Senior Writer: Supriya Bajaj
Reading Time: 7 MinutesPublished : March 26, 2024Call center shrinkage is one of the key aspects of measuring call center efficiency. It refers to the time that is used in activities other than handling the customers. The occupancy rate, on the other hand, reflects the time agents spend in productive work. According to studies, the occupancy rate, which is the recommended percentage at which call center agents should actively engage in productive work, is 83% as of date.
Measuring and reducing call center shrinkage directly translates to better occupancy rates and higher productivity. Therefore, it is important to understand, track, and control shrinkage in call centers to boost overall efficiency. Let’s learn more about call shrinkage in this informative blog.
What is Call Center Shrinkage?
Call center shrinkage is the measurement of time your call center agents are unavailable to serve customers despite being paid for it. It is one of the most essential call center metrics, as it helps you determine the accurate number of people needed to match the call volume. Sometimes, even the most efficient managers fail to identify the hidden areas of shrinkage, leading to delayed customer service and unhappy customers. It may also impact the process of evaluation of agent performance.
Proactive management and control of call center shrinkage helps businesses stay ahead of their competitors by providing better customer service. Use advanced business communication software like DialerHQ to reduce shrinkage, boost efficiency, and improve customer service and workforce management with its exceptional functionalities.
Shrinkage in call centers may occur due to productive or unproductive factors that consume the valuable time of your agents. These factors hold them back from spending their minutes answering calls for which they are paid. Understanding these factors helps control shrinkage and the overall operating costs of a call center and hence helps drive more efficient call center operations.
What Factors Contribute to Call Center Shrinkage?
Multiple reasons contribute to BPO shrinkage. These factors can be primarily categorized into two parts:
1. Internal factors that cause call center shrinkage
These factors mostly include tasks that are related to your call center other than handling your customers, such as
- Official breaks
- Huddles
- Team meetings
- One-to-one meetings
- Training
- Doubt-solving sessions
- Technical issues
- Administrative discussions
- Feedback sessions
- Special projects
2. External factors that cause call center shrinkage
These factors encapsulate the reasons that are not related to or in control of your call center, such as
- Extended breaks
- Holidays
- Absenteeism
- Late coming
- Early leaving
- Personal calls
- Emergency leaves
- Weather conditions
- Talking to coworkers
Other types of shrinkage in BPO that may affect operational efficiency include unplanned or planned company events, fluctuations in call volume, network failures, etc.
Why is Calculating Shrinkage Important?
Call centers can implement effective strategies to optimize workforce efficiency by identifying and addressing shrinkage. It also helps ensure that enough number of call center agents are available at any given time to meet the call volumes. This way, shrinkage calculation in BPO helps reduce wait times and call drops and improves response rates, enhancing customer satisfaction.
Calculating shrinkage percentage enables call centers to allocate resources more efficiently, reducing overstaffing during low-demand periods and understaffing during high-demand periods. Therefore, it contributes to the cost-effectiveness of the call center and improves profitability. It is also vital in making data-driven decisions by studying the trends and patterns of the factors that affect shrinkage. By calculating and managing the shrinkage in call center services, businesses can drive continuous improvement and growth in customer service.
How to Calculate Shrinkage in Call Center?
Shrinkage percentage can be calculated using a simple mathematical call center shrinkage formula. To calculate shrinkage in your call center, you will need:
- Total hours of external shrinkage
- Total hours of internal shrinkage
- Total scheduled hours
By putting the above data in this simple call center shrinkage calculation formula, you can calculate shrinkage percentage of your call center:
Shrinkage=(Total hours of external shrinkage + internal shrinkage / Total logged-in time) x 100
Let’s say 100 agents who work 10 hours a day are involved in breaks, meetings, discussions, etc., for 2 hours daily. Then, the call center shrinkage calculation formula can be applied as follows:
- Total hours shrinkage = 2 × 100 = 200 hours
- Total scheduled hours = 10 × 100 = 1000 hours
Shrinkage% = 200 /1000 × 100 = 20%
Hence, if the shrinkage percentage in your call center is 20%, then it means that 20% of your call center agents’ logged-in time is unavailable for taking calls and is rather spent for the internal or external shrinkage reasons discussed earlier.
How to Use Shrinkage to Calculate Staffing Requirements?
Shrinkage percentage plays an important role in workforce management by helping you determine the staffing requirements. It ensures that the contact center has the right number of agents to attend calls while meeting the service level objectives.
You can calculate staffing requirements by using the Erlang C formula:
Staffing requirement = (Staff required/(1-(shrinkage/100)))
For example, if you require 100 agents to cater to your call volume and the shrinkage of your call center is 20%, the actual staff required will be,
Staffing requirement = (100/(1-20/100))) = (100/(1-0.8)) = 80
Therefore, the actual number of agents you require is 80 instead of 100.
Impact of Call Center Shrinkage on Call Center Efficiency in BPOs
Call center shrinkage may vary from time to time. Some call centers may experience higher shrinkage rates in the morning times when most of the meetings are scheduled and in the mid-afternoon hours when the call volume may be low. Moreover, the shrinkage may also differ across the year. The shrinkage rates may rise during the holiday season when employees tend to take more leaves.
