How to Calculate ROI of Outsourced Customer Service

Outsourcing customer service has evolved from a cost-saving measure to a strategic move that directly benefits business growth, improves customer experience, and enhances operational efficiency.

As companies expand, especially those with fast growth rates, handling customer support in-house becomes expensive, inconsistent, and difficult to scale. These issues increase significantly when demand fluctuates during seasons or product cycles. That's where outsourcing services comes into play.

But simply choosing a call centre and outsourcing your customer support isn't enough. To justify the investment, businesses must be able to measure the value that outsourcing precisely creates. Therefore, it's important to calculate the return on investment (ROI) of outsourced customer service.

Outsourcing ROI doesn't just tell you whether outsourcing customer service is cheaper than maintaining an in-house team; it also helps you understand whether the partnership improves service quality, increases customer satisfaction, and supports your overall growth.

Let's explore how to calculate the ROI of outsourced customer service and what metrics truly matter.

How to Calculate the ROI of Outsourced Customer Service in 4 Ways 

1. Define what you're Measuring

Before judging your partnership with the customer support outsourcing firm and diving straight into numbers, businesses should decide which benefits they want to include in their ROI calculation.

Some of the common ones are:

• Cost savings (labour, infrastructure, overhead)
• Improvements in service quality (faster resolution, higher satisfaction)
• Operational efficiency (scalability, flexibility)
• Impact on revenue (repeat purchases, retention, reduced churn)

By clearly defining these parameters, you ensure your ROI reflects both financial and qualitative gains, not just surface-level cost differences.

2. Estimate your Baseline Costs

To calculate ROI, you need to define the starting point: the cost of providing customer service in-house.

Points to consider:

• Salaries of support staff
• Training and onboarding expenses
• Infrastructure (Office space, hardware, software, utilities)
• Overhead costs (management, administration)
• Variable costs (overtime, seasonal surges, hiring freezes, layoffs)

Once you have this in-house cost baseline, you can easily compare it with your outsourced solution's costs and see which offers better cost efficiency.

3. Determine Outsourced Costs

Once the in-house cost baseline is defined, the next step is to add up all costs associated with outsourcing. 

It includes:

• Service fees or per-agent costs, or labor costs from outsourcing partners
• Onboarding or transition costs
• Contract management or vendor coordination overhead

Subtract this outsourced cost from your in-house baseline, and you will get your cost savings.

For many businesses, outsourcing customer support has significantly reduced costs. Some companies report cost savings of about 15-30% when they outsource customer service rather than run it in-house.

Want to know how much you can save with outsourcing? Try our free Outsourcing Cost Calculator

4. Quantify Value from Service Quality and Performance 

Reduced cost is one of the many benefits of outsourcing. Good outsourced customer support can improve service quality, leading to higher customer satisfaction, retention, and possible revenue growth.

Some key performance metrics (KPIs) to track are:

• First Call Resolution (FCR): Fewer repeat contacts mean lower workload and happier customers. If your FCR improves by even a few percentage points, it can significantly cut costs.
• Customer Satisfaction Scores (CSAT) or Net Promoter Score (NPS): Higher CSAT or NPS scores can boost customer loyalty and repeat purchases.
• Response time, handling time, resolution speed: Faster support usually leads to better customer experience and less resource consumption.

According to research, some businesses reported a shift from 72% to 94% in customer satisfaction after outsourcing, coupled with lower churn or higher referrals.

5. Calculate Net Benefit and ROI

A straightforward ROI formula is:

ROI = (Net Benefit / Total Investment ) * 100

Where,

• Net Benefit = (Cost savings + Monetized benefit from improved performance) − Cost of outsourcing
• Total Investment = Cost of outsourcing + any transition/setup costs

6. Monitor KPIs and Long-Term Impacts

ROI should not be a one-time calculation. For sustainable improvement and growth, it's important to track the following consistently:

• Customer satisfaction score or NPS
• First-call resolution rate, average handle time
• Customer retention rate, repeat purchase rate
• Operational costs as the business scales
• Hidden costs: transition, vendor management, periodic training, quality issues

Over the long term, these savings and operational flexibilities add up to improved bottom-line and growth.