Why Companies Set Up Their Own Call Centers
Perhaps you need a customer service department to manage an influx of calls, a receptionist, or even a help desk to manage an influx of troubleshooting queries.
Whatever the reason is that you're looking to start an internal call center, you should be aware of the costs involved and the unforeseeable challenges you will face in the setup, staffing, and ongoing operation of an internal call center. Here are the 4 cost pillars for setting up and maintaining your in-house customer service call center department and a total cost analysis:
How many people do you estimate you'll need to work in the call center?
First, let’s do a yearly full-time equivalent calculation based on a 60% efficiency assumption per agent. While 60% efficiency may seem low, consider that no one can predict exactly when calls arrive, though educated statistical analysis can identify patterns in call volume so there will be times agents will be sitting idle waiting for calls during slow periods. Employees will also have, sick days, law-mandated breaks, life events, emergencies, vacations, and so on so those must be considered as well.
To get an estimate of the total number of hours a full time call center employee will work per month, take 40 hours a week and multiply that by 52 weeks, the total amount of weeks in a year. Then divide that number by 12 months in order to get the number of hours that a full-time employee can, in theory, show up to work. You should get 173 hours. Now let's multiply those hours by 60 minutes and then multiply that number again by a 60% efficiency rate to predict actual productive time spent in the call center. This will give you 6,228 minutes, which is how many call minuteseach full time employee can handle each month.
Full-time Employee (FTE) Calculation
|Total FTE Hours||Minutes per Hours||Efficiency Rate||Total Call Minutes each FTE Can Handle|
A High-Volume Call Center
We could estimate any number of minutes needed to answer the call, but if you're researching ways to set up an internal call center then chances are that your in-house staff is already being inundated with calls. For that reason, let’s use 50,000 minutes as an example of how much time is spent taking calls per month.
Employees Needed for a High-Volume Call Center
|Total minutes needed for High-Volume Call Center||Divide Total Call Minutes each FTE Can Handle||Total Amount of Agents Needed|
Salary for 9 Employees
According to Glassdoor, call center agents in the US make about $30,750 a year and a supervisor makes about $35,360 a year as of 2018. To manage a call center, you need a manager or a supervisor to ensure the operations are running smoothly. The national average for a customer service manager is approximately $50,000/yr. A call center supervisor is capable of competently managing up to 8-10 agents where as a manager should be able to oversee more than 10 agents.
These employee costs are based on the national average salary for each supervisory role and will vary greatly depending on the market value of your location.
Since you likely already have a manager overseeing the customer service operations of your organization, we will use the supervisor calculation. This will help control your annual costs.
In addition to the salary requirements, you need to estimate and include all payroll taxes and benefits which includes Medicare, social security, unemployment tax, medical benefits, and any other employer paid taxes and/or benefits. All of these taxes and benefits plus the base wage can be roughly estimated at 1.3 times the salary wage of the employee, so your total costs breaks down as follows:
|Term||Payroll Tax & Benefits||Quantity||Cost|
|Total Annual Employee Salary Cost||$365,768|
For a cloud-based call center there will be monthly subscription fees for use of the call center platform. A typical cloud contact center will cost $150 per month for each agent that you employ. In addition to the cloud-based call center platform you will need to subscribe to a cloud based CRM/ERP solution for agent scripting, ticketing, etc. While Salesforce is the de-facto CRM standard, you may consider lower costs options such as Zoho CRM.
Here are estimated cloud based service subscription costs:
|Item||Price||Term||Annual Cost||Quantity||Total Annual Cost|
|Cloud Contact Center Subscription||$150||Monthly||$1,800 (per employee)||9||$16,200|
|CRM/ERP Solution||$35||Monthly||$420 (per employee)||9||$3,780|
|Total Annual Subscription-Based Technology Cost||$24,180|
Why Does a Quality Internet Connection Matter?
The reason Internet service costs seems high is because you will want to utilize a quality Internet provider, preferably fiber-based Internet service, to ensure your callers will not experience poor call quality. Low-cost Internet Service Providers cut costs by over-subscribing their service which can result in packet loss and high latency: the enemies of VoIP call quality.
