What Are the Ideal Outsourced Phone Support Contracts for SMEs?

Published by Magellan Solutions at June 7, 2021

Before dealing with an outsourced phone support provider, you should check what kind of contract they have for your business.

Looking for an affordable and quality outsourced phone support provider is a hard task because you need to compare a lot of BPO companies. There are many third-party service providers that offer services to SMEs. And there’s no stopping on the rise of their number.

This industry is an ever-growing sector with a market value of $131 billion in the U.S. alone. It’s a proof of how many companies compete for your business. So you really need to filter which company is the right match for you.

Aside from pricing, you need to consider if they are the perfect fit for your business. That is why it is important to check their contract before signing anything.

Although many have very inexpensive prices, most of them have various terms and agreements. You have to check all the fine prints to make sure you understood the contract you’re signing.

In this article, we will check BPO companies’ different contracts and what’s suitable for SMEs. Let’s check it out:

Per Minute Package

This is one of the most popular contracts for BPO companies. Most third-party service providers that offer an inbound call center service prefer to charge their partner per minute.

This is preferable for small businesses with a small to medium volume of phone calls. The estimated charge per minute of a Philippines BPO company is $0.35 – $0.45.

So, if you have more or less 40 calls (CV) per day and your normal average handling time (AHT) is around 2 minutes then a BPO can charge (T) you for:

T = CV x AHT x $0.35 – $0.45

T = 40 x 2 x $0.35 – $0.45 = $28 – $36

Therefore, your daily rate when you outsource is between $28 – $36.

Now, this kind of contract is ideal if you know the AHT of your operation. You can determine and budget your fund if you have that information.

However, if your call center requires a long conversation with your customer then this kind of contract is not for you.

An example of companies that might not gain advantage with per minute contracts is logistics and eCommerce customer service. Their phone support requires a lot of phone time since they need to explain products and status of delivery to their consumers.

Hence, their BPO partner might charge them more.

Another thing to look out for is the call increment. Some have 10 seconds while others go as high as 30 seconds. For instance, if you have a 30 second increment then all calls that’s more than 2 minutes will turn into 2 minutes and 30 seconds.

Those extra 30 seconds will pile up and cost you more.

Per Agent Package

The per agent package is the same as a dedicated call center service. You will hire your own team to focus on your brand and attend to customers’ needs.

Besides that, you can personalize the script and overall identity of your agents. This is one of the reasons why most companies outsourcing prefer to have their own offshore in-house team.

However, a greater contract package requires a greater price to pay. One dedicated phone support agent in the Philippines has an annual salary of $7,395.

So, if you need 3 call center agents then your base rate is $22,185 or $1,850 monthly. Per minute package is still much affordable as having 40 calls with AHT of 2 minutes will only cost you $1,100 monthly.

Another thing you should worry about is the attrition rate of the BPO company. You should look for a BPO company with the lowest attrition rate if you want to have a per agent contract package.

Partnering with a third-party service provider with a high churn rate will topple down the productivity of your operation.

The ideal attrition rate for a call center company should be below 26%. You need to spend another $5,000 – $7,500 to hire and onboard new employees.

When an agent leaves your outsourced phone support, BPO companies have to look for another agent to train. Normally it will take a month or two to train them. Meaning your service will be greatly affected by any changes in a dedicated call center model.

Annual Contract

Fixed price rate is the option you have when you don’t know what contract to choose. Regardless of the call volume and productivity rate, there will be no changes on the price rate because of the contract.

Commitment is the main reason why some SMEs choose to have an annual contract. They want to secure a year of phone support to keep this off their mind. They rather focus on other business matters than worrying about the monthly rate.

Expertise of the BPO company is important when signing for a long term deal. You don’t want your company to be an “experimental” business for a start-up call center firm. Checking the tenureship of their employees won’t hurt their credibility.

An average call center agent is roughly 30 years old. Meanwhile, employees with an average age of 20 – 24 years have an average 1.1 years experience in call centers. Furthermore, agents who are 25 – 34 years old have an average tenure of 2.7 years.

If you decided to sign for this kind of deal then you should know a way out just in case. Your contract should have an opt-out clause included to protect your company from any losses.

There might be some instances that your call center operations can no longer support your business anymore. Therefore, you need to cut it loose before it affects your business further.

Another thing that you should consider is the flexibility of the contract. Forget about the opt-out clause if you don’t have it.

What’s critical is your contractor’s ability to change something in the agreement if deemed necessary. Like the number of agents you need for the operation.

Monthly Contract

Same as the aforementioned business model, a monthly contract also gives you a peace of mind in terms of fixed pricing. The good thing about this is you always have the option to continue or stop the call center operation every month.

This is perfect if you’re still unsure whether you want to invest in a full time phone support service.

Monthly contract is also preferable for companies that have peak seasons. For example, an eCommerce company could have 100+ calls a day during Christmas.

Thus, it might not be efficient to deal with a phone support provider on a per minute rate. This could cost you a couple of thousands of dollars due to erratic call volume during these seasons if you have per minute rate..

