11 pros and cons of outsourcing customer service

As your customer base grows, an inevitable dilemma arises: Do you continue handling your customer service in-house, or should you outsource it to an external provider?

There are different pros and cons of outsourcing customer service, as with all business decisions. The key is knowing the ins and outs of the outsourcing process, so you can make the best choice for your brand. You'll also see this called customer support outsourcing or contact center outsourcing. Same decision, different label.

What is customer service outsourcing?

Customer service outsourcing is the process of leveraging a third-party provider to support your customer service needs, whether that’s managing your contact center, answering customer emails, or tackling general support requests.

Types of customer service outsourcing

Not all outsourcing looks the same, and the type you pick changes the cost and the amount of oversight you’ll need to keep quality high.

The biggest split is location. Onshore or nearshore providers cost more but keep time zones and language closer to your customer base. Offshore providers usually cost less and work well for high-volume, lower-complexity questions. The second split is team structure. A dedicated team works only on your account and starts to feel like an extension of your own staff. A shared team splits its time across several clients, which costs less but ramps up slower on your specific product.

Most brands land somewhere in between—a dedicated team for peak season or after-hours coverage, with complex or sensitive conversations kept in-house.

Why is customer service outsourced?

Struggling to do more with less? Outsourcing customer service is one of the best ways for brands to save money, increase their quality of service, and take pressure off internal teams.

Some of the benefits of outsourcing customer service include:

• Unlocking massive savings. When you add up the cost of hiring, benefits, office space, and equipment, maintaining an in-house customer service team can be pricey.

• Plugging gaps in your customer service operations if your team is currently feeling swamped. With this extra coverage, internal team members’ sick and PTO days will have less impact on wait times, while helping decrease customer support turnover from burnout.

• Offering customers a better experience. For example, a 24/7 helpline operated by an external provider means customers can reach you whenever an issue arises, rather than waiting until the next day.

• Unlocking access to more global talent, especially if you’re seeking people with industry-specific knowledge or multilingual skills.

• Enjoying the flexibility in staffing levels, perfect for businesses that experience seasonal demand and surges around the holidays.

• Taking hiring and training off your plate. Recruiting, onboarding, and ramping new support staff eats weeks of a manager’s time. A provider already has that hiring pipeline built.

The result of these benefits? A better customer experience that leads to more loyalty, word-of-mouth recommendations, and repeat business.

What are the cons of outsourcing customer service?

While outsourcing your customer service to a third-party provider has massive upsides, there are a few cons to also keep in mind:

• For certain businesses, outsourcing may not yield significant time and cost savings. While external customer support agents can help take the load off when it comes to routine support, they’ll still need to defer complex issues to your in-house team. Therefore, if a majority of customers are reaching out for help with unique requests, an outsourced customer service provider may have a smaller impact.

• Outsourcing to a BPO can be expensive when you require customer service providers with expertise in niche industries or technical knowledge.

• Onboarding a provider can be a time-consuming process, especially if you have a large company, complicated products, or a unique culture. Yet, if done poorly, the lack of required knowledge to provide customers with the right support can lead to more frustration.

• Keeping quality and brand voice consistent takes real effort. A provider is managing your account alongside several others, so tone, empathy, and judgment calls can drift from how your own team would handle the same conversation unless someone is actively monitoring for it.

• Sharing customer data with a third party adds risk. Payment details, order history, and support transcripts now live on someone else’s systems, so your compliance and security review has to cover the provider’s stack too.

How much does it cost to outsource customer service?

Pricing varies with volume, location, and how specialized the work is, but a few ballpark numbers help with budgeting. Basic phone or email support through a BPO tends to run $1 to $2 per minute, or a flat $50 to $400+ a month for lower-volume accounts. A dedicated agent who works only on your account usually costs $30 to $65 an hour, which starts to look a lot like the cost of an in-house hire once you add benefits and management time.

Those figures are just labor. Add onboarding, quality monitoring, and the tools needed to keep an outsourced team working from the same customer history as your own staff, and the cheaper option isn’t always cheaper once it’s all priced in.

In-house vs. outsourced customer service

A quick side-by-side, before you decide:

How to outsource customer service the right way

To ensure the process of outsourcing customer service goes smoothly:

• Research different providers. Get pricing and a sample of past client results, not a sales pitch, and ask specifically how they handle escalations that fall outside their script.

• Create brand guidelines. Write down your tone, the phrases you always use and the ones you never do, and a handful of real conversation examples so a new provider team can sound like you on day one.

• Set clear KPIs. Response time and resolution rate are the obvious ones, but CSAT and first-contact resolution say more about whether customers are actually satisfied rather than just handled quickly.

• Use a comprehensive customer support platform to keep internal and external teams aligned, so both sides work from the same customer history instead of asking the customer to repeat themselves.

• Keep monitoring quality after launch. The first few weeks tell you the most. Sit in on calls or read transcripts, and revisit your KPIs at 30 and 90 days instead of assuming the initial training stuck.

Should you outsource customer service?

Outsourcing is an excellent alternative if you don’t have the budget, time, or staff to properly tackle customer service in-house. However, remember that your provider should help reduce the workload of your internal team, not replace it completely.

Whether you decide to outsource customer service or stick with your in-house team, Gladly’s comprehensive customer support platform can empower agents to become Customer Service Heroes. Check out what Gladly can do for your brand.