Customer Service Outsourcing: A Step-by-Step Guide to Finding and Hiring the Right Firm

15 min readNov 17, 2020

By Andy Seth

I made a living as a professional negotiator, making global deals for Fortune 100 companies like Microsoft, Levi Strauss, and The Gap.

The process I used was called “strategic sourcing.” That’s fancy talk for finding the best suppliers and structuring deals that delivered the highest quality at an affordable price.

Since my clients spent tens of millions of dollars on any one category of spend, the stakes were high so my process had to be tight.

After years of negotiating global IT hardware deals for Microsoft, a tricky proposition considering their suppliers were also their customers (e.g. Dell, HP, Lenovo), Microsoft asked me to build Hardware Buying Centers in the U.S. and India for them.

Within months, our team of outsourced customer service agents handled more IT spend than the U.S. Government!

I’m passing along all those years of experience to you in this guide and I broke it down so any size business, in any industry, can use it.

1. Research the Market

There are a lot of customer service companies to choose from, and they all offer a variety of services. Some companies can handle the needs on the support side (customers encountering problems) as well as the acquisition side of customer service (prospective customers asking about how things work and how they can use it). Here’s a quick lay of the land and advice to determine what you need.

Chatbots vs. Live Agents


If you have a transactional, straightforward product or service, chatbots can be sufficient… but add in any level of complexity, and you’ll end up having a very poor impression with your customers. Chatbots can’t handle complex questions or answers. Studies have also shown that people prefer one-to-one communications with a human, and chatbots are very easy to ignore.

Live Agent

Dedicated live agents are skilled at handling complex products and/or services that need to be explained. A live agent is trained to say the right thing at the right time and engage website visitors in a valuable conversation.


When you have a large volume and customer service history behind you, using a bot combined with a live agent is a great approach. You can increase throughput by using a bot to handle certain things up front while also giving visitors the option to chat with a live person.

Related: When to Use a Chatbot vs a Live Agent?

Overseas vs. U.S.-based Outsourcing


An overseas customer service outsourcing team works best if what you’re selling is transactional. If your product is easy to understand, doesn’t require customer education, the customer experience doesn’t suffer as a result of having a scripted team, then an overseas option is a good choice. This will keep your costs down. All they’ll need are the precise questions and scripts with the answers they need to provide.


If your product or service is complex (and if you’re based in the U.S.), a U.S.-based team is a great fit IF they are highly trained and skilled in the full customer experience. U.S.-based agents understand cultural contexts and can quickly answer questions or explain key selling points, but we’ve all been on the receiving end of some horrible customer service agents who were right here in the US of A. When you’re a customer-centric company, having a team that understands the customer journey well while knowing your products and services in-depth, will help you convert, retain, and generate word of mouth. That’s how a business scales.

Shared vs. Dedicated Services

Shared Teams

A shared services team has a pool of agents that will be trained on your business, and anytime an email (or chat, or text) comes in, it will be sent out to them like a round-robin tournament. One of them will pick it up and answer it. They’re going to have a light level of training in your business because they’re handling multiple clients.

Two things to note.

  1. You’re going to be charged by volume.
  2. The incentive of a shared team isn’t to make process improvements, but rather to reduce the amount of time each instance takes to handle and increase volume, because they’re getting paid by the volume of chats handled.

If your product or service is straightforward, without too many questions or challenges around it, a shared services team might be the right fit.

Dedicated Teams

This kind of team can hold a large amount of knowledge because they work on your account (and grow their knowledge about your business) daily. Their goal is to increase how much one person can do, and are able to provide great answers to potentially complex situations and questions.

If your product or service is complex and your chat volume exceeds what one person can handle in 20 hours a week, you’ll want a dedicated team that can increase quality and decrease cost by using chats to make sales.

You want to ask yourself if you’re looking for a support team, or a sales and support team. How many sales do you need to fully offset the cost of your customer support?

