When most people think about outsourcing customer service, sales or admin, they think about huge contact centres supporting the needs of equally huge businesses. It might surprise you to learn that smaller businesses, from SMEs to sole traders, are also taking advantage of the benefits of outsourcing, not only to support their services, but also to help their businesses thrive.
First, for the uninitiated, here is a quick introduction to outsourcing. At its heart, outsourcing gives businesses more flexibility over the way they hire their people. By using a third party to take care of a range of business functions, such as your customer service or sales support, you can ensure that you have a team in place who will support the changing needs of your business, without worrying about the challenges of recruitment, payroll and, importantly, surplus resources during quieter periods.
Employers have been benefitting from freelance workers for some time, but this involves sifting through a huge pool of potential talent which can be time-consuming. Outsourcing is far simpler in that there are ready-made companies who specialise in providing trained staff, ready to be incorporated into your company.
For start-ups in particular, the cost of staffing can be an intimidating burden to take on. Luckily, outsourcing has supplied the perfect solution; you only spend on staff when you know there will be a return on your investment.
But what’s the real saving? In this article, we provide you with a breakdown comparing the cost per minute of a full-time and an outsourced employee, whilst also considering a number of other benefits that could see you profiting from this fantastic fix.
So that we can make a fair comparison of skills, we will consider that, according to Glass Door, the average customer service representative will earn £20,000 per year.
However, according to sba.gov, the overall cost of a full-time employee actually equates to 1.4 times their salary. This is a crucial statistic for all aspiring employers to be aware of. This additional cost is made up of the following expenses:
- Employers have to pay a national insurance contribution on behalf of each full-time employee, which equates to 13.8% on earnings over £732.00.
- Employers have to contribute towards their employees’ pension schemes, which employees are automatically enrolled onto when their employment begins. This is usually a 4.5% contribution.
- Many employers also offer other employee benefits in order to attract the best talent. These can be perks such as health insurance, dental care, and childcare schemes. Depending on how much you’d like to offer, these can be a significant expense.
For ease, we’ll base a working week on an 8 hour day and a 5 day week, which comes to 40 hours per week or 2,040 hours per year.
According to time management software provider RescueTime’s analysis of more than 225 million hours of work, the average employee spends just 12.5 hours per week working productively. This means that you’re paying for more than 1,400 hours every year when an average employee is not working as effectively as they could be.
On this basis (and including holidays), an average customer service representative’s costs break down like this:
|Total monthly hours||160|
|Holiday entitlement hours||18|
|Total ‘working’ hours||32|
|Monthly salary, tax and benefits||£2,333.00|
|Cost per hour||£72.91|
|Cost per minute||£1.22|
And that’s not all, additional costs for heating, lighting, hardware, software management and training all need to be considered in the actual cost of an employee.
So, how does this compare to outsourcing?
At Cymphony, we offer our customers a range of ways for business to stay connected to their customers, and with call cost starting at £0.80 per minute, you could be saving as much as 35% by outsourcing.
Further Differences Between a FTE and an Outsourced Employee…
You wouldn’t be alone in thinking that a full time employee offers far more expertise than an outsourced worker. However, this is a common misconception that could be costing you a lot of money. Cymphony, for example, handle hundreds of thousands of calls every year from thousands of customers, meaning we’re set up to handle any situation. We spend hundreds of hours on training every month to make sure we’re able to give our customers the expertise of an internal employee, with the price tag of an outsourced one.
When you employ a full-time member of staff, you have to adhere, by law, to a number of working regulations. For example, there is a maximum number of hours that an employee can work for per day, including a certain number of breaks, and they will usually need to follow a particular rota or schedule. While these regulations are fair and important, they can be limiting for employers.
In comparison, the vast majority of outsourced personnel work on varied shift patterns and often remotely, making them extremely flexible in terms of which hours they are able to work. Furthermore, when you outsource to a specialist company, you benefit from having access to multiple members of staff which means 24/7 access to support. Every business owner, especially those who are just starting out, understands the lack of predictably when it comes to resource requirements, so this is a huge plus.
Administration Stress and Cost
Administration. The term alone can be a huge stress trigger for business owners. It’s a large, multi-faceted, time-consuming yet necessary aspect of business. This is particularly the case when it comes to hiring full-time employees; your Human Resources department will be one of the busiest in your team. Their responsibilities include but are not limited to payroll, recruitment, maintaining employee records, employee wellbeing and time keeping.
So what would happen if you were to outsource employees instead? A significant saving in time as well as money. The companies that provide outsourced services are responsible for the employees that you benefit from. All HR services are handled by them instead of you, which is another major benefit of outsourcing. You could save on the cost of an entire department!
The costs associated with training staff are considerable and the process is time-consuming to boot. When you outsource, the provider has already carried out their own training scheme in order to supply you with capable, ready-to-go personnel. They will need to be introduced to the specific requirements of their role with your company, but in comparison to a full-time employee, this is a quick and easy process.
Let’s say you already have a team of full-time employees but you’re looking to expand your business in order to meet new demand. Outsourcing allows you to re-purpose existing members of staff who have a strong knowledge of your company, as their roles can be filled by a third party provider. This is far more preferable than training someone brand new, who would need to work for the company for some time in order to learn the ropes, before being able to fill an expert role.
Outsourcing creates opportunities to focus on more profitable and valuable areas of the business, by freeing up time and manpower. You’ll soon see your business begin to flourish thanks to the additional investment in its growth.
It’s not only you who will benefit from the advantages of outsourcing; it is your customers too. Rather than struggling to cope during busy periods with a small team of full-time employees, outsourcing allows you to meet demand more effectively thanks to its flexibility. Therefore, fewer customers will be left feeling frustrated by, for example, missed calls, ineffective and rushed responses, or a lack of communication channels. This, in turn, will improve your customer service reputation.
We all know that your customer service department is the interface through which leads arrive, so outsourcing to a higher number of skilled call handlers could also improve business growth. Compare this to the potential response of a smaller number of full-time members of staff, who would not only feel overwhelmed by busy periods, but who would also be very difficult to replace should they not meet the standards you wish to achieve.
We hope that we have managed to shed some light on the many benefits of outsourcing over hiring full time employees, and enabled you to make some all-important savings on time and stress, as well as money. It’s a well known fact that outsourcing is transforming the business world; allowing companies to become more profitable, so don’t miss out on this exciting development yourself!