve this is through a mutually interdependent partnership.

Too many brands impose a moratorium on outsourcing for various reasons including bad experiences with BPOs where in fact the brand did lose control of the customer experience. In many cases, the wrong type of BPO was selected. Or the right BPO was selected but it wasn’t set up for success. And there are a variety of other reasons why outsourcing initiatives can fail.

Or, quite often, brands call for BPO “partners” but end up treating the BPO like an expendable “vendor”. In such cases, clients have a narrow view of BPOs. Such clients are fixated on below market pricing while demanding high levels of service and an intense resource investment from the BPO.

In these instances, stakeholders view BPOs as a commodity and I’m proud to say that our BPOs will routinely walk away from such situations and either resign the client or pass on the opportunity— and rightfully so. Our industry is crowded with a multitude of lower grade BPOs that offer little more than commoditized services— “people in chairs” at cut-rate prices. And as such, these types of BPOs attract clients with unrealistic expectations. We have no interest in such an approach, never have in our 18-year history, and never will.

There is a direct correlation between the quality of your CX outcomes and the types of BPOs you select:

  • You cannot expect “A” level customer experience from “B” and “C” level BPOs.
  • If you’re chasing the lowest bargain basement outsourcing rates, expect to get what you pay for.
  • If the brand is invested in the best CX outcomes from outsourcing, then the brand must strive to partner only with high-echelon BPOs that have CX in their DNA.
  • Progressive, intelligent and customer centric BPOs can be your best brand ambassadors because they clearly understand the call center's vital importance in the customer value chain.
  • Size of the BPO guarantees nothing. The default syndrome is alive and well—too many brands continue to assume that only the largest BPOs are the best—an ongoing fallacy in our industry.

Brands should select BPOs to enhance the customer experience and delight stakeholders through progressive operational practices, excellent agent engagement, advanced training modules, leading-edge technology, and an unwavering commitment to excellence. The right BPO should never make the brand feel like they’re losing control of the customer experience.

Outsourcing Myth No. 2: Call Quality Will Suffer

The perception that outsourcing customer service inevitably reduces call quality is a widespread myth. In truth, service quality depends on many factors including your organization’s internal controls and the extension of these mechanisms to your outsourcing partner(s). It’s vital to outline clear performance expectations, quality metrics and measurements when outsourcing. Holding the partner to your internal quality standards by utilizing the appropriate checks and balances, in concert with your BPO’s internal quality systems, can ensure the right outcomes.

Too many brands rely solely on the BPO’s quality systems, and this is fine if the BPO is elite. Otherwise, it takes a team effort and a closed-loop process to achieve quality metrics that enhance CX. Regular monitoring and feedback sessions are required to help ensure you meet these standards consistently.

Providing continuous training and support for the outsourced team is critical in improving call quality. This includes product knowledge training, soft skills development, and regular performance feedback. With proper training and management, your outsourced call center teams can effectively mirror or outperform your in-house teams, delivering equal or superior service quality.

Outsourcing Myth No. 3: Data Security and Customer Privacy Will Be at Risk

Data security risks are always present in today’s digital business landscape. These risks are not exclusive to outsourcing; they exist even when services are managed internally.

When it comes to data security, reputable BPOs have you covered. They invest heavily in state-of-the-art technology, compliance, and infrastructure to ensure robust data security and protection against cyber threats. Their strict policies prevent breaches or mishandling of sensitive information, giving you peace of mind.

Despite taking these measures, brands often have concerns about the location of their data, which brings us to another misconception about outsourcing — the data locality issue. It’s important to note that the physical location of the BPO doesn’t necessarily determine where the data is stored. In many nearshore or offshore outsourcing arrangements, the data resides in the U.S., regardless of where the services are delivered, further reinforcing data security.

Outsourcing partners also adhere to industry regulations and standards, such as Payment Card Industry (PCI), Service Organization Control Type 2 (SOC 2), and others, to ensure top-tier data security. They conduct regular audits to guarantee compliance and identify potential risks.

