A useful, responsive call center is a core element of delivering efficient customer experience in any company or industry. Customers rely on this direct communication channel for support, clarification, or guidance they can’t easily find elsewhere.
But the quality of the call center experience itself shapes how well the entire customer journey is delivered. To be effective, a call center must offer service that’s balanced, personalized, and genuinely helpful.
What if we told you that exceptional customer service doesn’t have to come at a high cost, and you don’t have to choose between quality and efficiency?
If you seek tangible optimization results for your call center’s workflow and performance metrics, you should start by exploring call center cost reduction strategies. You may be covering redundant expenses without even knowing it. Furthermore, re-assessment of costs and new workflow structuring decisions help achieve all-around business improvements.
This article explores call center-related expenses, their sources, and ways to mitigate them. Each section provides insights and pro tips for CX and related cost optimizations in a contact center.
Understanding where your call center expenses come from
Your current call center workflow may be incurring tons of hidden and extra expenses, mitigating which will have consequences across the board, from internal employee efficiency to overall profitability.
First things first, before you can start cutting any expenses, you need a clear view of where those dollars are even going. Even small line items add up quickly, so we’ll try to break down each major category into its component costs where we can.
Labor and staffing
Agent salaries
Benefits and perks
Recruitment and HR
Supervision and management
Attrition and turnover
Labor normally takes up 60–75% of all call center management costs. This includes salaries, benefits, and training, branching out into every other little expense related to managing employees. Higher employee turnover rates double up these costs—recruiting and onboarding new agents is both time-consuming and expensive.
Approximate expenses:
The average salary for a call center agent in the U.S. is approximately $31,200 per year (which can vary a lot globally).
Add to that health insurance (up to $9,000 for an average yearly premium), dental and vision coverage ($100–200 per month), retirement plans, and paid time off.
Some companies also offer subsidized meals, gym memberships, or contributions to home internet costs for remote workers.
Technology infrastructure
Software licensing and subscriptions
Hardware and equipment
Infrastructure and maintenance
Technology infrastructure can easily eat up 15–25% of a call center's operational expenses. The biggest expense here is investment in telephony systems, CRM software, Interactive Voice Response (IVR) systems, and other essential call center software platforms. Then, there are workstations, headphones, and VoIP phones or softphones to cover as well.
Approximate expenses:
Depending on the call center’s overall internal/external infrastructure, expenses can differ dramatically. For one thing, it can be a physical space running on on-premises systems and hardware. Or it can be a virtual office, built purely on cloud servers. Or a hybrid.
On-premises systems: Hardware setup can cost around $6,500, with additional setup and licensing fees amounting up to $15,000+ upfront.
Cloud-based solutions: Hosted contact centers may be more scalable and have lower upfront costs but will charge you with ongoing subscription fees of about $20–$140 per user per month.
Training and onboarding
Employee onboarding
Training and development
The onboarding process alone includes cost-consuming paperwork, background checks, and HR processing. You also need to provision the necessary hardware and software for new hires. Considering the call center workflow specifics, you may also need to develop and deliver custom training programs that would help operators figure out new company offerings.
Approximate expenses:
Any extra opportunities and additional training will, of course, require extra costs. Right off the bat, today’s average training cost per employee is about $1,296.
You can reduce this sum and make some call center cost savings if you gather employees in groups for virtual training with live instructors—costs from $1,500 for up to six people to $2,250 for up to 24 participants.
You can also audit your current employee workflow structure and reorganize things for higher efficiency.
By implementing flexible agent roles, Simply Contact enabled agents to switch between channels and maximized utilization and cost-efficiency.
Managing a physical workspace means paying for rent, utilities, office equipment, and facility maintenance. Operational costs can be major, especially in high-rent urban areas. These are doubled by the regular upkeep and repairs of facilities, security provisioning, and day-to-day supplies and office consumables.
Approximate expenses:
Depending on your rent or lease conditions, monthly workspace rentals range between $10–$25 per square foot, on average.