Each agent will need their own station hardware such as a desktop or laptop, headset, keyboard and mouse, and two monitors. According to Business.com, dual monitors can increase productivity by 20-30%. In our own call center, we have seen the positive effects for our agents to have two screens so we will include two monitors as part of the cost breakdown.
Here is the breakdown of station hardware costs per employee:
|Mid-tier Windows 10 pro laptop||$450 (per employee)||One-time||9||$4,050|
|Headsets||$50 (per employee)||One-time||9||$450|
|Keyboards and Mice||$15 (per employee)||One-time||9||$135|
|2 Monitors||$200 (per employee)||One-time||9||$1,800|
|Total Station Hardware Startup Cost||$6,435|
Networking & Data Infrastructure
Protecting your company and client’s data is vital to your reputation and staying in compliance with data protection laws. The best way for small and midsize enterprises to protect their network security is by using a unified threat management appliance.
Investing in managed switches to separate your voice and data networks allows you to assure quality of service. Without a managed switch, you cannot properly prioritize voice traffic over other things such as website traffic, which could cause your voice quality to suffer, IE: choppy, garbled audio.
You could use a 24-port switch to cut the price in half, but that is also cutting in on your ability to expand your call center if necessary.
|Networking & Data Infrastructure||Item||Price||Term||Quantity||Cost|
|48-Port Managed Switch||$700||One-time||1||$700|
|Total Networking & Data Infrastructure Cost||$2,200|
Once you have invested in the proper infrastructure to manage your call center, you will need an implementation specialist to help set up your CRM and call center system for optimal function.
This type of consultancy from a reputable firm will run about $125 an hour. Without coming across any overly complex situations, your consultant should be able to set up your call center with about 40 hours of consulting time.
Consulting for CRM
Call Center System Implementation
|40 hours @ $125/hr||One-time||$5,000||$5,000|
Where are your call center employees going to work from? Perhaps, you already have the space and you need to rent out additional space.
While commercial realty varies greatly depending on what the market value is in your area, we estimate about an additional rental cost of $2.40 per square foot per month. Each employee needs at least 100 Sq. ft to work comfortably and we wouldn't recommend going any lower than that.
There are many factors that determine utilities cost, so we've estimated basic utilities for a small business owners.
|Office Building||Item||Term||Quantity||Annual Cost|
|100 Sq. Foot Per Employee @ $2.40/sq. ft||Monthly||8||$25,920|
|Facility Utilities @ $200/month||Monthly||1||$2,400|
|Total Office Building Cost||$28,320|
If you’re unable to rent additional space, you will have to factor in the costs for constructing a call center and furnishing it properly. Give yourself an estimated total budget of $30,000 for construction and estimate $10,000 to furnish your office with cubicles, chairs, and other necessary furniture.
|Construction & Furniture||Item||Term||Quantity||Total Startup Costs|
|Office Build-out @ $30,000||One-time||1||$30,000|
|Total Construction & Furniture Startup Cost||$40,000|
Keeping the startup and annual costs in mind, here are your total costs for setting up a call center:
|Total Costs for a Call Center with 9 Employees Based on 50,000 Minutes|
|Annual cost with Westpark Communications||Request Custom Proposal|
|Startup cost with Westpark Communications||$0|
The purpose of this article is to provide you with information on the potential costs and challenges to setting up an internal call center. What can we gather from this information? Simply put, the costs to set up and maintain your own internal call center are substantial.
An additional aspect that needs to be considered in addition to the costs involved with operating a call center is the amount of time and effort required to ensure its success. Since humans cannot guarantee perfection you will need to invest in quality assurance. What KPIs will you require adherence to, and how will you track them?
Additional Costs to Think About
|Employee Costs||Key Performance Indicator Metrics (KPI's)|
|Employee Vacation||Wrap Time|
|Personal Days||Voice Quality|
|Scheduling & Forecasting Volume||Customer Satisfaction|
You might also consider using a workforce management platform, which may or may not be included in the cost of your monthly contact center solution pricing.
As an alternative, many organizations who once considered setting up an internal call center found that the hassle and immense resources required for setup and operation are unworkable, and instead realize that hiring an experienced outsourcing call center to become an extension of their business is the superb choice. Westpark Communications is a US-based outsourcing call center with specialized experience that has been in business since 1968.