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The Cost of Outsourcing Sales: A Comparative Breakdown

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By SilverBell Group
SBG Knowledge hub, knowledge is power and we are sharing it with you

Today is the day we explore a topic that’s becoming increasingly important for many businesses – outsourcing sales. You might be wondering, “how much does it cost to outsource sales?” Well, you’re not alone. Many companies are weighing the pros and cons of keeping an internal sales team versus outsourcing to a specialized partner. It’s a bit like deciding whether to cook at home or dine out. Both have their merits, but today we’re breaking down the costs to help you make an informed decision.

Outsourcing sales can be a game-changer for businesses looking to save on overhead costs and tap into expert knowledge without the hassle of managing an internal team. But what are the true costs involved? Are there hidden costs lurking around the corner? And how do you compare the average cost of an internal team versus an outsourcing partner? 

Let’s dive in and find out!

How Much Does Sales Outsourcing Cost?

Alright, let’s get straight onto the point of this article – how much does it cost to outsource sales? 

This question is a bit like asking how much it costs to buy a car. The answer depends on various factors, from the type of car to the features you want. Similarly, the cost of outsourcing sales can vary based on several elements.

Here’s a breakdown to help you understand, and a straightforward comparison of outsourcing to buying a new car (it has more similarities than one might think!):

Direct Costs vs. Indirect Costs

When thinking about outsourcing, it’s essential to first understand the difference between direct and indirect costs.

  • Direct Costs: These are the straightforward expenses that you pay directly to your outsourcing partner. They include things like salaries for the outsourced sales team, commissions, and any specific software or tools they might need. 

Think of these as your upfront, no-surprise costs. For instance, if you’re paying your outsourcing partner $5,000 a month for a dedicated sales team, that’s a direct cost. It’s predictable and easy to budget for, much like knowing your monthly car payment.

  • Indirect Costs: These are the sneaky ones that you might not think about right away. They can include things like training and onboarding the outsourced team, potential downtime during the transition, and communication overheads. These costs can add up and are often referred to as hidden costs. 

For example, if your outsourced team needs a month to get up to speed, the potential loss in sales during that period is an indirect cost. It’s like the extra expenses you encounter when your car needs unexpected repairs.

Hidden Costs and Overhead Costs

Speaking of hidden costs, let’s talk about those a bit more. Hidden costs are expenses that aren’t immediately obvious but can impact your overall budget. For example, if your outsourced team needs additional training or if there’s a learning curve, these can affect your bottom line.

  • Hidden Costs: Consider the time and resources spent on integrating your internal processes with your outsourcing partner. These might include additional meetings, aligning your CRM systems, or even adjusting your marketing strategies to sync with the new team.

 All these factors, though not directly billed, can eat into your budget. It’s like when you buy a new car and suddenly realize you need to spend more on insurance and maintenance than you initially thought.

  • Overhead Costs: These are the general running costs of your business that could be reduced by outsourcing. Things like office space, utilities, and administrative expenses fall under this category. By outsourcing, you can often cut down on these overhead costs significantly. Imagine no longer needing to rent that extra office space or pay for the utilities to support an internal team. These savings can be substantial, akin to switching to a fuel-efficient car and seeing your monthly gas expenses drop.

In-House Costs vs. Outsourcing Costs

Now, let’s compare in-house costs to outsourcing costs. This applies to every business, no matter if you’re a startup, or you already have a team behind you.

Imagine having an internal sales team – there are salaries, benefits, office space, equipment, and other perks to consider. These all add up to a considerable amount. On the other hand, outsourcing can streamline these costs into a more predictable monthly fee.

  • Internal Team Costs: Maintaining an internal sales team involves paying for salaries, benefits, and other perks. Plus, there’s the cost of office space and equipment. These costs can fluctuate and sometimes skyrocket, especially if you have a larger team. 

Think about health insurance, retirement plans, bonuses, and even the occasional office party. All these add up. It’s like owning a high-maintenance car that requires constant attention and investment.

  • Outsourcing Costs: With outsourcing, you usually have a more predictable cost structure. You pay a fixed fee or a commission-based fee to your outsourcing partner, which can help in better budgeting and cost-saving. 

For instance, instead of worrying about fluctuating costs associated with employee benefits and office maintenance, you know exactly what you’re paying each month. However, remember to factor in those indirect costs we talked about earlier. 

It’s like leasing a car where you have a fixed monthly payment and don’t need to worry about unexpected repair bills.

By outsourcing, you not only save on direct and overhead costs but also potentially gain access to a team of experts without the lengthy hiring process. This can lead to more efficient operations and potentially higher sales. 

