Some of the most powerful international conglomerates have weighed in on an issue that impacts businesses (and law firms) of all sizes – call center outsourcing. Time Warner, Inc., Hershey Foods, and The Wall Street Journal have all reportedly slashed costs by outsourcing their call center workforce. Other big names, including Dell, Capital One, and JPMorgan Chase have shut down their call center outsourcing operations, claiming that the savings did not outweigh the benefits. So, what is the takeaway for law firms?
There has been a trend recently in the legal field toward utilizing “virtual assistants” (or VAs). A VA is a business that provides a service (such as marketing or call center outsourcing) to firms that want to reduce the cost associated with hiring in-house staff.
Cost Considerations: Show Me the Money
So, what are the financial ramifications of outsourcing vs. having an in-house employee fielding calls? In house employees are expensive, because they generally demand high wages or salary. According to the U.S. Department of Labor, in house legal support generally make between $25,000 and $73,000 a year. And this is a floor, not a ceiling. Additional costs come into play, such as recruitment costs and access to hiring websites. You may also incur costs associated with providing benefits, Workers’ Compensation insurance, 401k plans, paid time off, and office supplies and equipment. You may also face costs associated with unemployment, severance allowances, and workers compensation payouts. Training is another hidden cost.
If you outsource your call center, it is undisputed that your costs are going to be lower. They act as independent contractors or employees of the VA agency. Benefits, salary, training, workers compensation costs, office supplies—all these costs are eliminated. Moreover, outsourced employees only pay for the work they actually do, not for the unproductive time they spend sitting at a desk.
Money Isn’t Everything
There are other pros and cons associated with outsourcing your call center. First, let’s look at some of the pros. Not only do staffing issues such as hiring, training, scheduling, and managing cost money, they are also often a source of headaches that are eliminated by outsourcing. Outsourcing often allows you to utilize services 24/7 at a fraction of the cost you would be paying an employee to work 8 hours a day. One option many firms employ is to only outsource to handle overflow during busy times and off hours.
There are also many disadvantages, chief among them, decreased customer satisfaction. A recent study conducted by MIT Sloan School of Management showed that outsourcing results in a significant decrease in service quality. This seems to be what led Dell, Capital One and JPMorgan Chase to abandon outsourcing. Often the problem is due to linguistic and cultural barriers due to reliance on overseas agents in cheap labor economies. Even if you are outsourcing locally, the people who pick up the phones will lack details of company culture, practice and values. Their loyalty is farther removed than you would find with an in-house agent. It is also worth considering security and privacy issues. Client confidentiality is key, and you don’t have control over who your VAs employ, and what they will do with information provided to them.
Weighing the pros and cons of outsourcing, there are benefits to both options. The key is picking the right agency. By selecting a firm with a quality reputation (ask around), and asking the right questions before buying in, you can retain a degree of control over your call center services. Remember, your call center represents you. Your clients deserve the best in representation–so does your firm.