How to Calculate Your Total In-House Contact Center Costs


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“How much is this going to cost me?”

You’ve likely thought that very question (or a variation of it) while talking to vendors about outsourced contact center solutions. Even when their value proposition is strong, we still need to justify the expense within our organization. Yet there’s another equally important follow-up question you need to ask: “how much do in-house contact center operations cost me?”

Conducting a cost comparison of in-house operations vs. outsourced contact centers can simplify your decision and rein in your investments in the long run. With that in mind, here is a breakdown on how you can calculate the differences between your in-house contact center costs and outsourcing:

1. Agents, Supervisors, and Managers

By hiring a number of contact center employees, you are accepting the scope of HR related expenses associated with employees.

  • Productivity – This is an area that deserves significant mention. When an employee is hired to work for a company, a commitment is made to pay that individual for 2,080 hours per year. However, the reality is that productive hours will be generally in the region of 75%, after PTO, paid breaks, and other time off phones is taken into consideration. In other words, a business will pay approximately 2,773 hours in labor costs to meet one full-time equivalent (FTE). In contrast, when you contract with an outsourcer, a company will pay 2,080 hours for one FTE because outsourced contact centers bill only for productive time. In other words, companies only pay for productive time.

Wages – Depending on the level of skill of your agents and the location of your contact center, compensation can vary drastically. There are a number of valuable skills that agents bring to the table. Customer support agents, outbound sales agents, and others are receiving offers elsewhere – especially with low unemployment. Your compensation needs to be competitive with other organizations in your area or you’ll suffer from above-average attrition for your industry.

  • Benefits – More than just monetary compensation, your agents want competitive benefits. And more companies are covering them. In fact, a study from the Bureau of Labor Statistics finds that 46.34% of compensation is attributed to benefits.
  • Taxes – Employee taxes are one of the certainties you’ll have to pay. If you hire your own contact center agents, you can typically expect to pay half of their Social Security taxes (12.9% of employee wages), half of Medicare taxes (2.9%), and all of their federal and state unemployment taxes. States taxes will vary but you can consistently expect to pay [amount based on wages of average employee].
  • Commission – What if your agents are funneling leads or selling over-the-phone? You need to account for some level of commission. For sales campaigns, outsourced companies offer a variable pay component tied to goal attainment, all funded within their rates.
  • Cost of Hiring – Additionally, the process of hiring the right candidates through advertising, screening, and interviewing can accumulate. According to Glassdoor, the average employer spends $4,000 to acquire each employee. If there is seasonality to your business, an outsourced solution will enable you to focus on your core business while an outsourced company can offer the right level of support on a just-in-time basis.

Though you’re paying for an agent with your contact center service, much of the expense is assumed within the rate.

2. Your Contact Center Location Costs

  • Work at Home vs On-Site – Though some companies are opting for a remote work-from-home model, we’ll contend that contact center work still requires an official workspace. Agents review a range of sensitive information, much of which is governed by federal regulation (PCI-DSS, HIPAA/HITECH, etc.). If an agent is noncompliant, your business risks millions of dollars in fines. A controlled and monitored facility mitigates this threat, but it does present a steep expense.
  • Office Space – The cost of office rentals nationwide is steadily on the rise. According to commercial real estate services firm JLL, the average price of office spaces across 53 major metropolitan areas is now $32.39 per square foot (ranging from $19.18 to $84.93). Average office density accounts for 150 to 250 square foot per employee. The cost of prime occupancy office space throughout the Americas has grown 3.7% year over year, and it’s not slowing yet. If your contact center is less than full, each seat has a variable cost tied to your utilization of space. Outsourced centers are built to use efficiently use resources and share the cost of rent to lower overhead amongst clients.
  • Rural vs Urban – States where the cost of office space is less expensive (think Iowa or New Mexico) or a cost-effective offshore destination can reduce your real estate expenses. However, establishing a facility from scratch is an expensive prospect when an outsourced contact center already has the space and infrastructure allocated for their contact center agents.

3. Contact Center Technology Costs

Contact centers depend on a wide array of technology to thrive, combining the typical office requirements with niche contact center industry demands. Here are the technologies that your organization needs to operate as well as the expected contact center price ranges:

  • Contact Center Software – This price is upwards of $100 per person and is essential. The best platforms costs upwards of $150 per person per month. The right tool combines elements of automatic call distribution, CRM, interactive voice response (IVR), call recording, call monitoring, real-time reporting, and analytics. The more features you incorporate, the higher the cost per agent. Remember that you will need system administrators to get the most ROI on your chosen platform.
  • Hardware – Though your business no longer needs the clunky phones of yesteryear, there’s still a hardware investment. The cost for PCs has decreased over time thanks to Moore’s Law, and the cost of peripheral equipment (monitors, keyboards, and other hardware components) have remained reasonable. However, ordering in bulk still has a price tag.
  • Power Grids and Back-ups – When you are running a contact center, you want to avoid power disruption at all cost. A continuity plan is vital to any contact center and technology is one of the primary components. Battery backups, backup servers, and generators can improve your business continuity drastically but they will elevate your overall direct costs. The right outsourced center partner will have already invested in redundant power systems, redundant data centers, redundant telecom providers, and a meticulous Business Continuity Plan. Sungard Availability Services states that the average business continuity management (BCM) platform is $88,915 alone.

