Part 1 - What are you really paying your agents?

As an outsourcer, when discussing the possibility of transitioning work that is currently insourced to an outsourced model there are consistent arguments / challenges that you will always hear. One of the most common is around cost. "Why would we pay an outsourcer $26/hour when our current agents only cost us $12/hour?" In this scenario it appears as if the outsourced solution is 116% more expensive.

In this posting and in subsequent postings I will provide the building blocks to understanding that the $26/hour can actual result in significant savings against the $12 an hour you are paying your current agents.

Step 1 - What are you really paying your agents?

Lets first start with what is included in the $12/hour. The $12/hour in this example is the hourly rate being paid to the agent before taxes and benefits. Keep in mind that in many in-sourced environments the agents are actually making much more than this and in many cases could be making upward of $15-18/hour.

The first thing we have to do is add on the cost of benefits. For a full time agent working 40 hours per week, the average employer funded benefit cost can run $300-400 per month. Spreading that over the hours worked translates into roughly a $2.25-2.50 per hour for medical benefits.

In most customer care operations there will be a bonus or pay for performance program that will be additional pay for the front line management that could range anywhere from $1-$5 per hour. For this example we will contend that the average bonus is $2 per hour.

Taxes will add another 10-15% to your wage rate. If you are company that has encountered a significant layout this % could be much higher and be closer to 20%. For this example we will be conservative and say that taxes run around 12% which for a $12/hour plus bonus of $2 is equal to an additional $2.80.

Current Tally:

$12,00 base wage rate
$ 2.50 benefits
$ 2.00 bonus
$ 2.80 for taxes
$19.30 total agent wage

Stayed tuned for my next update and I will share with you why this $19.30 an hour could be costing your internal organization closer to $30-35 an hour.