So, the question arises: what is a good shrinkage rate in a BPO? While estimates vary, it can be understood that the average shrinkage percentage across the call center industry is approximately 35%. Anything above this percentage signifies that your agents are not actively engaged in handling customer queries.
A higher shrinkage rate can have negative effects on the overall contact center efficiency. It may impact your service level targets and result in longer wait times. This leads to reduced customer satisfaction and can hamper your service standards. Therefore, striking the right balance for maintaining shrinkage is pivotal for providing better customer service.
How Can You Control Call Center Shrinkage in BPO?
It is important to control and manage shrinkage to improve call center efficiency. Here is how you can manage shrinkage in a call center:
1. Track shrinkage regularly
Regularly tracking shrinkage plays a fundamental role in controlling and reducing it. If you regularly monitor the shrinkage hours in your contact center, you can effectively determine and reduce the factors behind it. Monitoring shrinkage will help you with efficient call center staff staffing to attend the most number of calls.
Use call center software to track and manage shrinkage and implement advanced monitoring tools that provide real-time insights into what your call center agents actually do in a day. This can be done by establishing a shrinkage monitoring process for keeping an eye on their productive time and breaks, meetings, training sessions, etc.
2. Monitor schedule adherence
Absenteeism and tardiness are crucial factors that contribute to higher shrinkage. Employees who come late or take extended breaks can still be paid for it. If an employee takes 20 minutes of extra break every day, it amounts to 2 hours per week (considering 6 working days). And, if there are several such employees in your contact center, they can drastically increase your shrinkage percentage without even getting noticed.
To ensure agents are following their schedule, you can implement flexible break policies where they can divide their official break time into several parts, as and when required, to use the restroom, attend personal calls, etc. However, these breaks must be monitored strictly to make sure they resume work on time. If you find that your employees are tardy, warn them repeatedly to improve schedule adherence.
3. Give incentives for minimum shrinkage
Call center work can be monotonous at times, and employees may feel like skipping shifts or taking longer breaks. Although it is practically impossible for agents to utilize 100% of their time in productive tasks like addressing customer concerns, call center managers should aim to maximize schedule adherence. Implementing strategies to reward employees who follow their schedule can work as great encouragement for reducing shrinkage in the call center.
Create incentive programs that offer performance bonuses, incentives, certificates of appreciation, or additional tangible rewards for employees members who regularly put in a lot of effort. To increase productivity and lower shrinkage, you may also provide them with free vouchers, sponsored holidays, more paid time off, and other benefits. This strategy will assist you in meeting service level objectives and creating a positive work atmosphere in addition to inspiring other contact center employees.
4. Optimize your workforce effectively
Effective workforce optimization is crucial for reducing shrinkage. Workforce optimization can be achieved with accurate forecasting of calls and timely scheduling of agents to ensure that there is the right number of agents available to take calls. Contrarily, if there are more agents available during low call volume, they may end up being free. Regularly change and align agent schedules and adjust staffing levels according to the predicted demand.
Call center managers must cross-train agents to handle multiple tasks so that all the employees are capable of filling in for absent or unavailable employees. This will also reduce the training period of employees, which is one of the most important internal shrinkage factors.
5. Hire part-time agents
If the contact center experiences fluctuations in call volumes frequently, hire part-time agents to tackle overstaffing or understaffing problems. Hiring part-time agents can provide additional coverage during peak periods without having to end up with more agents in the other scenario. Flexible staffing helps the call center to adapt to the varying workload patterns.
Let’s say you have 20 extra agents to cover up during the peak seasons, and they may end up passing the time or doing non-work related activities during the other months and still get paid for it. It also increases the operational costs of the call center. To prevent contact center shrinkage arising out of this, strategically schedule agents in the busier periods.
Wrapping Up
Monitoring and controlling shrinkage in call centers require a comprehensive and proactive approach. It is not only about tracking the unproductive time and efficiency of your agents. It is vital for addressing staffing gaps, maintaining contractual obligations, meeting service level agreements (SLAs), and aligning the workforce with business objectives. Most importantly, it helps maintain the quality standards of your customer service, improves customer satisfaction, and promotes a positive work environment.
Frequently Asked Questions
Shrinkage in BPO can be defined as the proportion of time agents are unavailable to serve clients during their official work hours.
The acceptable shrinkage percentage across call centers of various industries is between 30 and 35%.
Any components that contribute to unproductive time that contact center agents do not utilize in serving customers, such as scheduled breaks, unscheduled breaks, training, meetings, coaching, feedback sessions, leaves, group discussions, etc., can cause call center shrinkage.
Contact center shrinkage should be tracked regularly to maintain high levels of customer service. However, one must note that the shrinkage percentage may differ from time to time and department to department.
Supriya is a highly skilled content writer with over 8 years of experience in the SaaS domain. She believes in curating engaging, informative, and SEO-friendly content to simplify highly technical concepts. With an expansive portfolio of long-format blogs, newsletters, whitepapers, and case studies, Supriya is dedicated to staying in touch with emerging SaaS trends to produce relevant and reliable content.
Updated : March 29, 2024
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