A Deloitte survey conveys that third party failures can cost as much as USD1 billion per incident to companies. There appear some uncertain challenges related to the cost of hiring a third party for inbound and outbound calling.
Cost-based Risks of Challenges Associated with Call Centre Solutions
Let’s explore a few common challenges here.
a. Hidden Costs
According to a survey by Deloitte, 30% of companies reported hidden costs being charged that led to more expenses.
Hidden costs are the costs are not initially obvious. For example, there may be costs associated with transferring data or knowledge, or with the ongoing management of the outsourced function. These hidden charges can be like these:
- Setup costs: It is typically shown as the cost associated with setting up the outsourcing agreement, such as legal fees, due diligence costs, and consulting fees.
- Technology costs: If the outsourcing partner uses different technology than the business, there may be additional costs. It can be charged in the name of integrating the systems or training staff to use the new technology.
- Data protection and security costs: If the outsourcing partner handles sensitive customer data, there may be the concerned cost in the name of data protection and security compliance.
- Customer dissatisfaction costs: If the third-party partner does not meet the quality standards of the business, there may be some costs, like lost sales, negative reviews, and damage to the business’s reputation.
To avoid these hidden costs, businesses should conduct due diligence before choosing an outsourcing partner, carefully review outsourcing contracts, and invest in effective communication, quality control, and vendor management processes. They should also ensure that the outsourcing partner has adequate data protection and security measures in place, and regularly monitor customer satisfaction to identify and address any issues quickly.
b. Communication Costs
Communication is essential, especially when a business is in outsourcing relationships. It can be costly. Businesses may need to invest in additional communication technologies or services, such as video conferencing. Communication in any outsourcing relationship, and call centre outsourcing is no exception. However, there are several communication cost challenges that businesses may face when outsourcing their call centre operations. Here are some examples:
- Language and cultural training costs: If the outsourcing partner is located in a different country or region, an additional cost based on language and cultural training to ensure effective communication with customers can be there.
- Time zone differences: If the hired calling company is located in a different time zone, there may be additional costs associated with scheduling and coordinating meetings and calls outside of normal business hours.
- Communication management costs: Managing communication with the outsourcing partner can be time-consuming and resource-intensive. Businesses may need to invest in additional staff or tools to manage communication effectively.
These communication cost challenges can be eliminated with a few tips. Businesses should carefully choose their outsourcing partner based on language proficiency, location, and cultural similarities. They should also invest in effective communication technologies and tools and establish clear communication protocols and expectations. Additionally, businesses should regularly review and evaluate their communication processes and make adjustments as necessary to improve efficiency and effectiveness.
c. Quality Control Costs
Quality control can be more difficult to manage when outsourcing, as businesses are relying on a third-party provider to deliver their services. Here, ensuring quality control is the key, which can be chargeable in the name of the following:
- Quality monitoring costs: An additional investment in quality monitoring tools and software, such as call recording and analytics software may be required, which can be expensive.
- Quality assurance costs: Keeping an additional staff to manage quality assurance processes, such as reviewing call recordings and providing feedback to the outsourcing partner, can be time-consuming and resource-intensive.
- Performance management costs: In case the outsourcing partner does not meet quality standards, businesses may need to invest in performance management processes, such as issuing corrective actions or terminating the outsourcing agreement. This can be costly in terms of time and resources.
- Dispute resolution costs: Disputes around quality control can be cost-intensive to resolve, particularly if legal processes are required.
To mitigate these quality control cost challenges, businesses should discover the most experienced and well-reputed outsourcing partner that is known for his quality standards and track record. They should also invest in effective quality monitoring and assurance tools and establish clear quality standards and expectations. Additionally, businesses should provide adequate training and support to the outsourcing partner’s staff and establish clear performance metrics and consequences for non-compliance. Finally, businesses should establish clear dispute resolution processes and consider including dispute resolution clauses in the outsourcing agreement.
d. Vendor Management Costs
Managing outsourcing relationships requires resources and expertise, which can be costly. Businesses may need to invest in vendor management software or hire additional staff to manage their outsourcing partnerships effectively.
- Transition costs: The transitioning of project cost can be more if you ignore saving margin. Select your outsourcing partner wisely. The cost savings margin for outsourcing a call centre to India can vary depending on several factors, such as the size and complexity of the operation, the level of service required, and the vendor selected. However, in general, outsourcing to India can offer cost savings of up to 60-70% compared to setting up an in-house call centre in the US or Europe due to lower labour costs and overheads.
- Contract negotiation costs: Negotiating the outsourcing agreement can be a complex process, particularly around pricing, service levels, and performance metrics. Businesses may need to invest in legal or consulting services to negotiate the contract effectively.
- Contract management costs: Managing the outsourcing agreement and relationship with the outsourcing partner may need to invest in additional staff or tools to manage the contract effectively.
Vendor management cost-based challenges can be overcome. For it, businesses should carefully make a plan and select their outsourcing partner based on their track record and performance history. They should also invest in effective contract negotiation and management processes, such as regular performance monitoring and dispute resolution mechanisms. Additionally, businesses should establish clear service levels and performance metrics and regularly review and evaluate the outsourcing agreement and vendor management processes to identify any areas for improvement and make adjustments as necessary.
Summary
Cost-based challenges that businesses may face during outsourcing include hidden costs, cultural and language barriers, poor quality of service, security risks, difficulty in managing outsourcing relationships, cost savings not guaranteed, and customer churn.