When you outsource your contact center, the outsourcer assumes all technology costs. And because they have more agents, they can typically reduce your contact center costs versus purchasing technology outright. If you are offering 24/7 customer care, more agents will be sharing hardware and backup resources, making it easier for your dollar to go further.

4. Contact Center Training Costs

Ongoing training is a vital part of any successful contact center. A training program brings new agents up-to-speed on your brand, goals, and processes while ongoing coaching encourages adaptability and rapidly improves your KPIs. Here are the potential costs associated with training:

  • Creating a Program – At the beginning, plenty of labor hours will go into designing a program that yield the highest results. Depending on who is involved internally, this price can skyrocket quickly. An outsourced contact center may include instructional design as part of its services. This is a welcome attribute of outsourcers since training development will cost somewhere in the region of $75.00 per hour.
  • Trainers – Having a dedicated training or leadership team on staff is costly but essential. All of the above expenses apply. When companies work with an outsourcer, support positions such as trainers are included in the bill rate. Our typical contract will include trainers at a ratio of 1:50 contact center agents.
  • Certifications – This is one hidden cost that really sneaks up on an organization. Whether your environment needs to be certified or individual agents, the cost adds up. One example is PCI-DSS compliance. A large enterprise business can spend over $100,000 bringing their organization within regulatory compliance. A bulk of those expenses come from updating technology (hardware and software) to remain compliant and protect customer data – costs that an outsourced partner can shoulder.

5. Contact Center Retention Costs

Keeping contact center agents under current market conditions is particularly difficult. There are plenty of opportunities available if they are dissatisfied with your work environment. More than just losing the employee, your organization loses a fair amount of money in the process. In fact, the rule of thumb is that it takes 16% of an employee’s compensation to replace them. Organizations need to be proactive about retention and here’s what is being done to maintain a healthy workforce:

  • Career Development – Employees are more likely to stick around if they see a future with your organization. But if your contact center is flat, then they’re more likely to go elsewhere. All of the leadership team at TLC Associates started on the phones.
  • Employee Engagement – That involves countless small actions to get your team energized and make work feel less like…work. It can involve volunteering, snacks in the break room, or any of other benefits.
  • Costs of Attrition – A well-negotiated contract will articulate that the outsourced provider is responsible for attrition training. Think of the expense involved for a class of 20 people. If a curriculum is 80 hours, it requires an investment of 1,600 paid hours.

Calculating Your In-House Contact Center Costs

When calculating your final contact center costs, failure to include the above-mentioned expenses will distort your view of the marketplace. The final price will vary depending on team size, location, specialty, and expertise. However, the following price is the minimum that most companies would expect to pay for a 50 person team within the first year:

Expense Type


Office Space (50 agents, 1 trainer, 1 manager)


Contact Center Software (50 agents and 1 manager)


Business Continuity Management


Wages & Benefits for 50 Agents


Wages & Benefits of 1 Trainer


Wages & Benefits of 1 Manager


Cost of Hiring




Min. Cost for 50 Person Team


The Next Step

It’s clear that an outsourced contact center is a cheaper option in the long run. More than cutting costs, you want a partner that can maximize your ROI. For that to happen, you need a partner with proven methods, leading-edge strategies, and a passion for providing remarkable experiences to your clients.

Are you tired of maxing out your budget with contact center costs? It’s time to outsource. Get our Contact Center Buyer’s Guide to determine what to ask outsourced contact centers as you evaluate their prices, capabilities, and performance.

Thomas Moroney
Thomas P. Moroney has worked in the contact center industry since 1990.He began his career with American Express where he worked his way from Associate to Director of Credit Operations.In 1999, Mr. Moroney joined PRC, LLC, as Director of Client Services.He went on to lead PRC’s international expansion, as SVP Global Services, reporting to Mr. Cardella.Mr. Moroney also worked as EVP Business Development for TRG Global Solutions and more recently as CEO of Donnelly Communications, an Atlanta based boutique contact center provider focused on the retail and catalog industries.


  1. What is the comparable cost for an outsourced contact centre with 50 agents? Outsourcing also implies that you never develop in the inhouse skills associated with the technology being supported. Trained In house support agents can be redeployed within your company to fill gaps in current headcounts or to replace skilled resources leaving. The lost value of these opportunity costs must also be added to the outsourcing costs.


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