Call Center Cost Breakdown: What Are You Paying For?

Published by Magellan Solutions at May 7, 2020

Call Center Cost Breakdown: What Are You Spending For?

Call center services are essential for most organizations. It helps companies to cut budgets for manpower. However, before partnering with a BPO company there are a lot of factors to consider.

One of the important things to check before landing on a decision is the cost of call center services. Between in-house and outsourcing, it is evident that outsourcing is more affordable. You also have to consider everything you need to know about call center outsourcing.

The first step for a business in need of a call center is to decide whether to have an in-house team or to outsource it. And an important factor to check before landing on a decision is the call center cost breakdown.

Why Pay for a Call Center Service?

As stated, call centers are an important part of every firm. 61% of the customers nowadays still prefer a phone answering service with a call center agent even if there are other channels for call center support. Next would be the delayed response emails with 60% and live chat support with 57%.

But, many customers like an online call if a traditional phone call is not available. This proves that customers still prefer to interact through calls. Despite companies having omnichannel call center services.

With that in mind, customers prefer talking to a live agent. They feel secure having a real person assisting their concerns.

Call Center Cost Breakdown Inclusion

The computation for the cost of call center services differs on companies. Here are some factors that affect the call center cost structure.

Number of Seats
Expertise of Agents
Current Labor Market Rate
Length of Contract
Call Volume

As mentioned, these factors are not present in every company. Some companies may only consider the number of seats. Others may combine the call volume and current labor market for the computation.

Let us take a closer look at each factor:

Number of Seats

This is one of the most vital factors in the cost of a call center. By determining the number of seats, you can also identify how many agents to work with.

There are some instances where the company has a local counterpart. In that case, they only need to lease a space and seats for their agents. These leased seats come with workstations, computers, and the internet.

There are other BPO companies offering seat leases that can provide full IT support for the team. These include dialers, VOIP, and call center platforms.

Expertise of Agents

Like in any other field, the more experienced and skilled the person is, the higher the rate will be. But regardless if the agent is new or has been in the field for years, they will all undergo thorough training.

Different countries have different outsourcing expertise. In India, their best service is about tech support. They have the best agents to support your business in the IT department.

But, the Philippines is not far behind in the tech support service. Aside from that, they have a world-class customer service industry. This is the reason why the Philippines is the call center capital of the world.

Current Labor Market Rate

The labor rate changes from time to time as there are movements in supply and demand. If there is a high demand for agents and the supply is low, expect higher rates. If the supply is high and the demand is low, the rates will be lower as well.

Outsourcing to countries where call centers are in demand will be a smart move for your business. The competition is tight for all BPO companies. Thus, they will make every move to lower the price of their service.

In the Philippines, BPO is the most in-demand job. They consist of 14% of the total Filipino workforce. The Philippine call center industry will continue to grow in the future. In 2022, there will be an additional 700,000 Filipino call center agents.

Length of Contract

The length of the contract also affects the price. Pricing will depend on the negotiation between the client and the BPO company. However, contract negotiations can be a problem.

Most of the time, clients want the lowest possible price with the most quality of the service. But, other sides want to gain as much profit as possible with minimal possible effort. Therefore, each party should explicitly state their expectations.

There are a lot of companies that offer a lower cost for companies that want to have longer contracts. These work for both big corporations and SMEs. Longer contracts are beneficial if you are planning to expand your business.

Call Volume

The volume of calls needed by the company will also alter the price of the service. This is because it will affect the number of agents needed for the operation.

The average handling time (AHT) is also a factor as well as the add-ons and many more. These will depend on the demand of the client. Furthermore, the price will change if they want to add a specific process to their service.

With this in mind, there are companies who don’t know their target AHT. There are several BPO companies in the Philippines that can help you set your AHT.

Call Center Breakdown Per Campaign

Aside from the inclusions, the cost of call center services varies per campaign. There is no definite call center cost structure. However, let us take a look at the common breakdown of costs per contact center campaign.

Call Center Cost Breakdown for Inbound Services

The call center outsourcing costs consist of a lot of important factors. Let us check the differences between shared and dedicated inbound call center services.

Shared vs Dedicated Call Center

There are different business models for each company. Knowing what model suits your operation can help with business development.

For bigger companies that expect a large call volume then you must take a dedicated call center. Agents in a dedicated call center set-up have training solely for your services. If you want your agents to focus on your product and services then a dedicated call center is perfect for you.

On the other hand, shared agents are perfect for mid-sized businesses. A shared call center means agents can answer calls for multiple clients. It is perfect for SMEs that have low to medium call volumes.

Rates and Type of Payment

Both models have different ways of computing its rate for the call center service. But both models are basing their computation on the duration of the service.

In shared service, the clients only pay for the time used on a per-minute basis. The normal cost for this is between $0.35-$0.45 per minute at low-cost international agencies. On the other hand, the rate for the USA and Canada is $0.75-$0.90.

The price for a dedicated call center depends on the number of hours. The rates in offshore companies are around $8-$15. Whereas, the USA and Canada rates are around $22-$28.

Call Center Cost Breakdown for Outbound Services

The call center outsourcing costs are different from outbound service. The computation depends on the business type. Additionally, there are different difficulties for each outbound campaign.

Let us take a look at some factors that affect outbound call center cost.

Rates per Businesses Preference

Businesses have different preferences for rates based on their business model. Hourly rate for outbound pricing models is the most common. This is applicable for lead generation and appointment setting.

The second type of outbound rate. is pay-per-performance. This is not the most ideal for many outbound call centers. The pay-per-performance rate forced agents to reach quota. Thus sacrificing the quality of service.

The third type is the combination of hourly and pay-per-performance rates. Clients and BPO companies are using this type to reach a quota while keeping the quality of the service.

Computation of Rates

Aside from the size of the campaign and contract, the hourly rate differs with the location. In India and the Philippines, the rates range from $6-$10 per hour. Meanwhile, Eastern Europe and Latin America are $9-$14 per hour. Furthermore, Western countries charge $22-$32.

Meanwhile, the pay-per-performance type of pricing structure depends on the situation. Here, the client should provide the outsourced call center at least a 10% to 20% premium for the extra risk.

The third type varies depending on the contract negotiation. Most of the time, the hourly rate is the average salary for the provider. At the same time, the pay-per-performance serves as the incentives. Incentives are for dedicated agents who can maintain the quality of their service.

Magellan-Solutions Can Help You Calculating Your Call Center Costs

Calculating your call center costs can be tricky. This is evident especially for start-up businesses. However, Magellan-Solutions is here to assist you with your outsourcing needs.

We help SMEs to reach their target in both outbound and inbound call centers. Our services include:

Magellan-Solutions have Implementation Managers that can help get your key performance indicator (KPI). They can also assist you in expanding your business.