For a 5,000-square-foot facility, annual costs can make up between $50,000 and $125,000.
Throw in an extra 5–7% to operational expenditures for utilities.
Quality assurance and compliance
QA monitoring and evaluation
Employee compliance management
Guaranteeing consistent service quality and compliance with industry regulations is your responsibility as a customer-facing provider. To keep that in check, any established call center should do regular assessments of agent interactions and provide respective quality corrections.
Approximate expenses:
These periodical assessments and constant reporting should do half the job, but you may also need to cover extra expenses if you wish to boost and reinforce quality compliance, like:
Effective QA and employee compliance may call for custom feedback mechanisms. If you implement custom dashboards or reporting tools, consider also an initial development investment ($5,000–$15,000) and $1,000–$3,000 monthly subscription payments.
For well-maintained compliance, you will also need to educate staff on industry regulations and company policies, and then audit them for adherence to legal and company-wide standards. HIPAA, PCI-DSS, GDPR—creating or licensing compliance training modules can cost $100–$300 per agent per year.
10 effective ways to cut customer service costs
From inspecting the figures and price tags let’s move on to actually figuring out how we can reduce call center costs in practice. These are the well-proven steps that were implemented by Simply Contact specialists in various-scale projects.
#1 Expand self-service capabilities
First off, many users today prefer not making any calls whatsoever. To meet their demands and process fewer inbound calls, you should implement self-service options, like accessible FAQs, knowledge bases, and AI-powered chatbots that can be used freely by independent-minded customers.
Providing intuitive self-service features is a great way to reduce customer service costs organically. Here are some common solutions that you can integrate:
Centralized knowledge base Build a searchable, well-organized repository of FAQs, troubleshooting guides, video walkthroughs, and step-by-step articles. Keep it updated and relevant.
Interactive Voice Response (IVR) A smart call center IVR system can handle simple tasks—like checking user account status, booking an appointment, or resetting a password—without ever routing to a live agent. (Remember to limit menu depth to 2–3 levels or you risk frustrating callers.)
AI-powered chatbots Deploy chatbots (more on that below) on your website and/or mobile app that would be able to:
Greet visitors with a friendly message (“Hi there! How can I help today?”)
Answer common questions instantly (order status, password resets, store hours, etc.)
Collect customer details and issue context before handing off to an agent, reducing call-handling time
Before actually launching any of the above solutions, make sure to do your research and see what functions you need more than others. Here’s a few pro tips:
Analyze common queries: Go through your call transcripts, chat logs, and support tickets to pick out the top 50 or 100 reasons people contact you.
Prioritize content creation: Start with the highest-volume issues. Write clear, scannable articles in your knowledge base.
Design user-friendly tools and features: Make sure your FAQ page, chatbot launcher, or IVR menu are easy to spot and navigate. Don’t bury them behind five clicks.
Promote self-service – Train agents to say, “You can also find quick answers here…”, and highlight self-service options in email signatures, web banners, and social media.
#2 Optimize workforce scheduling and occupancy
A call center manager or lead specialist can adapt and use a range of workforce management tools, e.g., to forecast call volumes and schedule agents accordingly. This optimized scheduling can help match staffing levels with demand, reducing idle time and overtime expenses.
Leverage available CX tools, integrations, and workforce management software. Some of it can even forecast call volumes and schedule agents accordingly to meet demand:
For more sensitive workflow monitoring, you can track agent availability and adjust schedules dynamically to maintain optimal occupancy rates. These will help:
Use these tools and the insights gathered with their help to:
Analyze historical data: Review past call patterns, interactions, and workflow dynamics to predict future staffing needs. Pro tip: Look at call volumes by day of week, hour of day, and special events (e.g., holidays, product launches). Use 12–18 months of data for accurate forecasting.
Set occupancy and shrinkage targets: Aim for ~85% occupancy (i.e., 85% of an agent’s time spent handling calls or wrap-up). Factor in shrinkage (breaks, training, meetings) to calculate how many agents you truly need on the floor.
