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Call Center Outsourcing Risks and How to Mitigate Them

The decision whether to outsource all or part of your call center has far-reaching consequences for your company. It is one of the most impactful calls a leader can make.

Create the right partnership and the business will reap the rewards of increased efficiency, lower operating costs and quality customer service. Your company will be able to focus on core competencies and innovation, giving it a competitive edge in the market.

An uninformed or hasty decision, on the other hand, may damage your brand and put your greatest asset—your customers—at risk.

Outsourcing does not necessarily mean offshoring—it means using a third party to handle call center functions irrespective of location. Outsourcing your call center within the USA does mitigate some risks, but not all. Low unemployment in the USA is impacting call centers and poses a major challenge in the years ahead as long as our economy keeps improving.

When it comes to customer-facing functions, there are often perceived risks associated with outsourcing nearshore and offshore in particular. These can often be traced back to an “allergic reaction” to nearshore and offshore call centers, caused by a knee-jerk reaction rooted in outdated stereotypes or media hype.

Perceptions aside, outsourcing does pose some real risks for companies that fail to thoroughly assess and select a vendor that matches their needs. The following are a few common risks associated with outsourcing.

Risks of Outsourcing


Loss of Control

In today’s customers-first world, superior customer service is often intertwined with the brand image. It’s no surprise that company leaders are reluctant to hand over the reins for the call center—often a company’s only human touchpoint—to a third party.

After all, how can the outsourcer’s agents have the same commitment to customers as internal staff who share the same workplace culture, mission and goals? Service leaders who are far removed from the frontline staff may feel that they lack the ability to engage agents and effectively communicate information about products and services, new releases, promotions and policy changes.

Compromised Service Quality

Compromised service quality is often a side effect of choosing a vendor solely based on price. Outsourcers that focus on delivering the lowest price are going to cut corners—that might mean hiring less-qualified employees, skimping on training time or employing fewer supervisors for monitoring and coaching.

Data Breaches

These days, data breaches are always in the news. It’s no wonder that cybersecurity and protecting customer data are at the top of every executive’s mind. Sharing sensitive information with outsourcers that lack robust security systems and protocols will most certainly put customer data at risk. The cost to the business will be high in both reputation and money.

Violating Regulatory Compliance

Whether it’s the Payment Card Industry Data Security Standard (PCI DSS), Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Telephone Consumer Protection Act of 1991 (TCPA) or an industry-specific regulation, using an outsourced call center that violates compliance standards can result in hefty fines for your business.

And the penalties are growing. Earlier this year, the FTC announced an increase in the maximum civil fine for violations of the Telemarketing Sales Rule (TSR) from $40,654 to $41,484, along with several other fines that the FTC enforces. The increase is part of a predetermined formula that will adjust fines upward for inflation every year.

Communication Barriers

Global call centers without the right agent quality can result in heavy accents and a cultural disconnect with American consumers. Communication barriers exist within U.S. outsourced call centers too if the agents haven’t been properly trained and vetted. The challenge of resolving a customer service issue when there is a language barrier or even a poorly trained agent can lead to longer handle times and lower performance across customer-centric metrics like first-call resolution (FCR), customer satisfaction (CSAT), customer effort score (CES) and Net Promoter Score (NPS).

Geopolitical Risks

Companies that outsource to offshore locations can potentially face business disruptions arising from political unrest and instability in the host country. Government rules and policies also can change suddenly impeding the vendor’s ability to run the operation effectively and efficiently.

Weather Anomalies

Inclement weather in the USA and global call centers heavily increases outsourcing risk. If employees can’t make it to work, calls go unanswered—especially if the outsourced vendor’s Business Continuity Plan (BCP) is weak.

Labor Market Issues

Unemployment in the USA is hovering at 4% nationwide and lower in many metropolitan areas. This makes it challenging to recruit and staff call centers—both internal and outsourced. However, on average, outsourced call centers pay lower wages compared to internal call centers so the recruiting and staffing competition is magnified.

Tips for Mitigating Outsourcing Risk

As with any business partnership, outsourcing your call center is not risk-free. However, the majority of bad experiences with vendors can usually be linked to poor planning, unclear expectations and lack of due diligence. The following are a few considerations that will help to minimize risks and put your business and potential partners on the right path.

Clearly Define Your Objectives

Before beginning your search for an outsourcing provider, set the parameters of the future relationship by clearly defining your objectives, requirements and expectations.