In-house teams can offer more control and closer integration with your company’s culture, but they come with higher and often variable costs. It’s all about finding the right balance for your company’s needs and budget. And might we add, with all these benefits, no wonder outsourcing is getting more popular

A young people are learning how to sale

Factors Influencing the Cost

Naturally, there are several factors that can influence the cost of outsourcing sales. Here are a few key ones:

  • Company Size: Larger companies might have more complex needs, leading to higher costs. On the flip side, smaller businesses might find outsourcing to be more cost-effective. 

A big corporation might need a comprehensive sales strategy, including global outreach and multi-channel support, which can be more expensive. Meanwhile, a small business can benefit from outsourcing by accessing top-tier sales expertise without the hefty price tag of building an internal team.

  • Office Space: If you’re running out of space or looking to cut down on rent, outsourcing can be a great way to save on overhead costs. By moving your sales operations off-site, you free up valuable office space that can be used for other critical functions or reduce the need for additional rental space altogether.
  • Sales Team Size and Expertise: The more experienced and larger the team you need, the higher the costs. Outsourcing allows you to tap into a pool of experts without having to hire them full-time. 

Whether you need a small team to handle lead generation or a large team to manage full-cycle sales, outsourcing gives you the flexibility to scale up or down based on your needs, often at a lower cost than hiring and maintaining a full in-house team.

  • Technology and Tools: The specific technology and tools required for your sales operations can significantly impact costs. If your sales process involves sophisticated CRM systems, analytics tools, or other software, you need to consider whether these will be provided by the outsourcing partner or if additional investments will be necessary. 

Keep in mind that some outsourcing partners may include these tools in their fees, while others might require separate purchases or subscriptions.

  • Geographic Location: The location of your outsourcing partner can also influence costs. Outsourcing to a partner in a country with lower labor costs can be more affordable compared to working with a partner in a high-cost region. 

However, it’s important to balance cost savings with potential challenges such as time zone differences, language barriers, and cultural differences that might impact communication and collaboration.

Always Make Informed Decisions

To make informed decisions about outsourcing, it’s crucial to understand the true cost and actual costs involved. So, here are some tips you should keep in mind when you start your research:

  • Cost Comparison: Compare the costs of maintaining an internal sales team versus outsourcing. Look at both direct and indirect costs. Calculate the total expenses for both options, including salaries, benefits, office space, and administrative costs for an in-house team, versus the fees and potential hidden costs for outsourcing.
  • Understand the Cost Structure: Know what you’re paying for. Make sure you understand the fee structure of your outsourcing partner. Some partners may charge a flat fee, while others might have a commission-based structure. Clarifying these details upfront can prevent any unpleasant surprises down the line.
  • Evaluate Hidden Costs: Don’t forget to account for hidden costs. They can sneak up on you and affect your budget. These might include costs associated with training, onboarding, and integrating your outsourced team with your existing systems and processes. 

Being aware of these potential expenses can help you make a more accurate budget and ensure that you’re fully prepared for the transition.

  • Check References and Reviews: Before committing to an outsourcing partner, check their references and read reviews from other clients. This can give you a better understanding of their reliability, effectiveness, and any potential issues you might face. 

It’s pretty much like checking the reviews before buying a product online to ensure you’re making a wise investment.

  • Define Clear Objectives and KPIs: Establish clear objectives and key performance indicators (KPIs) for your outsourced sales team. This helps in setting expectations and provides a measurable way to assess their performance. 

Regularly review these KPIs to ensure your outsourcing partner is meeting your business goals and delivering the expected value.

By considering these factors and tips, you can make a well-informed decision about whether outsourcing sales is the right move for your business. 

Understanding the true cost and actual costs involved will help you weigh the benefits and potential drawbacks, ensuring you choose the best path for your company’s growth and success – something we should all have in mind when considering outsourcing.

Speaking of success, did you know that the global market for outsourced services was estimated to be worth 92.5 billion dollars in 2019? And that was years ago! Can you guess the worth for 2024?

Outsourcing Is A Way To Go!

So, how much does it cost to outsource sales? It depends on various factors, including company size, office space, and the specific needs of your sales team. By understanding the direct and indirect costs, as well as hidden and overhead costs, you can make informed decisions that best suit your business needs. Outsourcing can offer significant cost savings and help you focus on what you do best – growing your business.Ready to dive into outsourcing? Make sure you’ve got all the facts and figures in place, and you’ll be well on your way to making a smart, cost-effective decision.

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