Implement flexible scheduling: Offer part-time, split shifts, or staggered start times. Allow high-performers to select preferred time slots.
Monitor and adjust: Use live dashboards to see if agents are idle or overwhelmed. If occupancy dips below 70%, pull in an extra resource or shift someone. If it spikes above 90%, consider temporary shift covers or overtime.
#3 Use automation to reduce manual tasks
Gartner predicts that by 2026, conversational AI will reduce contact center costs by $80 billion. It’s high time you leveraged some capacities of AI customer support, if you haven’t already.
To prepare the ground for long-term efficient implementations, make sure to:
Pick out the most routine, senseless processes. Map out tasks that are overly time-consuming, confusing, or just too repetitive.
Choose the appropriate tools. Select automation solutions to be integrated with your existing systems or adapted for a new workflow.
Onboard the staff. Make sure your employees timely learn how to properly use the new tools you adapt.
Following the above stages, you can easily adopt some of the following common automation solutions for call centers.
Ticket triage and categorization
Effective ticket triage helps prioritize customer inquiries and route them to the appropriate agents promptly.
Tools to consider:
Zendesk: Use “answer bots” and predefined triggers to automatically tag, prioritize, and route tickets.
Freshdesk: AI-powered “Freddy” engine auto-classifies tickets based on keywords and sentiment.
Salesforce Service Cloud: Einstein AI can scan incoming cases, suggest case fields, and auto-route based on agent skill sets.
Chatbots and voice bots
Chatbots and voice bots can handle routine inquiries and free up human agents for more contextual tasks.
Tools to consider:
Amazon Lex: Leverages AWS Lambda to build conversational logic, tap into backend data, and pass context between steps.
Google Dialogflow: Intents and Entities let you parse natural language, and you can easily integrate with other Google Cloud services.
IBM Watson Assistant: Boasts powerful natural language understanding with tone analysis, plus seamless Salesforce integration.
CRM integrations and macros
CRM integration enables a range of automation features, analytics, and customer expectations management.
Tools to consider:
Salesforce: Workflow rules and Process Builder can send emails or update fields when certain conditions are met.
HubSpot: Custom templates and snippets let agents insert preformatted responses or update records with one click.
Microsoft Dynamics 365: Use Power Automate (formerly Flow) to trigger multi-step macros (e.g., “When a case is closed, send a survey and create a follow-up task”).
#4 Improve first contact resolution
Studies show that for every 1% improvement in FCR, you see roughly a 1% bump in overall customer satisfaction. Fix this, and you begin saving money on callbacks, escalations, and customer churn.
Analyze FCR metrics:
Track which issues routinely require multiple touchpoints. Are they billing questions? Product troubleshooting? Delivery status?
Tag each repeat interaction: if a single-case ticket generates more than one agent transfer or follow-up, it’s not “first-contact resolved.”
Enhance knowledge resources:
Feed high-volume, hard-to-solve issues into your knowledge base. Make sure agents can search “common resolutions” with a single click.
Build a “golden lookup” cheat sheet: one-page quick reference for tier-1 agents to fix the top 10 repeat issues.
Introduce feedback loops:
After each call, send a micro-survey: “Did we resolve your issue today?” If “no,” log that as a failure to resolve and have a supervisor do a quick follow-up.
Hold weekly case reviews where agents, supervisors, and product experts dissect the trickiest calls to find root causes.
Equip agents with full context:
Integrate your phone system with CRM so that when a caller ID pops up, the agent already sees their purchase history, previous support notes, and any pending escalations.
Use single-pane-of-glass dashboards so agents don’t have to hop between five windows to gather information.
#5 Streamline agent onboarding and training
A well-informed employee who has access to the latest onboarding data can save a huge amount of costs, spent otherwise unnecessarily. Bringing a new agent up to speed can take 4–6 weeks, during which they’re not fully productive. Cutting that ramp-up time by just one week can yield huge savings. But to actually do that, you’ll need:
Structured training program, for instance:
Week 1: Company orientation, product fundamentals, basic phone etiquette.
