Estimated reading time: 7 minutes
Key Takeaways
- Outsourcing can reduce customer service costs by as much as 40–50% versus in-house, driven by labour arbitrage, bundled tech, and lower overhead.
- Typical per-hour rates range from £6–£20 (offshore) to £16–£36 (nearshore/domestic), with monthly per-agent costs reflecting similar spreads.
- Comparisons must align on identical SLAs, channels, and coverage windows to be fair and accurate.
- Flexible models (per-minute, per-interaction, per-hour, per-resolution) suit different volumes, complexity, and seasonality.
- Seasonal elasticity may carry a 10–15% premium yet unlock 20–30% annual savings by trimming unused capacity.
Table of contents
Understanding Customer Service Outsourcing
Outsourcing customer service means partnering with a third-party provider (onshore, nearshore, or offshore) to manage customer interactions across phone, email, chat, and social messaging. Providers may offer shared or dedicated agents and often deliver a provider-managed tech stack for routing, QA, analytics, and reporting.
Think of outsourcing as an elastic layer on top of your operation—scaling coverage, expertise, and tooling without scaling your fixed costs.
In-house vs. Outsourced—what truly changes?
- In-House: direct hiring, tool procurement, QA/training management, fixed overhead; maximum control but higher fixed costs.
- Outsourced: provider supplies agents, management, and technology; flexible pricing; faster scalability and predictable cost envelopes.
Cost Breakdown of Outsourcing vs. In-House Customer Service
Labour Costs
- Per-hour rates: Offshore ≈ £6–£20; Nearshore/Domestic ≈ £16–£36.
- Per-agent per month (fully managed): US-based ≈ £2,080–£2,720; Offshore ≈ £800–£1,600; In-house all-in ≈ £3,600.
- US providers command higher rates; offshore can be less than half, with nearshore in between.
Tools and Technology Expenses
- In-house: CRM/help desk, telephony/CCaaS, QA/analytics, WFM, AI/chatbots, hardware, integrations, and maintenance.
- Outsourced: many providers bundle core technology and admin tools into pricing, trimming separate software costs.
Overhead and Operational Costs
- In-house: office space, utilities, IT, HR/admin, recruiting, management layers.
- Outsourced: overhead embedded in provider pricing, cutting facilities and admin burden.
Training and Development Costs
- In-house: full responsibility for onboarding, continuous training, and QA programmes.
- Outsourced: provider-led recruitment, onboarding, and ongoing training; SLA complexity can affect price.
Pricing Models in Customer Service Outsourcing
Per-Minute Pricing (often for shared agents): pay for actual talk/handle time.
- Pros: usage-based; efficient for low or variable volumes.
- Cons: spend can fluctuate; risks incentivising shorter calls over quality.
Per-Interaction Pricing: fixed price per call/chat/email; typically ≈ £12–£36 depending on complexity, region, and SLAs.
- Benefits: predictable unit economics; aligns cost with demand.
- Drawbacks: spikes during surges; complex cases priced higher.
Per-Hour Rates (dedicated agents): offshore ≈ £6–£20; nearshore/domestic ≈ £16–£36. Ideal for consistent staffing and deeper training.
Other Structures: pay-per-resolution (≈ £2.40–£7.20 in standard scenarios) and flat monthly retainers are common in specific workflows.
Call centre projects differ: inbound often uses per-minute, per-interaction, or hourly; outbound/sales add incentives and compliance overhead. Regulated industries may see 15–30% premiums.
Additional Cost Factors in Outsourcing
- Setup and Transition Fees: onboarding, knowledge transfer, integrations, pilots—flat fees or first-month surcharges.
- 24/7 Coverage: higher rates for nights/weekends; supervision and multilingual routing increase costs.
- Multilingual Support: premiums vary by language availability and quality requirements.
- Seasonal Demand: flexible capacity may add 10–15% premium yet cut annual costs by 20–30% by removing idle capacity.
