Outsource Customer Service vs In-House: Pros & Cons

In-House vs Outsourced Customer Service

Adapt or perish is the mantra for businesses in the post-pandemic market environment. With customers demanding greater convenience and transparency, they are working hard to bring down response time and add new customer support channels, for example, video chat and social media. While this is a great move, many brands know that they need to do better when it comes to traditional in-house customer service channels.

Let’s take the case of inbound phone interactions. According to a study by Northridge, 61% of customers chose to call customer support for everything from general queries to complaints.

However, 52% of all inbound calls did not end in a resolution the first time. This means that the customer had to call back for the same issue again. Surprisingly, research shows that customer support teams with high attrition rates typically fared worse on first contact resolution than those that didn’t. This once again shines the spotlight on the familiar outsourcing versus in-house argument with regard to customer support.

Many business owners insist that keeping customer support in-house is the only way to ensure a consistent customer experience. After all, you would have greater control and predictability of performance with a team put in place by you. While this view is not without merit, it often boils down to the cost of support and its impact on already thin profit margins, especially in today’s post-pandemic environment.

On the other hand, if you opt to outsource to an offshore company located in another part of the world, the costs may not be a concern as much as communication barriers and potential data security loopholes. For these reasons and more, the decision to outsource is fraught with risk and a discerning business owner must take all aspects into account.

However, while debating the relative merits of outsourcing versus doing everything in-house, it is important to remember the digital dimension we are living in.

In an age of virtual assistants and cloud technology, the traditional outsourcing model has undergone a transformation- a new breed of US-based outsourcing partners that deliver on-demand, remote agents with none of the associated costs of hiring, training, and coaching. For example, brands like Helplama offer scalable support at a fraction of the cost of an offshore call center.

Here is a comparative analysis between in-house and outsourced customer service and the relative advantages and disadvantages of each:

In-house Customer Service: Pros and Cons

So let’s learn about the benefits and disadvantages of in-house customer support.


Here are some of the top advantages of keeping customer service in-house:

1. Quick turnaround time 

Focus groups have been one of the best ways for management teams to understand customer perceptions for a long time. With a customer service team located under the same roof, you can get first-hand insights based on conversations that agents have on a daily basis. This feedback can thus be gathered quickly and a solution can be implemented within days. This can give a crucial ‘first mover’ advantage compared to an outsourced customer service team.

2. Better service

Studies show that 37% of customers share positive experiences with their friends and family. Over a period of time, they begin to associate such experiences with your brand. Deliver great service consistently and you will have converted a customer into a brand advocate. However, the reverse is just as true. A single negative experience can alienate customers.

The challenge is to communicate in a way that is aligned with your brand promise. In-house agents are likely to be more friendly or empathetic than outsourced agents.

3. Better product knowledge

An in-house team is likely to have a better understanding of the product, working alongside the sales and marketing team. This can have a direct impact on first contact resolution, average handle time, and overall CSAT.

Besides, experienced agents can be nurtured for leadership positions, creating a talent pool that can be tapped in the future.


Here are the drawbacks of in-house customer service:

1. Higher operating costs:

The fixed and variable costs of running an in-house customer service team are substantial. They include but are not limited to wages, benefits, infrastructure costs, hiring, and training. These costs have a direct impact on business margins since they add to the total cost of production, promotion, and distribution. Agent productivity also impacts the overall costs of customer service.

2. Lack of resilience:

Disruptive global events like COVID-19 have necessitated a new approach to business continuity. Online businesses are at risk of being completely cut off from their customers in the absence of alternatives. For example, if attrition spikes suddenly, service levels might suffer.

Outsourced Customer Service: Pros and Cons

Now that we know the pros and cons of in-house teams, let’s learn about the benefits and drawbacks of outsourcing customer support.


Here are some of the top advantages of outsourcing your customer service operations to experts:

1. Focus on the core product:

Enhancing the Unique Value Proposition (UVP) of your product is the activity with the highest pay-off for your ecommerce store. However, this focus can dissipate if you spend too much time on routine operational tasks. This is allegorically called ‘working in the business rather than on the business.

Outsourcing helps you ‘buy back’ precious time that can be put to better use in value-added activities. This can help you get a competitive advantage.

2. Better scalability:

According to SuperOffice CRM, 86% of customers are willing to pay more for better customer service. However, brands need to contend with the short-term costs of scaling customer service in terms of hiring, technology, quality, training, and even team productivity. Outsourcing allows you to scale rapidly without compromising on the quality of service or running up huge bills on training. This helps brands provide consistent service.


Here are the drawbacks of outsourcing customer service:

1. Longer turnaround:

Communication can be a problem when dealing with an external customer support team, especially if located in a different time zone. For example, delays in reporting non-delivery of orders can lead to overstocking, understocking, or future fulfillment cycles both.

2. Communication and cultural barriers:

It is common for outsourced agents based in foreign countries to miss the cultural context of what customers say. This can make genuine rapport hard to achieve. The result is lackluster CSAT and first contact resolution.

Last Words:

Flexible, affordable, and performance-oriented, Team Helplama prides itself on being an integral part of your team, rather than thinking like an outsourced provider. Thanks to our state-of-the-art training philosophy and a team of US-based remote agents, we quickly master your process and deliver a quality customer service experience.

We bring rich data insights to the table to help you build or optimize your customer support processes, reducing operating costs and boosting CSAT.

With Helplama, you can say good riddance to complicated long-term contracts and our one-of-a-kind ‘Zero Risk Guarantee’ gets you your money back in case you decide to opt-out.

Contact us today for more information!