By Angela Garfinkel, President
When an organization is considering the use of outsourced telemarketing, the often unstated question is “how does the quoted cost compare to my internal cost if I choose to build a team in-house?”. That is a valid question and one that should be addressed. The key is to identify all of the cost components to ensure an apples to apples telemarketing services cost comparison.
Simple comparisons of salaries, bonuses and commissions overlook factors like these:
- Capital expenses, facilities and equipment, especially for expansion programs requiring building or leasing new space.
- Recruitment and training, including the cost of downtime as new resources are brought on board and up to speed.
- Vacations and other benefits, particularly healthcare
- Management overhead, including opportunities lost while managers and sales teams coach telemarketing sales staff to improve effectiveness.
For those that want a quick Telemarketing Services Cost Comparison Worksheet for outsourced telemarketing vs in-house, here it is.
Salary or Rep RateThis is often stated in terms of “Per Hour” when priced by
an outsource provider
| Cost Component | Outsourced Provider | In-house Costs |
|---|---|---|
| Recruitment Costs | Included in Per Hour Rate | |
| Benefits Load (17%) | Included in Per Hour Rate | |
| Commission | Included in Per Hour Rate | |
| Training & Certification Costs | Included in Per Hour Rate | |
| Facilities Costs (rent, furniture, etc) | Included in Per Hour Rate | |
| Required Hardware (computer, phone, etc) | Included in Per Hour Rate | |
| Software Licensing (CRM, dialing system, etc) | Included in Per Hour Rate | |
| Total cost per sales rep | Should be $25 to $35 per hour, depending on if you are outsourcing B2B or B2C telemarketing and depending on complexity of the program. |
Because most telemarketing service providers charge per hour, the goal is to convert your internal costs to a “per hour” basis. For example, if you are paying a rep a salary of $50,000 per year, then the “per hour” cost would be approximately $25 per hour ($50,000 divided by 2000 hours per year). If the CRM licensing cost is $1000 per license, then the CRM licenses cost per hour would be equal to $1,000 divided by 2000 hours per year ($.50 per hour).
That should give you a good starting point. You’ll most likely find that when you add in all the costs, the in-house decision may not save you money, but is in fact costing you money.
Another factor to consider is that outsourced telemarketing costs are variable over the long run, compared to the high fixed costs of hiring and laying off employees. Organizations should consider program risk and the value of risk management when comparing insource and outsource costs.
Finally, a narrow or exclusive focus on costs can be misleading. Outsourced telemarketing providers should offer real economies of scale, not just cut-rate or narrow services that underperform and defeat their clients’ purposes. And organizations should never forget the real benefits that show up on the other side of the ledger: increased sales results.
Angela Garfinkel is the President and Founder of Quality Contact Solutions, a leading outsourced telemarketing services organization. Angela has the pleasure of leading a talented team that runs thousands of outbound telemarketing program hours on a daily basis. Angela can be reached at angela.garfinkel@qualitycontactsolutions.com or 516.656-5118.
