Home Business In-house and outsourced customer service: differences, pros and cons

In-house and outsourced customer service: differences, pros and cons

by Ana Lopez
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Co-founder and CEO of Angry Consumera review platform that helps consumers be heard and brands improve their customer service processes.

Your customer service team mans the front line where you communicate directly with your customers; dealing with their questions, concerns and problems and, most importantly, building and maintaining a positive relationship. As your business grows, ensuring your customer service team can continue to provide the same standard of service becomes more and more challenging, and you will find yourself at a crossroads. At this point, the question must be asked: Which way are you going to scale most effectively? Customer service in-house or outsourced?

Here I would like to take a brief look at the factors that distinguish in-house versus outsourcedand also provide some recommendations on which approach is best suited for which style of doing business.

In-house customer service

The advantages

In-house customer service means you have your own dedicated team within your organization trained to handle customer inquiries and provide customer service. This approach certainly has communicative benefits, as your employees are already familiar with your company’s existing structures and protocols and can thus easily collaborate with management and other departments.

In-house customer service has the best product knowledge and the most direct lines of communication to operations and product teams. Such a clear connection enables continuous feedback and thus promotes continuous improvement and refinement of processes to customer appreciation.

Brand identity

Going in-house also gives you more control over the customer experience. It’s easier to transfer the company’s culture to internal customer service and raise service standards to a higher level. If your CS team is well versed in your company’s values ​​and culture, this can ensure a consistent message and the expected quality of service for your customers. Both aspects strengthen your brand image and customer relationship.

It can be helpful to look at real-world examples of successful internal customer service implementations. While few big names have a fully in-house customer service team, many, such as Trader Joe’s, Amazon and Netflix, take a hybrid approach and outsource their telephone exchangesan overlap that brings together the advantages of both solutions.

The lacks

There are indeed limitations to taking an internal approach. Finding, training, managing and setting up the required infrastructure for a customer service under your own roof requires a significant investment. For smaller businesses, these costs can be prohibitive. Plus, the whole process takes time to get up to speed, and even longer to smooth out all the creases and keep everything running smoothly.

Outsourced customer service

The advantages

Large American companies such as Target and Bank of America have already done so outsourced their customer service call centers to countries such as India and the Philippines to save on labor costs. Both countries have high English proficiency and lower salaries. Yet this comes with its own communicative disadvantages.

An outside team won’t be as familiar with your company’s culture and processes as an in-house team, but you’ll gain access to a team with customer service experience and familiar with the pitfalls and mistakes an in-house team might have to learning by trial and error, so you can get off to a flying start, so to speak. An outsourced provider will also have refined and streamlined its infrastructure and processes over time, reducing man hours and wait times for customers.

Cost savings

For those who don’t have the resources to build their own customer service team from scratch, the other solution is to outsource customer service. Contracting a third-party provider saves the burden of start-up costs, a boon for early-stage or small to medium-sized businesses that need to be flexible, and outsourced customer service at scale will yield significant savings. This solution also allows for immediate implementation, inevitably bypassing the teething problems with a homegrown alternative.

The lacks

An important point I always mention is keeping the consistency of the message as well as a motivation and a manner that represents your company’s identity. Ensuring alignment and consistency with your company’s core values ​​and culture can be complicated to maintain with outsourcing. Another aspect of this potential misalignment to consider is that customers value a personal touch, as this is a hallmark of excellent customer service, and consistency is key here.

What then becomes imperative is that an existing manager oversees this outsourced solution, oversees and ensures quality standards are met. This may or may not be feasible, based on the resources available or the smooth communication between your managers and the outsourced team.

In-house or outsourced customer service: key considerations

According to statistics, 89% of consumers saying that they will be more inclined to make a subsequent purchase from a company after a great customer service experience, so investing time and money in this area to make sure you get it absolutely right will definitely pay off.

Consider what matters most to your business, what your key strengths are, and what your customers see as your biggest assets. An optimized solution would balance improved customer service and some degree of control over operations with access to expertise and controllable costs.

Benefits of Internal Customer Service:

  • Better oversight and implementation of corporate culture and values
  • Shorter communication chain
  • Easier to maintain consistency
  • Better knowledge of your product/service

Disadvantages of in-house customer service:

  • Significant financial expenditure on infrastructure, recruitment and training
  • No access to specialized expertise and benefits of experience in the area
  • Scale issues as the company grows

Benefits of Outsourced Customer Service:

  • Immediate access to a proven customer service process
  • Lower initialization costs
  • Flexibility to scale up or down

Disadvantages of Outsourced Customer Service:

  • Reduced control over the customer experience
  • Misalignment with corporate culture and processes
  • Longer lines of communication and need for supervisory staff

The decision between in-house and outsourced customer service solutions can shape your company’s trajectory, so consider your company’s circumstances, the pros and cons of each approach, and choose the path forward that best meets the goal of becoming a … ​exceptional customer delivery experience.

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