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Pros and Cons of Outsourcing Customer Service to an Offshore Call Center

Adam Uzialko
Adam Uzialko
Freelance Editor

This guide describes the pros and cons of outsourcing customer service to an offshore call center. Is an offshore call center right for you, or is it a risk you can't afford to take?

  • Using third-party offshore call centers can be more affordable than setting up in-house customer service operations.
  • The cost advantages of offshore call centers can come with challenges in communication, data security and changing how your customer service team operates.
  • When choosing whether to outsource your customer service to an offshore call center, consider language and cultural barriers, technology differences, customer experience, and the call center's client portfolio.
  • This article is for small business owners considering outsourcing their customer service operations to an offshore call center.

Many businesses outsource their customer service to a call center to save time and free up staff to focus on tasks other than managing the phone lines. Call center services offer trained agents who handle your incoming calls based on a script or guidelines that you create for them. Call centers often engage in other services as well, including order management, complaints, technical support and outbound marketing campaigns.

To cut costs, some businesses look abroad for a call center service provider. While overseas call centers are typically less expensive than their domestic counterparts, there are some major considerations a business owner should keep in mind when choosing whether to partner with an international contact center.

 

Editor's note: If you're looking for the call center that's right for you, use the questionnaire below to receive information from a variety of vendors for free.

 

What is an offshore call center?

It's no secret to many consumers that companies often outsource their customer service management to overseas call centers. India and the Philippines are the most prominent countries where offshore call centers are located. Overseas call centers typically offer lower rates, because the labor costs in these countries are much lower than in the U.S. However, it's important that companies do not lose sight of what's important if they are considering moving their call center operations overseas.

Bryce Maddock, CEO of TaskUs, a California-based outsourced customer support provider with four offices in the Philippines, warned that costs aren't the only factor to consider. Businesses also need to make sure the provider they choose won't compromise their brand and, most importantly, the customer experience.

"The most common mistake companies make when choosing a call center is focusing exclusively on price," Maddock said. "Service, reliability and cultural fit should never be discounted. Choose the call center that fits your brand and company culture, not just your price point."

For a long time, this has been the major point of contention between domestic and offshore call centers. Domestic contact centers claim native English speakers as agents and avoid the cultural barriers associated with offshore call centers. Domestic contact centers also tend to maintain a technologically superior infrastructure compared to overseas call centers. However, a more recent phenomenon has given rise to yet another kind of contact center: the nearshore call center. 

Nearshore call centers

Nearshore call centers are designed to blend the quality of service found in domestic call centers with the cost-effectiveness of offshore call centers. These contact centers are typically located in Central America or the Caribbean and have significant numbers of bilingual agents as well as native English speakers. Nearshore call centers also tend to minimize cultural barriers because there is more travel back and forth between nearshore countries compared to truly overseas call centers.

Key takeaway: Offshore call centers are international call centers that, due to their location, can often pay lower wages and thus charge less for third-party customer service.

Pros and cons of offshore call centers

These are some the ways offshore call centers might benefit your business:

  • Lower wage costs. The primary reason that companies outsource their customer service to offshore call centers is that many foreign countries pay their workers less than in the U.S. As such, using an offshore call center can be significantly cheaper than launching an in-house customer service team.
  • Lower technology costs. In-house customer service can mean implementing and maintaining technologies such as customer relationship management (CRM) software. Outsourcing customer service to an offshore call center eliminates these technology costs.
  • More customer service availability. In an ideal world, your customer service line would be reachable 24/7. In reality, your team probably works the standard 9 to 5 on weekdays, which is often all that small businesses can afford. However, with offshore call centers' low rates, 24/7 customer service enters the realm of possibility.

These are some ways offshore call centers can be disadvantageous:

  • Lack of control. The geographical distance inherent to international outsourcing can make controlling your operations tougher. Presumably, you can't easily visit an offshore call center to see the team in action and discuss changes in person.
  • Fewer regulations. Offshore call centers are not obligated to adhere to the rigid security protocols outlined in U.S. law. As such, using offshore call centers can theoretically increase the chances of a data breach.
  • Language and cultural barriers. Customers may feel dissatisfied if they reach an international representative with whom communication is difficult. We'll discuss this consideration in more detail below.