Fast fact: All of Flow’s chat agents are trained to sell. Flow agents are able to increase the number of website visitors that engage in conversation by 67 to 85%, then convert those visitors into new customers or repeat customers with increased average order sizes.

We turn your customer service center into a profit center and track the sales generated by customer’s engaging conversations with our dedicated team. After time, our fully sustainable operating unit generates enough sales for our customers to offset the cost of customer service.

Related: How Flow’s Marketing Flywheel Puts You on a Path to ROI

Phone vs. Digital Only (Live Chat, Email, Text)

Customers are less and less wanting to hop on phones. They prefer a digital means of communication.

We’ve already made an argument for why you should ditch the phones. The key to leaving them behind is designing your customer service program in a way that allows you to help all of your customers digitally. When Flow helped LEVO get rid of their phones, we dropped their costs to a fifth of what they were because of the volume we were able to handle digitally.

Phones are one-to-one communication. Email is an asynchronous communication, and live chat is a synchronous communication where multiple visitors are talked to at once. When you focus on digital-only customer service, you tap into an economy of scale.

Customer Service vs. Customer Experience

Customer service companies start and finish with handling the chats, but customer experience focuses on the big picture: strategy, acquisition, and conversion.

Flow is one of the few — if not only — experts in customer experience that integrates customer service outsourcing with content marketing. Doing this accomplishes three things:

  1. Drive traffic to the website and create awareness for your brand by creating online content.
  2. Learn what customers want and need via customer service chats and generate more sales with live agent conversations.
  3. Use the data from chat transcripts to inform editorial content calendars based on customer’s needs, hitting the pain points that they want to be addressed and creating more web traffic for your business.

This customer experience cycle uses intelligence gained from customer support and feeds it back into the marketing strategy as informative, valuable content.

Related: Calendar, Chatbot, and Live Chat: The Ultimate Guide to Online Appointment Setting

2. Start Your Search

Now that you know the playing field, you’ll want to narrow down your top contestants. What kind of customer service provider should you be searching for? Define your requirements, know your ticket volume, and pick channels of communication before you start looking for the company that will be a good fit for you.

1. Establish what hours you’d like a dedicated customer service head to cover.

These hours should be fixed, the same times on the weekdays and separate set times for the weekend. Do you want customer support to be available from 9 to 5 on weekdays and 11 to 7 on the weekends or some other time frame?

If you need to determine what your hours of operation should be… You can look into your Google analytics to see when a majority of your website traffic is coming online, and time your hours of operation to coincide with that traffic. Wherever you see the bulk of your traffic, that’s where you’ll want to aim your support, because that’s where you’re going to have the greatest amount of impact with the person you’ve brought to your website.

Understand the current volume you do have and where that volume is coming from.

You’ll want to staff high-traffic channels with dedicated customer service agents. Try to work with a provider who understands how to help you balance the different loads (and who can help you achieve that balance).

Note: If you’re in pre-launch and just starting out, you might not have any volume. That’s alright! You’ll need to find someone who can provide the least amount of coverage and can grow with you. Work with an executive-level expert who can work with you to map customer service needs based on growth expectations.

Determine your channels of communication for customer service.

Most likely, it’s going to be email, but I highly recommend support to deflect some emails to live chat and cover support-related questions.

Email + Live Chat

Every company, at a minimum, should have email and live chat. If you don’t have live chat, you’re overburdening your email team and are going to end up paying more to handle support tickets because no one was able to answer them in a real-time chat.

A question or a chat is typically answered in less than 8 minutes total time… but that same question answered via email may take 17 minutes. In a chat experience, the user is accustomed to quick answers, but on email, there’s an expectation of a longer or more detailed explanation.

If someone knows how to properly build out a sales program, there’s also the opportunity of chat sales. Having a chat “on” and fielding people who click the button is nowhere close to the revenue opportunity you can access when you work with someone who specializes in live chat sales.

Related: Everything You Need to Go Live with Live Chat

Text Messaging

You can also add a text line, which has been proven to be a great communication channel for people. If you’ve been collecting text numbers or plan to run text campaigns, you should definitely have a number that people can use to text you so that your campaigns turn into active conversations with agents.

