There is a very common saying that there are always two sides to a coin, which literally and metaphorically means that there are always two perspectives to look at things. When we are running businesses, we often forget to look at both of those perspectives and chase after making our businesses profitable. I would understand because I am a business owner myself, and every day, my co-founder Ankit Kapoor and I strive to take our business one level up.
From taking inspiration from renowned brands to the ground learnings every day at work, you see it all as a business owner, and I resonate with you. Through these everyday learnings, one thing that has become common knowledge is that customer service and support come above all. Gone are the days when you could tell your customers to wait a little while you get their issue resolved; now, they need an answer right away. Similar is the case with sales as well. You need to spend your resources heavily on pre-sales activities to finally land a customer.
These efforts and situations in regard to customer service and support are the same for all businesses, regardless of their size. However, some businesses still rise to the top while others struggle too hard or eventually fail.
So, what exactly are the growing businesses doing differently? This brings us back to square one- ‘Every coin has two sides.’ It is the acknowledgment of the fact that there are two perspectives to look with at business growth. One is building profits and generating as much revenue as possible, and the other is looking at your losses and minimizing them.
I ask you, how often do you work on the latter?
Consider this: Jeff Bezos is always saying that the key to his success is Amazon’s focus on its customers. So is the case with Microsoft, the tech giant that is always vigilant and ready to hear its customers out at any time of the day.
What is common between both these big brands? They are ultra customer-focused, and most importantly, their customer service and support are consistent across the globe. The question is, how are they making it happen?
Do you think they are spending their resources in terms of time, capital, as well as knowledge transfer every time they hire someone within the company?
Follow-up question: do you think they are even spending the time to focus on hiring an internal team for customer support?
Quick answer- No!
These brands are scaling and have been scaling consistently for over a decade now because they chose to not only just focus on generating revenue but also reducing losses, and outsourcing customer and sales support services helped them in doing so.
It is common knowledge that Microsoft has been outsourcing tech support services for almost 20 years now, and Amazon has been outsourcing customer services from third-party vendors ever since they started growing. What could be the reason, especially when these brands are very capable of getting it all in-house? Why did they still choose to outsource?
There are plenty of reasons, the major one being able to cut down on the hidden losses.
You are losing approximately 42 Lakh rupees every year if you are not outsourcing customer support and services. I am certain this might have caught you off guard, but I am going to give you a new perspective to grow your business, and that is by cutting down these losses.
It’s all going to be a numbers’ game from here, and I have tried my level best to simplify it all for you.The calculations and numerics we are going to focus on are suitable for businesses of all kinds and sizes. Reading it all might be a bumpy ride; you might get a shocker at times, but in the end, you’ll find a solution to turn around these losses.
How are you losing 40 Lakhs+ every year that you are not outsourcing customer services
We are all on the same page when it comes to customers being a priority. Now, customer support executives are the ones managing those customers. You have to hire them, onboard them, train them, invest in infrastructure for them, and then, one day, they might find a better opportunity and move on. The cycle starts again.
You are investing plenty of resources in this process, and I have pinned it all down here for you through research and statistics.
Statistics and assumptions to calculate losses
| Values | Source | |
| Average Cost of Employee Below Manager Level | ₹22,000 | |
| Average Employee Turnover Rate | 47% | SHRM Benchmarking Human Capital Report |
| Average Onboarding Period | 2-3 days | Indeed |
| Average Training Period | 15 days | Quora |
| Average Cost of Trainer | ₹38,500 | Naukri |
| Average Infrastructural cost | ₹9,800 | The Office Pass |
| Average cost of Team leader/ Month | ₹30,000 – ₹75,000 | Glassdoor |
| Average Hiring cost | ₹25,500 | |
| Average Decrease in Employee Productivity During Notice Period | 40%-70% | Business Today |
| No. of Positions | 4 | Assumption |
This table has all the values that we are ever going to need to understand and analyze all the situations where you are losing your capital.
