What Is The True Cost Of Employing A Customer Service Representative?

cost of outsourcing

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Have you ever wondered about the true cost of employing a customer service representative?

Recruiting and retaining new employees is expensive for many organisations – not least those in the customer service sector.

But when looking for a new customer service representative, there are several additional costs that many organisations fail to consider.

Here, we’ve compiled a range of figures that help illustrate the true cost of employing a customer service representative.


According to Payscale, the average salary for a UK customer service representative is £19,275 per annum, equating to an hourly rate of around £8.61.

However, this hourly rate changes depending on such factors as experience and location.

hourly rate for customer service representative

Cost Per Workstation

As stated in the Workplace, Health Safety and Welfare Regulations (1992), you must provide each employee with an appropriately proportioned workspace. The legal minimum workspace size is 11 cubic metres.

The estimated cost of a workstation (comprising the approximate annualised cost of rents, rates and service charge) varies across the UK, ranging from £2,427 in Plymouth to £15,984 in St James’s area of London. This cost excludes the cost of any equipment required by your agent, the costs of which are detailed below.


You will need to provide your customer service representatives with appropriate equipment to fulfil their roles. This will likely include a PC, telephone, desk, chair, headset, along with relevant software and service licences.

Based on our agents’ needs at WeAnswer, this is likely to set you back at least £2,115 per agent.


All full-time workers are entitled to a minimum of 5.6 weeks (28 days) paid holiday per year in the UK. This is known as “Statutory entitlement.”  Public holidays can be included as part of that 28 days.

It’s important to remember that you must have enough trained customer service representatives to cover each holiday taken.


According to Gov.uk “All employers must offer a workplace pension scheme by law. You, your employer and the government pay into your pension.”

However, employers do not have to contribute if representatives earn these amounts or less:

  • £520 a month
  • £120 a week
  • £480 over 4 weeks

For your employees to qualify, they must be aged 22 and above and work within the UK. If your employee is below 22, they can still join the pension scheme, but you do not have to contribute as an employer if they earn below or equal to £480 a month.

minimum pension requirement

Recruitment Costs

Recruiting employees to join your team will involve internal and external costs. As an employer in the Customer Service sector, you may need to ramp up your team during busy periods such as Black Friday and Christmas. If you don’t have an internal HR department, you have to approach recruitment agencies to help source temporary staff.

The average recruitment cost of filing a vacancy using internal and external recruitment methods is £4,500.

Sick Days

The UK sickness absence rate fell to 1.8% in 2020; this is the lowest recorded since the data time series began in 1995.

Obviously, the coronavirus (COVID-19) pandemic affected the sickness absence data in several ways; “while the virus may have led to additional sickness absence, measures such as furloughing, social distancing, shielding and increased homeworking appear to have helped reduce other causes of absence, allowing the general downward trend to continue” according to the Office of National Statistics.

But this is not the only potential cost to your organisation. When an employee is sick, their workload must be divided amongst their colleagues. Productivity levels and the overall quality of service being provided will then be affected.

Staff Turnover

Every employer knows that retaining staff is a lot cheaper than finding new ones. It may also benefit from sending a positive signal to potential employees that you are a good employer to work for.

The level of staff turnover for UK customer contact operations is 26% – well above the UK average of 15%.

Employing an in-house agent may cost more than you think…

As our latest figures show, the first-year costs of employing an in-house customer service agent could easily top £30,000 when workspace, equipment, recruitment and other costs are factored in.

That’s almost double the annual salary you’re likely to be paying them.

Outsourcing your customer service not only helps reduce costs but also allows you to concentrate on driving your business forward.

It can help reduce the stress of recruiting temporary staff for your busy periods, as recruitment will be the responsibility of your outsourced supplier. It could also help make you more responsive to your customers’ needs by enabling you to be open on evenings and weekends.

Of course, you don’t always have to go “fully outsourced.” An overflow service may help reduce pressure at your peak times and prevent you from missing an opportunity with a customer.

Wrapping Up

Providing excellent customer service can help you grow your customer base and strengthen the loyalty of your existing customers.  Investing in this part of your business will not only allow you to get on with what you do best, but it will also pay dividends as your business grows.  Rather than ask yourself if you can afford to outsource your customer service, ask yourself if you can afford not to.


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