Week 2: Shadow experienced agents (listen to live calls, take notes, do mock calls).
Week 3: Hands-on practice in a “sandbox” environment: no live customers.
Week 4: Gradual introduction to live calls with supervisor monitoring (whisper coaching).
Provide mentorship opportunities:
Pair each new hire with a work buddy in a peer-to-peer program. Buddies answer real-time questions, like “How do I handle this weird billing error?”, without waiting for formal training.
Create standardized training materials:
Develop slide decks, process maps, and quick-reference cards that are consistent for every new agent. That way, no two trainers accidentally teach different scripts. Record video tutorials of “best practice calls” so agents can replay and study top performers’ techniques.
Use E-learning platforms:
Host training modules on a learning management system (LMS) where agents can self-pace through quizzes, role-plays, and recorded webinars. Track completion rates and quiz scores automatically, so supervisors know who is struggling.
Assess training effectiveness:
After Week 4, evaluate agents on key metrics:
average handle time (AHT)
customer satisfaction (CSAT) scores
FCR for their first 20 live calls
#6 Invest more in performance monitoring and feedback loops
Implementing performance analytics tools helps monitor agent effectiveness and see where things could be scaled or improved. This is where it’s best to double down on regular feedback checks and coaching sessions for existing and new employees.
Use the above-mentioned tools and methods to:
Define performance metrics: Set up KPIs (like the ones mentioned just above) to assess agent performance.
Conduct regular reviews: Schedule periodic evaluations to discuss performance and set goals.
Encourage open communication: Don’t skimp on an opportunity to make agents feel comfortable by openly sharing feedback and suggestions via any means available.
#7 Reduce turnover with better agent support
An active employee turnover that is so closely associated with call centers is the major source of pressing call center expenses. The turnover itself doesn’t necessarily indicate poor working conditions or that you are doing something very wrong—a contact center operator is rarely a lifetime career.
But you can still encourage and prolong it for eager employees by recognizing them, giving back accordingly, and offering more growth headroom.
You can provide:
Career development opportunities: Offer career pathways and promotion ladders, e.g.,
Operator → Mentor → Manager or Tier 1 → Tier 2 → Team Lead → QA Analyst → Supervisor
Wellness programs: Implement initiatives that support agent well-being:
Subsidize mental health apps (e.g., Headspace or Calm) or provide free counseling sessions.
Organize monthly Wellness Wednesdays: yoga/stretching classes, healthy snack deliveries, or desk-chair massages.
To research some actual employee desires and aspirations, as well reasons why the turnover, you can:
Conduct exit interviews: Gather insights from departing employees to see where you can grow better and satisfy future employees.
Recognize achievements: Celebrate successes to boost morale and job satisfaction, provide the employees about to leave with personalized performance statistics.
#8 Match support channels to customer behavior
Analyzing customer preferences and behaviors would allow your contact center to allocate resources to best-preferred communication channels, such as chat, email, or phone. But it’s not enough to cover all essential support channels: you should know your customer expectations.
To do that, make sure to prioritize a couple of things:
Omnichannel support: Phone, email, SMS/text, live chat on your website, social media (Facebook Messenger, Twitter), in-app messaging—make sure customers can reach you wherever they’re already spending time.
Channel analytics: Track metrics like “% of total volume per channel,” “Average Response Time per channel,” and “CSAT per channel.”
To discover more insights for call center cost reduction strategies, make sure to also:
Analyze customer data: Determine which channels are most frequently used by customers.
Optimize channel availability: Make sure resources are allocated to the most used platforms.
#9 Use location strategy to control call center cost savings
Research your locations. Sometimes, relocating may be the most cost-beneficial scenario for your call center. Which locations pose what costs and rates? Are there jurisdictions that spawn special and extra costs? Perhaps, for your case, remote operations would actually help achieve a higher ROI to give some space for further planning.
