Companies of all sizes and industries are turning to outsourcing as a way to stay competitive in the market. Contact center outsourcing is one area where outsourcing has become particularly popular, as it allows companies to focus on their core competencies while leaving the management of customer service operations to a specialized third-party provider.
In this comprehensive guide, we will explore the ins and outs of contact center outsourcing, from its current global market size to best practices for selecting the right outsourcing partner and ensuring success in your outsourcing arrangement.
What Is Contact Center Outsourcing?
Contact center outsourcing is the practice of hiring an external third-party company to manage a company's customer interactions, such as phone calls, emails, chats, or social media messages.
When it comes to contact centers, companies may choose to outsource various functions. These include inbound and outbound call centers, email support centers, live chat support centers, social media support centers, video support centers, and help desks.
For each function, agents are trained by the outsourcing provider to handle the specific needs of customers who contact them, such as customer service training for inbound call center agents, sales training for outbound call center agents, and technical training for live chat support agents offering technical support.
Working with an outsourcing partner is popular among companies that want to reduce costs and improve the quality of their customer service. Outsourcing can be done onshore, nearshore, or offshore, depending on the needs of the company. Onshore outsourcing involves hiring a third-party provider within the same country, nearshore outsourcing involves hiring a provider in a nearby country, while offshore outsourcing involves hiring a provider in a different country, often with lower labor costs.
Global Market Size for Contact Center Outsourcing
According to a report by Globe News Wire, the global market size for contact center outsourcing was valued at $79502.02 million in 2022, and the industry is expected to grow at a compound annual growth rate (CAGR) of 6.06% by 2028.
The growth is attributed to the increasing demand for multilingual customer support, the need for cost-effective customer service solutions, and the rising adoption of cloud-based contact center solutions.
The Asia Pacific region is expected to dominate the market, with countries like India and the Philippines being key outsourcing destinations due to their large, skilled workforce and favorable business environments. North America and Europe are also expected to contribute significantly to the market growth, driven by the increasing adoption of automation and artificial intelligence technologies in contact center outsourcing.
Impact of AI and Automation on Contact Center Outsourcing
The impact of AI and automation on contact center outsourcing has been significant in recent years. Automation technologies such as chatbots, robotic process automation (RPA), and natural language processing (NLP) have transformed the way customer service is delivered. These technologies enable contact centers to handle routine tasks quickly and efficiently, freeing up human agents to focus on more complex and high-value interactions.
AI-powered chatbots have become increasingly popular in handling simple customer queries, such as password resets or FAQs. RPA, on the other hand, automates repetitive back-office tasks such as data entry and record keeping, streamlining operations and reducing costs. NLP technology allows machines to understand and interpret human language, improving the accuracy and efficiency of customer interactions.
The adoption of AI and automation technologies has also led to the emergence of new outsourcing models, such as "digital labor" or "virtual workforce" outsourcing. These models leverage AI and automation technologies to create a workforce of digital agents that can handle a wide range of customer interactions, 24/7, at a lower cost compared to traditional human agents.
Overall, AI and automation have had a positive impact on contact center outsourcing, improving efficiency, reducing costs, and enhancing the customer experience. However, it's important to note that human agents still play a critical role in delivering high-quality customer service, particularly in handling complex interactions that require empathy and emotional intelligence.
What Are the Regulations and Compliance for Contact Center Outsourcing?
Just like any other industry, contact center outsourcing also has regulations and standards that are designed to protect the privacy and security of customer information. In the United States, contact centers must comply with federal regulations such as the Telephone Consumer Protection Act (TCPA), the Fair Credit Reporting Act (FCRA), and the Health Insurance Portability and Accountability Act (HIPAA).
The TCPA regulates telemarketing calls and requires contact centers to obtain prior express written consent before making automated or prerecorded calls to consumers. The FCRA governs the collection, use, and disclosure of consumer credit information and requires contact centers to comply with strict data protection and security standards. HIPAA regulates the privacy and security of patient health information and applies to contact centers that handle healthcare-related inquiries.
In addition to federal regulations, contact centers may also be subject to state-level regulations, such as the California Consumer Privacy Act (CCPA) and the New York State Department of Financial Services Cybersecurity Regulation.
To comply with these regulations, contact center outsourcing providers must implement strict data protection and security measures, such as encryption, access controls, and regular security audits. They must also train their agents on compliance requirements and monitor their compliance with policies and procedures. More regulations may apply depending on the location of the outsourcing provider.
