Shrinkage in BPO Call Centre: Formula, Types, and Calculation

Call centers and BPOs always focus on improving efficiency by reducing and monitoring call shrinkage. The shrinkage formula in Business process outsourcing is a useful tool to improve employee performance by effectively managing costs and resources. Team leaders in BPO and contact centers need to understand call shrinkage to deliver the best services to customers and satisfy them.

Shrinkage in BPO is an important component in estimating the percentage of time the agents are available to handle customers. Thus shrinkage in a BPO can be defined as when call center executives are not available to handle calls for various reasons, such as breaks, off days, and training sessions.

Many reasons can cause call center shrinkage, like when the calling agents are less than call volumes. In call centers and BPOs, the shrinkage varies between 20% to 50%, but the average remains at 30%. This means that, on average, 30% of the total scheduled working time is spent on something other than handling customer calls or performing core tasks.

For Example, if a call center agent has an 8-hour shift, the average shrinkage of 30% would mean that they are only available for 5.6 hours (8 hours * 70%) to handle customer calls and perform their duties. SquadStack has proper Telecalling workforce management software which has helped many companies to like Upstox, Delhivery, and Choice through its fully managed network of on-demand experts.

Shrinkage in BPO & Call Center: Definition and Impact

In Business Process Outsourcing, "shrinkage" refers to when employees are not in a position to handle incoming customer interactions or complete their primary job responsibilities. Sometimes calling agents on breaks, lunchtime, training sessions, 1:1 meetings, team huddles, etc., can lead to shrinkage in BPO. However, some shrinkage is required in BPOs because it impacts the efficiency of calling agents. Some of the reasons for the shrinkage in BPOs are shared below:

1. Breaks and Lunchtime: Employees can rest and eat during breaks and lunchtime. This is called planned shrinkage.
2. Training and Development: Team Leaders in BPO conduct training sessions to improve performance and sales.
3. Meetings and Huddles: Team meetings, performance evaluations, and huddles are all essential to discuss operational strategies and Script changes.
4. System downtime: Unplanned shrinkage may be caused by technical issues, software updates, and maintenance.
5. Absent agents: Unplanned shrinkage due to illness or personal reasons.
6. Unscheduled Pauses: Employees may occasionally take unscheduled pauses, resulting in unplanned shrinkage.

Managing shrinkage in BPO is important to ensure they have sufficient agents to provide the best customer service. Proper workforce management and scheduling help balance planned and unplanned shrinkage to maximize productivity and operational efficiency.

How Squadstack Minimizes Shrinkage?

SquadStack manages shrinkage by leveraging work-from-home telecallers and implementing a pay-per-connected-minute model. By allowing employees to work remotely from their homes, we reduce the time and resources spent on commuting, creating a more flexible work environment. This flexibility can help minimize shrinkage related to factors such as absenteeism and adherence, as employees have greater control over their schedules and are more likely to be available during their designated working hours. Additionally, the work-from-home model can attract a wider pool of talent, including individuals with constraints that prevent them from working in a traditional office setting.

The pay-per-connected-minute model further incentivizes telecallers to maximize their availability and productivity during working hours. Instead of being compensated solely based on the hours worked, employees are rewarded for their time actively calling customers or prospects. This model encourages telecallers to focus on connecting with as many customers as possible while minimizing idle time. By tying compensation directly to performance metrics, SquadStack can effectively manage shrinkage by ensuring that employees remain motivated to optimize their availability and productivity, ultimately leading to improved efficiency and customer satisfaction.

Shrinkage Formula in BPO for Optimizing Workforce Management

Two types of shrinkage in a BPO or Call center are External and Internal. These both shrinkages are used in the shrinkage formula in BPO to calculate final shrinkage.

The shrinkage formula in BPO in terms of hours can be stated as follows:

Shrinkage Percentage % = ( Total hours of external shrinkage + Total hours of internal shrinkage) / Total hours available ×100

The percentage of shrinkage received after this calculation is the real shrinkage in the call center.

Where:

External shrinkage refers to activities where your call center executive is unavailable for customer service at the desk.

• Being late
• Sickness
• Absenteeism
• Holidays (Public holidays)
• Paid Leaves

Internal shrinkage occurs when your agent is at work but cannot answer Inbound calls. This could be due to:

• Meetings (team or individual)
• Coaching and training
• System downtime (unable to take calls)
• Unplanned facility issues (Loss of power, unable to access floor)

The shrinkage Formula in BPO can also be stated regarding Productive and Non Productive time, which is shared below:

The formula to calculate shrinkage in BPO in terms of Productive and Non Productive time is:

Shrinkage percentage (%) = (Non-Productive Time / Total Available Time) * 100

Where:

• Non-Productive Time: The total time employees spend on activities other than handling customer contacts. This includes breaks, training sessions, team meetings, administrative tasks, etc.
• Total Available Time: The total time that employees are scheduled to be available for handling customer contacts.