Loss on account of hiring cost to fill 9 positions in a year
Considering the average hiring cost of an executive to be ₹25,500 and 4 positions necessarily needed, your hiring cost a year becomes ₹1,02,000.
But here is a catch: the average employee turnover rate is 47%, which means you will not be hiring for 4 but 9 positions per year, making your hiring cost to be:
₹25,500 x 9 = 2,29,500 [A]
Loss on account of amount spent on onboarding of a 9 employees during a year
We have established that you will have to fill 9 positions every year on the executive level for your business. Considering the data in the above-mentioned table, if we take even the minimum days of onboarding, i.e., 2 days, then it will account for a total of 18 days of free pay being credited.
Now, onboarding is a necessary activity that cannot be overlooked. Running the calculations and keeping the average monthly pay of executives in mind, you are spending ₹733 per day and if we take 18 days of onboarding into account, then you will be spending a total of ₹13,200, for which, by the way, you are not getting any work done in return.
₹733×18 = ₹13,200 [B]
Now, onboarding seems more like a ‘necessary evil.’
Loss on account of training the 9 newly hired employees every year
You cannot send your soldiers to war without preparing them for what is to come. The same is the case for your executives when it comes to the customer service and sales arena. Extensive and rigorous training is needed to get a client onboard or even to assist one.
15 days is the average training period for any new joiner in the company. Even after 15 days of training, the employee will need almost a week to start making a difference; thus, anything less than 15 days will not do any good.
In these 15 days, you are not spending resources just on the trainees but on the trainer as well. Picking up the data from all the previous calculations and our data table, we come to the conclusion that you will be spending one lakh, seventy three thousand, two hundred and fifty rupees every year on the trainer every year.
Employees to be trained- 9
Average training period- 15 Days
Total training days- 9×15 = 135
Cost of the trainer per day- ₹1283
Amount spent on the trainer for training 9 employees- 135×1283 = ₹1,73,250 [a]
During the training period, it is obvious that there would be no actual work but just learning. Now, as much as we are supportive of learning and growth, it is also crucial to keep in mind that during this period, resources are being invested without any returns on it.
Employees to be trained- 9
Average training period- 15 Days
Total training days- 9×15 = 135
Cost of the trainee per day- ₹733
Amount spent on 9 trainees during the training period- 135×733 = ₹99,000 [b]
Total cost spent during the training period- a+b = ₹2,72,250 [C]
I know it is hard to digest, but it is these insights that will also help you make judicious decisions and save big in the long run.
Loss on account of low productivity post joining till 45 days
It is not fair to expect anyone to start performing right when they have joined your company; they are going to need their own time to adjust to the processes and finally function at their potential.
So keeping in mind that 9 hirings will take place every year, the average salary of the executives and a minimum of 45 days of effort needed to finally start performing, you will be spending approximately 1.5 Lakhs without any fruitful results.
No of employees- 9
Average monthly salary- ₹22,000
Time to reach an optimum level of performance- 45 days
Salary of 45 days with productivity at 50%- ₹33,000
Total resources spent on employees during low productivity period- 9×33,000/2 = ₹1,48,500 [D]
Loss per year on infrastructure for 4 employees
There is no way to adjust or save on the infrastructure that you need to provide to your employees. So, keeping the calculations simple, you will be spending four lakhs, seventy thousand, and four hundred rupees to provide top-notch infrastructure to get maximum productivity from your employees.
Number of positions- 4
Average infrastructural cost- ₹9,800
Total amount spent on infrastructure every year for 4 employees- 4x9800x12 = ₹4,70,400 [E]
Loss on account of low productivity during notice period
It is a well-known fact that during notice periods, the employees tend to work at way less potential than they actually hold. This is also fair from their point of view; however, it becomes an unfair deal to the company, especially when you see it in terms of financial resources. Let’s look at the numbers that you will be losing due to low productivity during the notice period.