Comparing In-House vs. Outsourced Costs
Side-by-Side Overview
- Labour: In-house ≈ £3,600 per agent/month; US outsourced ≈ £2,080–£2,720; Offshore ≈ £800–£1,600.
- Tools: in-house buys licences; outsourced often bundles.
- Overhead: in-house facilities/admin vs. embedded provider overhead.
- Training: in-house borne vs. provider-shared (SLA dependent).
Where Each Wins
- Outsourcing: up to 40–50% savings; rapid scalability for variable demand.
- In-house: more control, specialised brand expertise, tighter cultural alignment.
For volatile volumes or rapid launches, outsourcing shines. For niche, high-touch scenarios with stable demand, in-house may justify the premium.
Impact of Service Level Agreements on Pricing
Stricter SLAs—faster responses, higher first-contact resolution, lower abandonment, specialised queues—require more experienced agents and advanced tooling, increasing cost. Always align SLA terms across providers and with your in-house baseline to ensure a fair, apples-to-apples comparison.
ROI and Trade-Offs of Outsourcing Customer Service
Cost-Driven ROI
- Labour arbitrage across regions.
- Bundled technology reduces separate software and hardware spend.
- Lower overhead by removing facilities and admin layers.
- Scalable staffing without long-term commitments.
- Seasonal elasticity to match demand.
- Reported savings up to 40–50% vs. in-house.
Non-Cost Considerations
- Outsourcing: mature processes, analytics, extended coverage.
- In-house: deeper brand control, tailored training, tighter feedback loop.
Strategic value: Many firms treat outsourcing as a growth enabler, freeing core teams to focus on product, revenue, and innovation.
Data-Driven Benchmarks and Cost Comparisons
- Cost per Agent per Month: US £2,080–£2,720; Offshore £800–£1,600; In-house ≈ £3,600.
- Per-Hour Rates: Offshore £6–£20; Nearshore/Domestic £16–£36.
- Per-Interaction: ≈ £12–£36 per contact (complexity and SLAs drive variance).
- Pay-Per-Resolution: ≈ £2.40–£7.20 in standard scenarios.
- Seasonal Flexibility: 10–15% premium may deliver 20–30% annual savings.
Guidance for Making the Right Choice
- Map Contact Volumes: by channel, complexity, and seasonality. Request quotes in at least two models (e.g., hourly and per-interaction) with identical SLA/coverage assumptions.
- Calculate Cost per Resolved Contact: focus on resolution economics, not only cost per agent.
- Evaluate Non-Cost Factors: quality metrics, cultural fit, data security, compliance.
- Pilot Before Scaling: run a controlled pilot with clear SLAs and QA metrics; use real data to refine forecasts.
- Review Annually: revisit pricing models, SLAs, and demand patterns to stay aligned with goals.
Bottom line: use a structured comparison framework and insist on SLA parity to reveal the true TCO and value impact.
Video: Quick Overview
FAQs
How much can outsourcing customer service actually save?
Businesses commonly see 40–50% cost reductions compared with in-house when factoring labour, bundled technology, and overhead elimination. Your exact savings depend on SLAs, channels, and the mix of offshore/nearshore resources.
Which pricing model is best for variable demand?
Per-minute or per-interaction models fit variable volumes, as you pay in proportion to usage. For stable workloads and deeper training, hourly dedicated agents often deliver better consistency.
What drives higher outsourced pricing in regulated industries?
Compliance, certifications, specialised training, and enhanced QA typically add 15–30% premiums. These safeguards protect data and ensure adherence to strict industry requirements.
How do I compare providers fairly?
Require identical SLA targets, channels, languages, and coverage windows. Then compare effective cost per resolved contact and quality outcomes, not just hourly rates.
Do offshore agents impact quality?
Quality depends on the provider’s recruiting, training, QA, and coaching systems. Many offshore teams achieve strong CSAT and FCR with mature processes and clear knowledge bases.
When is in-house the better choice?
In-house can be superior for highly specialised, brand-sensitive interactions with stable volumes where deep domain knowledge and tight cultural alignment outweigh cost savings.