Future of Contact Center Outsourcing
The future of contact center outsourcing looks promising, as companies continue to prioritize customer experience and seek to reduce costs by outsourcing their customer service operations. However, several factors are shaping the future of the industry. Take a look at the predicted trends of contact center outsourcing below.
Artificial Intelligence and Automation Technology
One of the key trends is the increasing use of artificial intelligence (AI) and automation technologies, which are transforming the way customer service is delivered. AI-powered chatbots and virtual assistants can handle simple queries, freeing up human agents to focus on more complex interactions. Automation technologies such as robotic process automation (RPA) and natural language processing (NLP) are also streamlining contact center operations and reducing costs.
Omnichannel Customer Service
Another trend is the growing focus on omnichannel customer service. Customers expect to interact with companies on their preferred channels, whether it's phone, email, chat, social media, or messaging apps. Outsourcing providers that can deliver seamless omnichannel experiences will be well-positioned to win business in the future.
Data Analytics
Data analytics is also becoming increasingly important in the contact center outsourcing industry. By analyzing customer data, outsourcing providers can gain insights into customer behavior and preferences, allowing them to personalize interactions and improve the customer experience.
Contact Center Outsourcing Providers
Finally, there is a growing demand for contact center outsourcing providers that can offer more than just customer service. Companies are looking for outsourcing partners that can help them with sales, marketing, and other functions that can drive growth.
How Does Contact Center Outsourcing Work?
Contact center outsourcing involves hiring a third-party service provider to manage customer service operations on behalf of a company. The outsourcing provider typically has a team of agents who are trained to handle customer queries and complaints across multiple channels, such as phone, email, chat, social media, and messaging apps.
The outsourcing process typically involves the following steps:
1. Identifying the Need
A company identifies the need to outsource its customer service operations. This may be because it wants to reduce costs, improve service quality, scale up operations, or they’re simply dealing with staffing issues.
2. Selecting an Outsourcing Provider
The company then has to evaluate different outsourcing providers based on factors such as the provider’s experience, expertise, cost, and reputation. It’s recommended that businesses take their time in choosing a contact center outsourcing partner to ensure the success of the strategy,
3. Defining the Scope of Work
Once the company successfully chooses an outsourcing provider to work with, and all the necessary contracts and agreements are settled, both parties then define the scope of work, including the channels to be used, the types of queries to be handled, and the service level agreements (SLAs) to be met.
4. Transitioning the Service
The outsourcing provider takes over the customer service operations, often by hiring and training new agents or by reassigning existing staff.
5. Managing the Service
The outsourcing provider manages the customer service operations, using tools such as customer relationship management (CRM) software and quality assurance programs to ensure that SLAs are met.
6. Reporting and Analysis
Lastly, the contact center outsourcing partner provides regular reports and analyses to the company. This includes reports containing the metrics for call volume, resolution time, customer satisfaction, and cost savings.
Best Practices for Contact Center Outsourcing
Contact center outsourcing will require time, effort, and money on your part, so you have to ensure its success on the first go. To help you with this, here are some best practices.
Define Clear Goals and Expectations
Clearly define your goals and expectations for outsourcing, and communicate them clearly to your outsourcing provider. This will ensure that everyone is on the same page and working towards the same objectives.
Choose the Right Outsourcing Partner
Select an outsourcing provider with the expertise and experience to meet your needs. Consider factors such as cost, reputation, cultural fit, and language capabilities.
Develop a Strong Partnership
Build a strong partnership with your outsourcing provider based on open communication, mutual trust, and collaboration. This will help you to work together effectively and resolve any issues that may arise.
Define Performance Metrics and SLAs
Define clear performance metrics and service level agreements (SLAs) to measure the success of your outsourcing arrangement. This will ensure that you can monitor progress and hold your outsourcing provider accountable for meeting your expectations.
Provide Adequate Training and Support
Provide your outsourcing provider with adequate training and support to ensure that they have the knowledge and skills to provide high-quality customer service on your behalf. This is an ongoing practice, so make sure to allocate time and resources to this aspect regularly.
Monitor and Evaluate Performance
Regularly monitor and evaluate the performance of your outsourcing provider. You can use tools like quality assurance programs, customer feedback, and performance reports.
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