Is the Cost of Business Process Outsourcing Worth It?


The top cited reason that companies consider business processing outsourcing (BPO) is to save money, according to Deloitte’s 2016 Global Outsourcing Survey.


But with the highest levels of government encouraging companies to bring business back to America, it can feel like a sticky situation when the workforce in the US (as well as countries like Canada and the UK) are demanding more money and potentially producing less for it.


When big business is at stake, it becomes a game of numbers with BPO showing considerable gains in the long run.

Local, Cheap Labor Isn’t Actually Cheap


Many companies want to keep their workforce local and in-house, and not just that but they also want to save money. Those two don’t necessarily go hand in hand. If you want to keep your help in house, then you’ll need to look at your workforce options.


A younger employee who is willing to accept less pay may not be taking the job seriously. They may be looking at it as a short stint until something better comes along or as a stepping stone to a better position with better pay.


In fact, this has often been cited as an issue among millennials, the oldest of whom turned 18 in 1999. CNBC states that millennials will stay at their current employer if they earn raises annually and are able to move up the career ladder. However, even if they’re happy, research shows that they tip the scale at around three years before they’re ready to move on. By the six year mark only 39% will stay at their jobs, and you can guarantee that by that time they won’t still be working the same customer service position that brought them to your company.


You may get away with paying a young hire very little at first but if you want to keep them then you should expect to up the ante annually. Otherwise prepare to take the hit when you replace them.


Forbes contributor Economist Bill Connelly estimates the price of an entry level turnover at “50% of salary [and] mid-level [turnover] at 125 percent of salary.” That means you may be losing at least 50% of a salary roughly every 3-6 years, and that’s a low estimate assuming your employee likes their job.


However, we know that in general customer service positions are not highly sought after careers in top paying countries. The US Bureau of Labor Statistics describes customer service positions in 2017 as entry level high school graduate positions with an average pay of $15.81 per hour.


That means if you hire an employee to fill your customer service position, and you experience a turnover every 3 years, then you’ll lose roughly $5,480 per year. With those odds you might as well put your money elsewhere.


Related Article: Trusted BPO Takes Corporate Level Information Security Abroad


BPO Increases Company Profits


If you opt to put your lost money into hired help at a nearshore call center, what is it that you’re really paying for?


The first answer is expertise. A quality call center looks for agents who are experienced in the vertical that employs them Not only that, but agents receive additional training on your company so that they can confidently represent your core values. This ensures that when one of your customers ends up at the call center, they feel like they’re talking to a in-house specialist who truly understands the company they represent.


It’s one thing to have experienced agents on board, but it’s even more important to retain them. There’s no point in switching one job-hopper for another. In general, a good call center has a very low annual attrition rate across their entire center. Somewhere around 5% or less is an incredible goal to shoot for.


Agent retention directly correlates to great pay, a good working environment, employee incentives, and the ability to rise in the corporate ladder. When agents enjoy this type of atmosphere, it has a direct affect on your companies ROI.


Happy agents perform better which means they’re providing better customer service and simultaneously increasing your customer retention. Brain & Company found that when you increase customer retention by 5%, then you’ll increase profits anywhere from 25-95% annually.

Essentials of a Profitable BPO Relationship


Here’s what you should you be looking for in order to save the most money while also benefiting from the high integrity and quality that you’ve come to expect within your own company.


Pricing Structure

In the USA and Canada agents earn anywhere from $22-28 per hour. However, when you opt for a BPO nearshore location, then you’re saving at least half of that amount meaning you can service twice the customers for the same price you’re already paying. Plus, a flexible call center will allow you to start with as few as three agents, helping you create a smooth transition without the huge contract.


Cultural Understanding

It’s not worth it to save on a call center agent if you end up with agents who don’t understand your culture, so choose a call center whose agents have experience living in your home country. Customer service and help desk calls aren’t just a quick fix; they’re a relationship between your company and your customers, and the ability to understand issues in a cultural context can make the difference between losing and retaining a customer.


Multilingual Capabilities

A huge benefit of BPO is the limitless pool of agents who have bilingual and multilingual capabilities. In both your home country and abroad, agents deserve to paid a fair wage for their ability to service a more diverse population (particularly when they also have cultural understanding); however, even when you pay fair wages for the extra benefits you’re still nowhere near the price you’d pay an employee.



A good, working partnership with a BPO means you’ll be making regular site visit, and you may also have a remote employee working from the training center. Keep in mind that conducting business with a 15 hour time zone difference can be tricky and draining, plus traveling across the world is fun the first couple times but that too can turn into a hardship. Proximity makes things simple.


In general, if you’re going to spend money on customer service agents, the best choice is to opt for a call center with high integrity and who makes business easy. You want a call center who looks for expertise and also treats their employees well so they stay on for the long haul. The longer they stay on, the more they integrate with your company’s core values while increasing customer retention, and the more money your company makes. Contact ABC today to learn more.



Related Article: Trusted BPO Takes Corporate Level Information Security Abroad
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