Self-Service Knowledge Base

You can even go a step further and develop a self-service knowledge base. Once you have an understanding of what your customers typically ask, you can build (or have a provider build) a self-service knowledge base for website visitors. This accomplishes two things:

  1. Reduces the amount of email tickets, because customers can help themselves.
  2. Drives your SEO ranking through the roof, because Google loves to reward websites that provide specific answers to specific questions (exactly what a knowledge base is doing).

Social Media

Although not all of the messages are customer service related, you may also want to have support with social media. Some companies can help with customer inquiries and questions from Facebook or Instagram while also handling any customer support questions that may come up in live chat. If you’re not receiving a lot of social media chats or already have a social media manager, it’s probably best to keep this task in-house.

Related: How to Get a Customer Obsessed Reputation with Live Chat

3. Conduct Total Cost Analyses

When you’ve found a few companies that you like and are looking into costs, take a second to assess the setup fee and compare costs of ongoing fees with a simple equation.

Assess Setup Fee

Be wary of companies without implementation fees. If they don’t have a fee, it means that there’s not going to be a great investment on their end. They’re looking for you to provide them with all the information and they’ll limit how much they can train their team on your business. It’s likely not a program with the results that you’re going to want.

If you need your team to handle 20 FAQs, and someone asks a question outside of that scope, they’re probably going to kick it back to you. You’re still going to be handling customer service.

Remember: If you want a customer support team that can handle everything, they need to be trained to handle everything.

I’ve seen setup fees ranging from a $2,500 minimum to hourly billing rates, to extra costs for building up the knowledge base and the processes. With a $2,000+ setup fee, you can hand over everything to your new team and they will execute on what you hand them while also building out information on anything you haven’t given them (and need to extract from you).

Implementations need to happen, and there’s a great investment on both parties to make them happen in order for the program to be successful, but implementations are not a profit center. They create the profit center.

Compare Ongoing Fees

If the company charges by dedicated cost, you can compare costs based on an hourly rate or full headcounts. If you take an hourly fee x 40 (hours a week) x 4 (weeks a month), you’ll get a monthly fee for the full headcount. It’s easy to compare the costs of dedicated heads and teams.

If someone charges by the volume (like a shared service team), you’ll want to look at your current volume expectations, multiply it by their per-unit fee, and see if it exceeds what it would cost to have someone that’s a dedicated head.


Check to see how long the startup phase will be (it can range from same-day to 30-days). Same-day implementation is some of the least knowledgeable but can be cost-effective if your product or service is easy to understand.

On the other hand, if someone is going to build out a program (from the messaging strategies to the knowledge bases), configure systems custom to you, and hire, recruit and train the right people who are a good match for your business, it should take 30 days or more to do it well.

Before You Sign the Contract… Negotiate.

You’ve found the right company and are ready to move forward. Here’s what to check before signing on the dotted line.

Contract Terms

Length. Some companies are month-to-month, and others will have 90-day trials before turning it into an annual contract. The most common agreement is an annual contract.

Make sure you’re very clear on the contract’s terms and length. If it’s not listed, ask your new vendor. You want to understand the length of the contract you’re signing. Personally, I believe you should also have full flexibility in having a month-to-month option. It’s your business. You should have the ability to pull out at any time.

Termination. Take a look at your termination clause. What does it say about termination for convenience? Are there penalties involved? You want to see if there are any constraints that would limit your ability to leave this customer support team and have it transitioned somewhere else if you aren’t happy with the services.

Payment. Some companies will ask for net 10, others will ask for net 30. Some will charge your credit card on the first of every month. Read through the payment terms and make sure that you’re getting the best option for managing your cash flow.

KPIs and SLAs

Key Performance Indicators (KPIs)

Things like response times, time to resolve backlogs, missed chats. Your provider needs to be fully aware of which performance indicators are meaningful to your business in order to give you the best results.