The shrinkage formula in BPO, typically expressed in terms of logged-out time and logged-in time, is shared below:

Shrinkage Percentage % = (Total Logged Out Time / (Total Logged In Time + Total Logged Out Time)) * 100

Where:

• Total Logged Out Time: The time agents are unavailable for handling customer interactions (e.g., breaks, training, meetings).
• Total Logged-In Time: The time agents are actively logged into the system and available to handle customer interactions.

Shrinkage Calculation in BPO: Step-by-Step Guide

The two ways to calculate the shrinkage in the contact center are the number of hours (time) and the number of call center agents. Using the equation to calculate shrinkage in the contact center in terms of time:

Shrinkage Percentage % = ( Total hours of external shrinkage + Total hours of internal shrinkage)/ Total hours available×100%

Let us take an example of the contact center shrinkage based on

• The total number of working days in one complete year: 260
• The total number of working hours in one complete week: 37.5

In the example shared below, the total shrinkage in days/ year = ( Total hours of external shrinkage + Total hours of internal shrinkage)/ Total days

= 82.5/260

= 32.5 %

A complete table showing how this shrinkage calculation is done is shared in the infographics below:

Calculation of Shrinkage in terms of the number of Agents:

Calculation of Shrinkage Percentage % in terms of Agents = ( The total number of agents required to take calls) / The total number of agents available to answer calls ×100%

Let us take an example of the calculation of shrinkage in BPO in terms number of agents.

Let's assume the following data for a specific period:

• Total Logged-in Agent Hours for the period = 10,000 hours
• Total Productive Agent Hours for the period = 8,000 hours

Now, let's calculate the Shrinkage Percentage:

Shrinkage Percentage (%) = ((10,000 - 8,000) / 10,000) * 100

Shrinkage Percentage (%) = (2,000 / 10,000) * 100

Shrinkage Percentage (%) = 0.2 * 100 Shrinkage (%) = 20%

The shrinkage Percentage in terms of the number of agents for this specific period is 20%.

This means that, on average, 20% of the agents logged in time were not productive but rather on breaks, training, meetings, or other non-productive activities.

What are the Different Types of Shrinkage in BPO?

Considering shrinkage when planning and managing customer service in contact centers is important. This affects efficiency, resource allocation, and overall effectiveness. Shrinkage can take many forms in BPO.

1. Idle Time Shrinking: Idle time shrinkage is caused by several factors, including low call volume and slow system performance. The agent may be logged in but is not accepting calls.
2. Break Time Shrinkage: Proper scheduling ensures smooth operations and allows agents time to rest. Break time shrinkage is the amount of time that agents spend taking breaks. This includes coffee, lunch, and other activities.
3. Training Shrinkage: Agents who attend training workshops or sessions cannot serve customers. This training is necessary for the knowledge of company policies and customer service skills.
4. Absence Shrinkage: Absence shrinkage is when agents are absent due to planned leaves.
5. Attrition Shrinkage: Attrition shrinkage refers to the amount of time lost due to a reduced workforce due to employees leaving an organization.
6. Shrinkage due to System Downtime: Shrinkage can occur if agents cannot access the necessary tools.

Effective Strategies for Controlling and Reducing Shrinkage in BPO

Reducing call center shrinkage is crucial for optimizing productivity, maximizing efficiency, and improving customer service. Here are some tips to help reduce call center shrinkage:

1. Using Proper Telecalling Workforce Management (WFM) Software: To reduce shrinkage, you need a reliable software system where agents are paid according to their call volume and schedules. Squadstack pays agents according to their call timings. It helps Squadstack adapt the team size by scaling campaigns per your business needs.
2. Real-Time Monitoring of Agents: SquadStack uses an AI-powered real-time monitoring process, including an automated quality check engine that helps measure call quality and agent performance.
3. Adherence Incentives: Introducing incentives for agents who consistently adhere to their schedules can reduce BPO or contact center shrinkage. A positive environment among agents can encourage better time management and reduce unscheduled breaks.
4. Training Efficiency: Optimize training programs to minimize the impact on live call handling and control shrinkage.

By implementing these strategies, you can reduce shrinkage in BPO and enhance overall performance, resulting in better customer satisfaction and increased efficiency.

Wrapping Up: Shrinkage's Role in Business Process Outsourcing

In the context of a contact center, it can be concluded that the term "shrinkage factor" refers to the amount of time that agents are not available to handle customer interactions. This concept is crucial in contact center workforce management as it helps to determine the right number of agents needed to meet service-level goals. Several components contribute to the shrinkage factor in a contact center, like breaks, Auxiliary Activities, Adherence, and Compliance, Sick Leave and Absences, Vacation Time, Coaching and Feedback, etc.