Outsourcing Myth No. 4: There Will Be Backlash from Stakeholders and Internal Employees

Outsourcing often faces resistance in organizations due to misunderstandings about its benefits. Clear communication and strategic positioning are crucial to prevent backlash.

The key is to highlight the advantages outsourcing brings to the company. It's not just about cost reductions; it also enables staff augmentation, facilitates growth, and ensures SLA adherence for customer satisfaction and retention, ultimately contributing to customer retention and revenue.

Stakeholders generally support strategies that promote business growth. With proper communication and education, they are likely to endorse outsourcing. You can ease initial resistance from internal employees through open discussions about the reasons for outsourcing and its potential benefits to the company.

It’s important to emphasize that outsourcing is not a threat but an opportunity. It allows employees to focus on other tasks while the outsourced team augments the internal team’s efforts. This shift can enhance job satisfaction and productivity and offer career development opportunities for the internal team.

Outsourcing Myth No. 5: In-house Call Centers Always Perform Better

An argument can be made that, if structured correctly, in-house call centers should outperform outsourced teams. This belief stems from the idea that internal employees have a deeper understanding of the company's culture, values, and products. It also stems from the fact that in most cases, internal call center agents are often compensated better than their BPO counterparts.

Here at CustomerServ, we work with brands of all sizes from Fortune 50s to emerging enterprises. In most cases, stakeholders utilize in-house call centers as the benchmark. And in other cases, benchmarking is shared between in-house and outsourced BPOs.

Meticulously selected, top level BPO partners became a key part of the customer lifecycle and in many regards, indispensable. In fact, these BPOs consistently compete with and often outperform internal operations, and with greater speed to proficiency.

The right BPOs can and should outperform a brand’s internal call center operations if we’re comparing apples to apples. Outsourced vs. internal performance comparisons depend on so many factors including the brand’s investment in the right vendor management resources. And of course, the quality of the BPO and its people, process, technology, expertise, innovation, and culture.

Choosing Your Path: Final Considerations for Insourcing vs. Outsourcing Call Centers

The debate over insourcing or outsourcing your call center has been ongoing in the business world. Both options have benefits, but there’s no one-size-fits-all solution. When weighing your options, it’s essential to set aside preconceived notions and carefully evaluate your business needs, budget, and customer expectations. Here are three important points to consider:

  • Pricing Comparison. Accurately assess insourcing vs. outsourcing cost vs. benefit. Too many companies are miscalculating the actual costs and expenses associated with operating internal call centers, whether remote or on-premise. For a detailed look at determining the potential savings, check out this article: Call Center Outsourcing vs. Insourcing Price Comparison.
  • Talent and Geographic Diversity. BPOs can provide access to a skilled and educated workforce with long-term career aspirations in BPO. This is especially true in emerging offshore/nearshore markets offering clients access to new and highly talented sources of human capital. The right BPO partners, in the best location(s) for your needs, can solve for staffing challenges, flexibility, scalability, seasonal support, business continuity, redundancy, and subject-matter expertise.
  • Focus on Core Competencies. Outsourcing routine tasks and processes to a trusted BPO partner can save time and resources, allowing your internal team to focus on core competencies and strategic initiatives. According to a recent market insights report by CustomerServ and Execs In The Know, there is a growing trend toward outsourcing among brands, with only 7% intending to insource more than outsourcing.

While we are pro-outsourcing, we’ll be the first to advise a company not to outsource if the organization isn’t prepared to do so. Successful outsourcing requires a state of readiness, and not every organization that wants to outsource has the structure in place yet, to maximize the benefits of partnering with BPOs.

Ultimately, the choice between insourcing and outsourcing depends on multiple factors unique to your brand and CX objectives. As we navigate this complex landscape, let’s make informed decisions based on facts rather than assumptions.