Key takeaway: Offshore call centers can be cheaper and expand your availability, but they can also present challenges with controlling operations, securing data and facilitating smooth communication.

What to consider before outsourcing customer service to an offshore call center

Whether you select a domestic, nearshore, or offshore customer service management partner, it's important to consider a wide range of factors. While costs are key, there is much more that goes into the decision to outsource your customer service. After all, you're trusting your partner with your brand image and your customers' satisfaction, two of your most valuable assets.

Language barriers

Naturally, with an overseas call center, your customers are likely to encounter a language barrier at least some of the time. Not only is this frustrating for customers (many of whom are already calling about a problem), it can reflect negatively on your brand.

Consumers often assume that outsourcing call center operations to an offshore service provider indicates an unwillingness to spend money on domestic customer service representatives. If you're going to partner with an offshore call center, test its service first.

Cultural barriers

Even when language barriers aren't a problem, cultural differences can get in the way of customer engagement.

When outsourcing your customer service operations to an offshore call center, consider where there might be disconnects between agents and your customers. In some cases, social conventions might clash; where an agent believes they are being polite, a customer might perceive them as rude. Where a customer asks a question about a product or service the agent has little direct experience with, the agent might not have a suitable answer.

Before outsourcing your call center operations, find out how customizable the scripting options and guidelines for agents are, and how sophisticated their knowledge of your company will be.

Technology

The technology supporting call center operations is a key consideration in a call center, especially one that is located abroad. Call centers should have redundant systems in case of a natural disaster or trouble with the local infrastructure. Otherwise, your customer service representatives could go offline, leaving callers unanswered. Customers expect brands to be responsive and helpful, and they aren't typically sympathetic to gaps in service, especially when those gaps originate at an offshore call center.

Moreover, it's important to understand the level of security being applied to the communications data moving through the call center you choose. This is especially true for businesses in sensitive industries that might deal with privileged data, such as healthcare companies and law firms. Both software security and physical security at the facility itself are important considerations you should fully understand before making your decision.

Customer experience

The most important aspect of outsourcing your customer service, the true bottom line, is how well it supports your customers' experiences. If a call center service offers you the lowest rate but agitates customers and harms your brand, the return on investment is not going to be worthwhile.

The best thing to do when choosing whether to outsource your customer service to an offshore call center, outsource to a domestic call center, or keep it in-house is to consider your customers' needs and wants. Put yourself in a customer's shoes and compare their perspective to what you know about each call center service you've investigated. If you're not convinced that the call center will leave your customers satisfied, it's too big of a gamble.

Client portfolio

Before finalizing your decision, look at the roster of companies the call center works with. This will help you identify if the call center is a good fit for your business. For example, if the call center works with mostly large-scale corporate companies and you're a newly funded startup, that particular provider is likely not a good fit.

Examining the call center's clients can help you understand its offerings and the types of companies it best suits. Ask providers who their top clients are, if they work with any of your competitors, and if you'll be one of their largest or smallest clients.

Key takeaway: Important considerations when choosing whether to use an offshore call center include language and cultural barriers, technology differences, customer experience, and the call center's client portfolio.

Your customers should be your highest priority, not your budget

The main point of customer service departments is to ensure your customers are taken care of and satisfied. A satisfied customer is a return buyer and will recommend you to friends and family. An unsatisfied customer will likely never return, oftentimes without a complaint or explanation.

While it's tempting to save every last dime, cutting costs at the expense of customer experience is never wise. Instead, balance costs with outsourcing your customer service to a call center that will represent your brand the way your own staff would.

Offshoring can be an incredibly effective way to achieve that balance, but only if you do your due diligence and find the right partner. Otherwise, you're better off using a more expensive domestic call center service or just keeping your customer service department in-house. [Are you looking for the call center that's right for your business? Check out our reviews and best picks.]

Max Freedman and Anna Attkisson contributed to the reporting and writing in this article. Some source interviews were conducted for a previous version of this article.

Image Credit: fizkes / Getty Images
Adam Uzialko
Adam Uzialko
Business News Daily Staff
Adam Uzialko is a writer and editor at business.com and Business News Daily. He has 7 years of professional experience with a focus on small businesses and startups. He has covered topics including digital marketing, SEO, business communications, and public policy. He has also written about emerging technologies and their intersection with business, including artificial intelligence, the Internet of Things, and blockchain.