  • Is your main goal to cut costs, add channels, extend hours?
  • Decide what type of partnership will deliver your business goals; for instance, do you want a vendor that will manage the core call center function, or one that will help your company to drive innovation and business growth?
  • Put together an evaluation team that includes key stakeholders from different functions across the company.
  • It can be beneficial to include an individual—either internal or external—who has call center outsourcing expertise and can guide the process. Over 50% of companies participating in Deloitte’s 2016 Global Outsourcing Survey reported that third-party advisors added value throughout strategic assessment, business case development, RFP/vendor selection, and negotiation and contracting.

Develop a Robust Selection Process

Once the list of potential outsourcing partners is narrowed down, each vendor typically is sent a request for proposal (RFP) to evaluate how they will respond to your company’s unique needs. This process requires a significant investment of time and resources on the client’s part, so some companies elect to forgo the pre-qualification step and send a blind RFP. This carries its own set of risks in that it may put off highly qualified vendors and the company may lose out on a potential partner that closely matches their requirements.

Be Thorough in Your Due Diligence

Given the confidential nature of the information the call center will be handling, compliance and data security checks must be included in your due diligence.

  • Ask potential partners how they will protect customer data, where it will be stored, how it can be accessed and how systems will be maintained.
  • Perform a risk assessment to ensure that the vendor provides appropriate security controls and practices, and is compliant with industry standards and certifications.
  • In addition, make sure that frontline training and monitoring processes are in place and that agents consistently adhere to compliance procedures.
  • For geopolitical, weather and labor market concerns, include what-if scenario planning to assess the potential impact on your customer base should an event occur that disrupts normal business operations.
  • Find out how the vendor will monitor and manage your risk exposure as well as their procedures for ensuring business continuity.

Transparent Communication Benefits Both Partners

Open and transparent communication is vital to ensure that potential partners understand objectives, events that impact call volume, policies, procedures, desired skill sets and agent training needs. The communication lines need to be open both ways during the selection process and after the contract is signed. Proactively sharing information about changes to products, services and operating procedures will ensure consistency in service delivery and success in the partnership.

Don’t Base Your Decision Solely on Price

Cost savings is still the top reason why companies decide to outsource, but that should not be the main reason for selecting a vendor. Going with the lowest priced option that is way below fair market pricing, can sometimes lead to service quality issues, as previously mentioned, and will often end up costing more in longer handle times, unhappy customers and lost business.

Getting Past Language and Cultural Challenges

If you’re outsourcing your voice communications and feel that accents and cultural differences in international locations will have a negative impact on your customer base, limit your selection process to onshore and nearshore vendors that demonstrate best-in-class training and development for English language communication and aptitude.

The Philippines is the largest outsourcing marketing in the world for English voice in the world. However, many CALA (Caribbean and Latin America) markets are even better with little to no discerning accent. Although outsourcing costs in CALA are higher than the Philippines, the consensus is that most clients are willing to pay for closer proximity and higher quality agents. This generally translates into a better customer experience for companies seeking to reduce costs without sacrificing quality. Furthermore, nearshore providers’ proximity to the U.S. contributes to a better understanding of American culture and lingo.

Look for vendors that provide training in English language proficiency, accent neutralization, culture and even English language academies.

Don’t Expect an Apples-to-Apples Comparison

Call center outsourcing has expanded considerably over the past couple of decades. Outsourcing vendors appear to be ubiquitous, leading many to view them almost as a commodity. In fact, the types and specialties are so widespread, it would be impossible to make an apples-to-apples comparison.

Navigating a crowded field of players can be overwhelming, so companies often default to picking a large vendor based on name recognition. Taking a small operation that has specialized needs to a large vendor can result in a mismatched partnership and unmet expectations down the line. We help clients to “right-size” by matching their specific wants, needs,  priorities and objectives with a vendor partner that can provide the perfect  niche expertise and account management.

Create a True Partnership

With so much riding on the vendor selection process, devoting the time and resources upfront will increase your chances of finding an outsourcing provider that is a perfect match for your vision and objectives. 

Focus on forging a true partnership versus just a contractual agreement. With a contractual agreement, a vendor will meet agreed-upon performance standards, but a true partner has skin in the game and will endeavor to mitigate the risks to your business. In a true partnership, the vendor will work with you to streamline processes, improve quality, identify opportunities to enhance products and services, and will go above and beyond to transform your operation into a best-in-class service provider.

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As a call center outsourcing thought leader and president of CustomerServ, Nick Jiwa is dedicated to helping companies find, select and retain the right call center outsourcing partners. Nick’s expertise and contribution to the call center industry started in 1986 – as a call center agent when the industry was still in its infancy. An avid 80s music buff, proud father and soccer fanatic, Nick is passionate about “anything call center”, giving back to the community, mentoring and helping others win!



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