Remote teams
Going for remote work models can help you avoid overhead costs related to dealing with physical office spaces. You can also explore a broader talent pool. Companies that allow remote work save around $11,000 per employee per year, and can potentially reduce call center costs by ~27%.
Nearshoring and outsourcing
Outsourcing certain functions to regions with lower labor costs is another well-tried option. One that can help balance out the expenses and eventual ROI through fast tech partnerships. Companies can save an average of $87,012 annually by outsourcing certain functions, which is an 85% reduction compared to hiring onshore.
#10 Outsource selectively for efficiency and scale
Outsourcing operations is actually among the most go-to, well-tried call center cost reduction strategies, allowing you to tap into dedicated service provision delivered in an express mode, by specialized professionals.
You can leverage an outsourcing team to fill the gap in your call center’s structure or handle certain tasks, like administration and maintenance, without investing too much and at any given moment.
But first, you should make sure to:
Identify non-core functions: Determine which tasks can be outsourced without compromising quality.
Conduct due diligence: Research potential partners thoroughly before entering agreements.
Establish clear SLAs: Define service level agreements to set expectations and accountability.
When it makes sense
When you are looking for a strategic partnership with a new partner
When you need to collaborate for short-term goals or completion of project parts
When you need to scale operations without restructuring in-house operations
When you need you to save on equipment or recruitment
How to choose the right partner
Look for an agency experienced in your particular requirements
Look for portfolios, certifications, and brand partnerships
Seek a consultation or preliminary estimates beforehand
Explore all options and make sure they are flexible enough
Partner up with an agency ready for long-term deals
Partner up with an agency that knows how to reduce customer service costs
Download our simple, single-page BPO partner selection checklist covering the essentials you should consider.
Data security: insist on high security guarantees, like end-to-end encryption and managed access controls.
Quality control: ask for regular work reports and transcripts to keep an outsourced team in fuller control.
Cultural/language fit – Choose vendors with proven bilingual or local teams if you need that region’s language/nuance, or outsource support to a multilingual team.
Long-term gains of a leaner support operation
Taking the steps described above allows for an ultimate contact center workflow optimization. Re-evaluation of work scenarios opens more room for innovation, digital tools and automation frees up human specialists, and streamlined training programs motivate professionals to strive for more skill.
In the long run, it all comes down to a bunch of essential benefits, including:
Lower cost per contact
Higher customer satisfaction
Scalable service during peak periods
Increased team focus on complex issues
Challenges to watch out for
Now, we give a lot of technical and business directions in this article, but it is your task to not just follow blindly. Take each step carefully, with beforehand research of how well it fits your line of work and what potential impact it could make.
The most sensitive questions that you should clarify above all before implementing any of the above are:
How do you align internal and external teams when turning to outsourcing?
How do you avoid over-automation and balance integrations?
Are you ready to handle all the change management?
How will you maintain the improved service quality in the long term?
Final word
With the advent of automation platforms, high availability of digital tools, and well-trodden scaling paths, a call center has many faucets where it can innovate and enhance through either method. It’s crucial that you find and leverage the opportunities that match your needs perfectly.
FAQs
What is the biggest cost driver in customer service?
Labor and staffing expenses are typically the most significant cost drivers in customer service operations, accounting for 60–75% of total costs.
How much can outsourcing reduce support costs?
Outsourcing can cut support costs significantly when you partner with an experienced provider. One of Simply Contact’s clients reached an 85% average utilization rate, meaning agents spent most of their time actively helping customers rather than sitting idle. That higher productivity translated into lower cost per resolved issue.
Is automation always cheaper than live agents?
Automation can drive a call center cost reduction by streamlining routine tasks, but human agents are still required for handling complex or sensitive customer interactions.
Can reducing costs hurt customer satisfaction?
If not managed carefully, cost-cutting measures can negatively impact service quality. However, strategic optimizations can enhance both efficiency and customer satisfaction.
Want to cut support costs without sacrificing quality?
Book a consultation with Simply Contact to explore smart automation tools and CX outsourcing opportunities tailored to your business.
