Last month, this column addressed how an agent's employment status affects the types of services offered by virtual contact centers. While both models offer significant benefits over brick-and-mortar call centers, the decision to hire agents as either contractors or employees creates important differences. As a reminder, virtual contact centers with independent contractors are primarily engaged for straightforward, scripted call types needing minimal training. Virtual contact centers with agents as employees, on the other hand, are the best choice for companies with complex, unscripted call types requiring weeks or months of training.
While industry fit is a key difference between the two employment models, the agent's perspective is also a factor deserving consideration when selecting a virtual contact center partner. There are pros and cons to the experiences agents have as either independent contractors or employees. Understanding the motivations behind a person's decision to choose one model over the other can help ensure you have the best agents to meet your needs.
Life as an Independent Contractor
For people who want to work five to ten hours a week for some supplemental spending money, becoming an independent contractor is a good fit. Independent contractors are their own bosses. They work when and for as long as they want. Unfortunately, the available work for most independent contractors is late at night and on the weekends answering calls for items such as direct response TV ads, pizza orders or other infomercials.
While the flexibility may be appealing, the decision to become a contractor is inherently more risky than working for an employer. Most independent contractors are required to pay $600-$800 in upfront costs with no guarantee of sustainable income. Here is a breakdown of the required expenses prior to being accepted as a contractor:
1. $200+ Incorporation Fee: To begin with, many companies require contractors to form their own LLC or corporation. This can cost up to $200 or more on average, depending on the state of residence.
2. $50+ Background Fee: Next, contractors typically pay for their own background check, credit check and drug tests-fees that can range from as low as $50 to more than $175 for some companies. (While employee-based companies typically also charge for background checks, agents only pay after they have been offered the job and all of the money is paid directly to the screening agency.)
3. $100s in Lost Wages: Once approved, the next phase is training. Independent contractors are not paid for time spent in training, and some companies even require contractors to pay out-of-pocket for their own training. For contractors at some virtual contact centers, these cash outlays can reach several hundred dollars, while the cost of not being paid for training hours often equates to several hundred more dollars in "lost" wages.
4. $100s in "Access" and "Certification" Fees: Finally, on top of these "getting started" costs, some companies charge their contractors certification and ongoing monthly network access and support fees.
To justify this financial outlay, a prospective contractor agent should ask how long it could take to recoup the investment. Because pay for a contractor is variable, the answer to this question is "it depends." Nearly all independent contractors are paid a flat fee based on the minutes they are on the phone or on a per-call rate. Typically, these rates are approximately 25 cents per minute, with additional "spiffs" and bonuses for hitting certain metrics. In the unrealistic scenario where an agent is on the phone for 60 minutes in an hour, they could theoretically make upwards of $15 per hour. The reality, however, is that many independent contractor agents take two or three calls in any given hour-long period, resulting in an effective wage of less that $5 per hour. The majority of independent contractor agents earn an average of $5,000 a year, while earning power is further eroded by the lack of access to corporate benefits and a higher income tax burden. For these reasons, this model is chosen mostly by people looking for a secondary (and somewhat unpredictable) income.
Life as an Employee
The experience a person has as an employee is quite different from that of a contractor. Agents who elect to work as employees are willing to make a stronger commitment to the company and their clients in exchange for better job security and guaranteed pay. As an employee, agents set their work schedules to accommodate personal commitments. These schedules are then matched to a client's forecasted volume. This ensures a certain level of compensation for agents because the company pays based on hours worked, regardless of high or low call volume. Employees are also paid for time spent in training, which in many cases can add up to several thousand dollars.
Most employee agents log over 34 hours a week and earn on average $8-$10 per hour, with additional monetary incentives for meeting quality-related metrics. As employees, agents have access to corporate benefit plans, avoid the burden of paying self-employment taxes and have more opportunities for advancement. At Alpine Access, for example, the majority of our staff in account management and leadership positions began their careers as virtual contact center agents. The extreme level of dedication from agents who choose to become employees is one of the major reasons employee-based, virtual contact centers set the standard for high quality service.
The Right Choice for Your Business
In summary, people who would like to make a little extra income by working from home are well-suited to the contractor model. It requires little training and no schedule commitments, allowing them to sign on and off as they like. If the start-up costs and variable income are not concerns, this is a viable way for people to make a financial contribution to their households. From a business perspective, independent contractors are sufficient for companies with unpredictable call volumes who need staff to handle straightforward calls using scripted answers. The contractor model could be the right choice if the client is comfortable with an inability to schedule or manage the agents, and a tendency to receive variable service levels.
Virtual contact centers that hire agents as employees offer a very different type of service. With paid training, people are willing and able to gain the extensive knowledge needed to provide the high quality service complex programs and industries require. Agents dedicate themselves to one client and commit to a set schedule, and in return they receive the company's commitment to guaranteed wages, benefits and advancement. Clients of employee-based centers have the security of defined service levels and quality performance metrics. Companies also know their representatives have the most up-to-date training and skills, combined with a dedication to service.
To determine which model is most appropriate for your business, first look at the reasons your customers call. Can the majority of calls be resolved using a set of scripted answers with very little agent training and no direct management? If so, independent contractors may be adequate. If not, you likely need agents who have the expertise that comes from being an experienced and committed employee.
Rob Duncan is Chief Operating Officer of Alpine Access, Inc., a nation-wide provider of virtual contact center solutions and services. Alpine Access clients include many Fortune 500 companies in the financial services, communications, retail, travel, hospitality and government sectors.
Rob Duncan is COO of Alpine Access, Inc., a Denver, Colorado-based provider of contact center services using exclusively home-based customer service and sales employees.Duncan can be reached at 303-279-0585.Edited by Juliana Kenny