The rate starts at $100 per month. The final cost will depend on the number of agents and software that you will use on the operation.

They will also charge you for the agents training during the campaign. Typically, the cost of the training is 20% to 30% of the hourly rate during the live operation.

Choosing this kind of contract has its downside too. BPO companies could change the terms of agreement in the contract which might not favor your business.

On top of that, there’s a constant hassle in reviewing and signing the paper works every month. You need to renegotiate what’s inside the contract to further improve your operation.

Performance-Based Contract

In this kind of contract, there is no definite computation for the BPO rate. Everything will depend on the capability of the agent that you will hire.

You can set a based price point and compute the final rate depending on their productivity. Of course you need to set metrics to meet whenever you have this kind of agreement.

When going for this kind of business model, you should consider the return of investment (ROI) for your company. You’re risking some parts of your business by highlighting your target key performance indicator.

For example in cold calling telemarketing, the basis of your performance-based contract is your agent’s total number of outgoing calls.

Let’s say you have a quota of 80 calls per day. So, there’s a possibility that your cold calling agents will perform incoming calls without really pursuing the prospect clients. It is because all your concern is the number of calls they make per day.

However, if you want to monitor the performance of the quality then try to set the basis of rate on their closed sales. Your agents can have a commission-based salary according to their daily revenue.

How to Compute an Agent’s Salary based on Daily Revenue?

When getting the salary of the agent (AS) based on daily revenue, you need their calls per day (CC), average closure rate (CR%), and the revenue per sales (R). Then multiply this to their share per closed sales (S%)

For this example, if your agent can call 35 customers per day with a closure rate of 60%. Moreover, the revenue per sales is $500 and their share per close sales is 20%.

So,

AS = CC x CR% x R x S%

AS = 35 x 60% x $100 x 20% = $420

It means an agent with this productivity can get a $420 daily salary. This rate can go higher the better the closure rate is.

The good thing about this kind of contract is that you can encourage your agents to perform better. Better productivity means faster growth for your business.

However, this type of business model is not advisable in the long run. You might end up paying more than what you should’ve if you have a large team to operate in the future.

Prepaid Call Center Package

This is the least popular contract here on this list. Technically, there is no “contract” involved when you choose to get a prepaid call center package. You will just buy a definite amount of time to a BPO company that you can use anytime you want.

Some companies we found that offer this kind of package have a starting price of almost $400 for a 300 minute phone time. This kind of business model is applicable for companies doing a one-time marketing campaign or the like of it.

You can spend the 300 minute calling prospects to market your service. There’s no need to worry about extra charges like call increment or performance compensation when you have this kind of contract.

Of course, this is not suitable if you want to establish a long-term call center operation. You will need to monitor the remaining number of minutes you have to ensure the continuity of your service. It’s a hassle and counterintuitive process at the same time.

Must-have Terms in your Customer Relations Outsourcing Contract

Aside from the type of rate, here are some of the terms that your outsourcing provider must include in the contract:

Call Center Training
Dedicated Workstation for your Operation
Cloud-based Information Sharing
Regular Quality Assurance
Continuous Software Upgrade
Fortified Data Security
Non-disclosure Agreement

You need to check every detail of the contract as some call center companies tend to charge their business partner extra for training and software upgrades. Some don’t have cloud-based information sharing therefore it might be hard to forward any data.

Besides that, you need to check the capability of the company to safeguard your sensitive information. Look for a call center partner with a certification from trusted standardization bodies like ISO and HIPAA.

10 Questions to Answer Before Signing a Contract for Outsourced Customer Support Services

When you have the contract in your hand, make sure to read every single detail of it to avoid any misunderstanding. Before signing it, make sure that you properly answer these questions in your mind:

What services am I outsourcing?
What am I risking by outsourcing my business? Is it worth it?
When do I need this outsourced call center service? Days? Weeks? Months?
What are processes and procedures before the actual live operation?
What company am I using? Are they trustworthy?
Who’s more in charge with the outsourced agents?
What are my key performance indicators? Will I achieve it in the given time frame?
What are my back-up plans if outsourcing doesn’t work?
Does this BPO company want to be my partner or a provider?
What areas of my business will improve after outsourcing?

Once you answer these questions and you’re satisfied with your answers, then that’s the time that you can sign the contract.

Where to Find Customer Support Outsourcing Companies for SMEs?

If you are a small or medium business looking for an outsourced phone support service then go to Magellan Solutions. We have more than 17 years of experience providing service for SMEs from different industries.

Here are some of the phone support services we’re offering:

We are an ISO certified BPO company that strictly follows a high standard of service from recruitment to on-boarding process. Besides that, we guarantee a fortified protection for your data. Our tech support team has different security protocols to prevent online breaching.

Our Business Developers can help you in setting up your key performance indicators (KPI). KPIs will guide you and monitor the progress of your business with us.

We also offer guaranteed flexible pricing options based on several factors like service and number of agents you need. Magellan Solutions understands that start-up businesses have limited funds in outsourcing services.