They should present you with a menu of different kinds of KPIs to help you determine which ones are important to you, and then set the contract terms and staff the team accordingly.

Service Level Agreements (SLAs)

Contractual obligations with metrics you need to hit and penalties assessed if your provider doesn’t meet them. If you want service level agreements in place, they’re usually agreed upon on two conditions:

  1. Your provider will require a bonus for meeting the metrics, typically 2–3% of that month’s billing.
  2. Your provider has to be able to control staffing. They need to have the ability to add more people to meet SLAs if they are falling behind.

Most contracts don’t have SLAs, but they do have KPIs that are measured and monitored monthly. Measuring key performance indicators will make sure you achieve end results without having to handle the contentiousness of service level agreements.

Scaling Strategy

Ask what information you’ll be given in order to justify an increase in resources.

If you have projected growth, you’ll want to talk strategically about at what point you might hit those projections, and if there will be additional needs. How will resources be added, and what information will be provided to justify the increase in customer service?

You don’t want to be in a situation where you’re constantly asked for resources and are overpaying and overstaffing. Prepare and plan for growth with your vendor.

Ask how the knowledge base gets updated.

Is there a limit to how many times you can make an update or send out new information? Get granular and clarify how quickly you expect an update to be completed or how many updates you’re able to make in a certain time frame.

Ask about how leadership will be added to the team.

As your business grows, there will be a point where you’ll likely need a team lead: someone who’s dedicated to overseeing the team of agents you have, managing quality assurance, updates, and reporting.

How will this be handled and what will it cost? Will there be a price discount on the agents if you add a team lead?

Fast fact: Flow discounts fees on agents when clients add a team lead.

Ask about season hires.
eCommerce businesses need to be able to staff their customer service for seasonality changes during holidays. Is it easy to bring on more agents? Will that price be different from the regular price? Can you define the dates and times that the agents will work, or is it already set?

Ask about reporting and insights.

It feels like there’s a limitless amount of data that can be provided, but a great vendor will be able to distill that data into what’s more useful for you, helping you focus on signals rather than creating noise. Talk about how different live chats and emails will be tagged for reporting purposes.

An intelligent vendor will understand your business and know these tags are necessary to help you get reporting that will always be actionable.

Related: Live Chat Metrics that Matter

Data is only as useful as the insights that can be gleaned.
Talk with them about the kind of insights and recommendations they provide with their reporting, and clarify who will provide these insights. Will it be the team lead?

You should be listening for not only recommendations that would increase throughput, but those that could help your customer base be able to self-service more. You don’t want recommendations on when they need more headcounts (that’s a given).

You want to see what they can do to help grow your business.

Close The Deal

Make sure the agreement outlines the exact terms you’ve discussed (and is easy to understand). You want to have clarity on the contract terms and statement of work.

A great contract is written in plain English with standard contract language and nuances from your discussion.

Implement and Continuously Improve

When you begin working with your new customer service vendor, you need to ensure that you’re getting quarterly business reviews and quarterly meetings on the books. This will help everyone stay aligned on the performance of the current program, issues that need to be addressed, and what’s coming in the following quarter.

For instance, if there’s a campaign coming up, your customer service provider should understand what the messaging behind the campaign is intended to do so they can match the message in their chat with those in your campaigns. When a visitor arrives on your website, they’ll have a brand-aligned conversation without any gaps between what they saw in your campaign and what they’re hearing in live chat.

Suggested Quarterly Meeting Agenda

  • Reporting and insights
  • New marketing campaigns
  • New products that might be introduced
  • Products being phased out
  • Changes in your business model
  • Changes in personnel
  • Upcoming staffing needs

You should have an open line of communication with your provider, and at a minimum, quarterly business reviews and monthly reporting (with insights and recommendations). Use these touchpoints to engage in conversation and see how the vendor can continue making improvements to the program.

Want to chat about how Flow can help with your customer experience? Schedule a demo to learn more about Flow’s agents.




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