The average salary of the executive- ₹22,000
No of people that will be leaving the job in one year’s time- 5
Notice period- 1 Month
Cost of loss in 40% productivity during notice period- ₹8,800
Total cost of loss during notice period due to 40% decrease in productivity- 9×8800 = ₹44,000 [F]
Cost of team leader
No matter how good your team is, until you have a better leader to lead them, they are not going anywhere! To manage your team, you are going to need an inspirational leader who will have to be compensated fairly for all the things they will be doing to get the team to perform.
As per our data table, the minimum yearly expense of a good leader is ₹3,60,000, and it only goes up from there. [G]
Total cost from hiring to notice period and everything in between
Summing it all up, you get a huge number with you, which is clearly the loss that your business is facing.
Simple Math
A+B+C+D+E+F+G = ₹13,21,850 [x]
Until now, you have lost fifteen lakhs, eighty-six thousand, two hundred and 50 rupees in a year, which you could have saved by outsourcing services. Well, there is more you need to look at.
Sales losses that you often overlook
According to a Lead Connect survey, 78% of customers buy from the first salesperson who responded to them. 80% of sales need a minimum of 5 follow-ups or engagement activities with the lead and your chances of a sale spike by 391%. And if it takes 5 minutes or longer to respond, then the chances of the sale decrease by 80%.
These numbers seem like a good insight, but they will look even better when I will elaborate on them in the context of your business and further convert them into your profits and losses. Consider this case study for the same.
- Let’s say the average ticket size of a customer is ₹5,000.
- Number of monthly leads you receive from social media is 50.
- So, considering the 50% loss in leads due to delayed response will leave you with 25 leads.
So, monthly loss due to delayed response would be = ₹1,25,000 [y]
This loss per year would be = ₹15,00,000
- Now, if your team did not follow up or missed getting in touch with the lead 40% of the time, then you will be left with only 20 leads.
So the monthly loss that you will ensure due to lack of follow-ups is = ₹1,00,000
Yearly, this loss will account for = ₹12,00,000 [z]
Total loss that you can save with outsourcing every year
x+y+z = ₹40,21,850
So that brings me to my point again: you can save forty-two lakhs, eighty-six thousand, two hundred, and fifty rupees every year just by outsourcing services for your business.
Not only that, but you will also shed the responsibility of keeping your customers happy since that would be taken care of by the outsourcing company, and they will be accountable for not only saving you money but also getting more of it!
Outsourcing can save your business approximately half a crore every year but it does a lot more than that!
Well, the numbers already prove why I am rooting for outsourcing and also why all the biggest firms out there are outsourcing services instead of getting them in-house. Turning around your losses of almost half a crore rupees is not the only thing that outsourcing will do for your business; there are many more for you to discover.
Enhanced productivity
With outsourcing, your team has nothing to worry about except doing what they are supposed to do- converting the clients. When all the administrative tasks of training, onboarding, and management are taken off the plates of your employees, you will see them function at their maximum potential.
You will witness them making back-to-back sales because the rest will be taken care of by your outsourcing company.
Happier customers
You not only need customers, but you need ‘happy customers’ who will keep coming back for more. That is only possible when you have a team of highly skilled, experienced executives with the ability to handle customers. And where can you get that? Through outsourcing!
Faster results
Whatever objectives you have for your business, they become way more achievable when you have a team of experts on board to work towards them. So outsourcing services not only helps you save a ton of money but it also accelerates your process of making more of it.
Now, that’s what a real win looks like. Witness how many companies could reach new heights with the help of AM2PM Support’s outsourcing services, and you could be next!
Outsourcing is the key to making it big!
I know it hasn’t been easy sitting through this, especially when the realization of the losses hit you. In business, we often become like a horse; we just focus on one thing, which is generating as much profit as possible and keeping our businesses afloat.
Of course, that is one way to make it big, but there is another way that can help you make it bigger, and that is outsourcing. When you expand your vision beyond generating revenue, that’s when you will be able to see things from a different perspective and put it all to use for the ultimate growth that you seek for your business.
You got that perspective today, so make sure it does not get wasted. Book a free call with AM2PM Support and act on it right away.
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