5 Mistakes to Avoid with a Low-Cost Outsourced Provider

Every business wants to secure a low price when it comes to securing services and goods.  However, a low price is sometimes too good to be true – especially when you’re negotiating deals for complex products like business process outsourcing (BPO) services. 

Hourly agent prices can vary in this industry by as much as 200%.  What looks like a deal might have hidden fees and other components that can significantly drive up your expenses later on.

Make sure you pick the right outsourcing partner by watching out for these 5 pitfalls

Ensure the Agents are Qualified to Serve Your Customers

A super low price means that your BPO will have to hire low salaried agents.  These might not be the best reps. They may lack soft skills, experience and qualifications needed to service your product – especially if your product or service requires multiple steps, critical thinking and empathy to resolve customer issues.

Low skills will lead to longer calls, as it will take longer for the agent to resolve an issue.  Longer calls drive up response times – and will increase the cost per inquiry. 

Agents working at reduced salaries tend to have higher attrition levels (they leave as soon as they have the skills needed for higher-paying positions).  Attrition leads to a cycle of constant turn-over and training, which drives up expenses and can reduce CSAT scores. 

Inefficiencies compound as underpaid agents have higher absenteeism rates.  They don’t show up on time – or call out sick.   The low-cost BPO may not have additional staff ready to fulfill lost shift times as they have to operate with minimum staff to reduce their cost.  Again, this will have a direct impact on your SLAs from Quality, CSAT and Productivity measures as your entire operation will be less efficient.

Determine How Much of Your Time is Needed to Manage the Low-Cost Provider

It’s easy to overlook the training expense question.  A low-cost provider may include the first wave of training- but you need to be concerned about what happens when you have product updates – or when new employees join the team.  Will this cost you more money each time you need to train?  Will you have to do the training, or will your BPO provider have enough trained and available staff in their Training department to keep training your project’s needs on an ongoing basis? 

Premium BPOs give you a Quality Analyst (QA) for your team without charging you for it.  That’s someone who reviews calls, chats and emails to make sure it meets your brand and quality guidelines.  They work with your agents to ensure they are doing everything right and on-brand.  Low-cost BPOs don’t do this, or if they do, then they’ll charge you a fee on top of your staffing quote. So you may need to review interactions and flag areas for improvement yourself.

The same is true for additional team leaders or management required to manage your project team.  A low-cost BPO may expect you to develop training, and you might be responsible for managing the actual team of agents.  The bargain provider will bill you for as many extra people as they can – including management and coaching resources.  A BPO that is priced right should execute all of this for you:  hiring, training, monitoring, and quality improvement.

Watch-Out for Inferior Security Systems & IT

A low-cost BPO may compromise on IT and security – which could have a devastating impact on your business.

You need to ensure that your BPO has cutting-edge firewalls, networks and IT systems to protect your customer and corporate data.  Many companies don’t appreciate the importance of security until they have had a breach.  The costs to clean up a data catastrophe are extreme.

Similarly, low-cost agents may be working on second hand or obsolete hardware. Inadequate equipment decreases their efficiency, which leads to a pile-up of emails and calls.

Establish What Kind of Reporting You’ll Get – and Who is Responsible for Monitoring

You need to understand what kinds of business intelligence is included in the price.  Are they providing customized or cookie-cutter reports?  And, if they are customized, do they cost more? 

More importantly, you need to figure out who is looking at these reports to ensure you are continually improving customer service and uncovering any potential issues.  In many low-cost scenarios, the BPO doesn’t have anyone reviewing the analytics, and it falls on you to do that.

Determine Who Pays for Activating the Business Continuity Plan (BCP)

A BCP might not have been a significant concern before COVID-19, but it’s front and center now.  You need to understand who is going to manage the BCP and who’s paying for the associated expenses. 

During the pandemic – we’ve heard about low-cost providers charging clients for work-from-home requirements and security needs. This can result in a significant impact on your SLAs – not to mention unhappy customers and potential loss in revenue.  Additionally, a low-cost BPO may end up passing the cost of BCP to clients like :

  • Accommodations to house staff
  • Laptops for work-from-home setups
  • Internet and other security features

One low-cost provider even changed the hourly rate they were charging to operate remotely.  The client had to pay a surcharge as it took more time to manage staff from home.

Related Article 4 Pitfalls to Avoid with Overseas Outsourcing

Make sure the price you have in the quote is what you’ll end up paying.  A low-cost BPO may try all kinds of tactics to squeeze their margins with more seats, training charges, additional fees, and inferior infrastructure.

Contact our team today to learn more about Goodbay Technologies’ suite of services.