At some point in the lifecycle of most businesses, there’s a decision point regarding how best to deal with the proliferation of customer contacts. In the early stages of growth, most businesses handle calls and emails with an internal staff. As this expands and the cost of adding staff begins to accumulate, many companies realize that their internal center is ill equipped to adequately deal with the demands of their business.
Over the course of the next several blogs, we will discuss the most common reasons why businesses decide to outsource their contact center services. The first reason we will focus on is, of course, cost. There are many expenses associated with running a contact center, but we will focus here on three in particular: Staffing; Technology; and Regulation Compliance.
- Staffing – This is the number one cost driver for a contact center operation. Companies find it cheaper to outsource call center staff for several reasons:
- Geography: Many companies are in urban areas where the cost to hire employees comes with a big price tag. Call center companies tend to locate in lower cost areas in suburban or rural locations (like college towns) where they can still attract talent but at a cheaper cost. Additionally, lots of contact center companies have expansive footprints that include near shore and offshore locations that can provide massive savings on staffing.
- Agent Compensation: It’s expensive to hire full time employees at an internal call center. In addition to salary, you must cover health benefits, vacation, sick time, personal leave, etc. When you outsource, you pay for the agent’s productive time…the outsourcer pays vacation, sick time, tardiness, etc. Also, they will usually cover the cost of lunches and breaks.
- Hiring and Firing: Staffing is part of the core competency at contact centers and they deal with recruiting and replacing staff in a continuous effort year-round.
- Training: While contact centers do charge for initial or “new hire” training, most will not charge their clients for attrition (replacing agents) training. Because contact center agents tend to attrite at higher than average rates, this is a big hidden cost savings.
- Technology – Running a contact center involves having an ACD (automatic call distributor) and a CRM (customer relationship management) tool. Within these tools are add-ons like workforce management software, quality monitoring systems, and reporting and analytics tools. In addition to having to pay steep implementation costs to integrate these technologies, there is also an ongoing licensing cost. Many small businesses can’t afford to make these types of investments. For those that can, often they are under-utilizing their tools because they don’t have the necessary in-house personnel expertise. A typical call center will provide the following as a part of their hourly agent rate:
- ACD/Call Routing System/Outbound Dialer
- Workforce Management/Forecasting/Real-Time Adherence
- Basic CRM with custom integration usually billed at an hourly IT rate
- Quality Monitoring software that allows remote listening and screen viewing capability
- Knowledgebase/Resource Sharing/Intranet for easy access and reference to training materials
- And most importantly: the staffing resources with the expertise to administer and utilize these tools.
- Regulations Compliance – This is a necessary investment that is too often overlooked at most internal call centers, many times because they aren’t aware of them. It can be very expensive to build a contact center environment that adheres to the multitude of government regulations imposed on the industry. It can also be very expensive to NOT adhere to these regulations in the form of fines and/or shutdowns. The following are the most common regulations affecting the industry and their basic reasons for existing:
- PCI DSS – Payment Card Industry Data Security Standard. This regulation is tied to safeguarding customer credit card data. There are many factors that go into being “PCI Compliant” and there are several different levels of certification. Suffice to say that getting to a PCI level compliance and staying there takes organizational discipline and is an ongoing process. Getting certified at PCI level 1 (300K+ transactions per year) will cost roughly $70K per audit. Fines can range from $2K to $100K per month for PCI violations, plus additional fines for repeat violations. Data breaches can cost company millions of dollars in remediation fees and untold dollars in loss of customers due to goodwill issues.
- HIPAA – HIPAA, the Health Insurance Portability and Accountability Act, sets the standard for protecting sensitive patient data. Any company that deals with protected health information (PHI) must ensure that all the required physical, network, and process security measures are in place and followed. There are several steps a company needs to go through to become HIPAA compliant including training, building a compliance manual, installing hacker and ransomware software protection, and continual remediation and ongoing audits. It takes anywhere from 6 to 8 weeks to go through the steps to become HIPAA compliant and costs ~ $5K. HIPAA violations can result in fines based on the severity (tier) ranging from $100 to $50K per violation with a maximum of $1.5M per year.
It’s a daunting task to build and maintain a world class call center with top notch staff, great systems and tools while maintaining all industry regulations. If you are a corporation that has built your own internal call center and are dealing with any/all of the above issues, consider outsourcing to a 3rd party provider that deals with all the above as a core competency.
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