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What is Call Center Shrinkage & Shrinkage Formula in BPO

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Paras Kela

Senior Writer:

green tickDate: February 29, 2024

Call center shrinkage is one of the key performance indicators in a call center that can help you improve customer interactions, average handling time, and service quality.

Shrinkage enables operations managers to measure the time for which agents cannot handle calls despite being paid for it. Call center shrinkage also helps estimate how many agents you need to hire to meet call volumes.

Call Center Shrinkage – What is Shrinkage in BPO?

Call center shrinkage is the difference between the time you pay your agents to serve your customers and the actual time they spend doing so. It helps determine the time agents spend doing other things rather than attending to customers and their respective queries.

There are several other definitions of call center shrinkage, similar to the above explanation.

  • Any scheduled or unscheduled activities that prevent agents from assisting customers is known as call center shrinkage. 
  • Call center shrinkage is the set of elements that take your agents away from being productive and serving your customers.
  • It is the difference between the number of agents employed and the number of agents available to attend customers at a given time.

While the definition of shrinkage may vary from company to company, the contributing factors remain the same.

What Factors Contribute to Call Center Shrinkage?

Call center shrinkage factors are divided into two categories: external and internal.

Call center shrinkage internal factors – It includes factors that are related to your call center, like:

  • Paid breaks (like lunch)
  • Team meetings
  • One-on-one meetings
  • Training sessions
  • System downtime
  • Time spent helping other departments
  • Work-related to Special projects

Call center shrinkage external factors – It includes factors that are not in your control (rather in your employee’s control), like:

  • Taking longer breaks
  • Holidays
  • Vacation
  • Absenteeism
  • Half-day (or leaving early)
  • Coming late
  • Personal calls and emergencies

You May Also Read : How To Calculate and Improve Occupancy in a Call Center?

Calculate Call Center Shrinkage – What is Shrinkage Formula In BPO?

Formula to calculate call center shrinkage

The formula for call center shrinkage is:

Shrinkage = (Total hours of external + internal shrinkage / Total hours available) x 100

For example, let’s say one of your agents spends 40 hours at work per week. His internal shrinkage (lunch, training, etc.) amounts to 7 hours, and external shrinkage (coming late, longer breaks, etc.) equals 2 hours per week.

Shrinkage = ((2 + 7) / 40) x 100 = 22.5%

Impact of Call Center Shrinkage on Call Center Efficiency in BPOs

The average shrinkage rate for call centers across industries is around 30-35%. Anything more than 35% indicates that very few agents are available to attend customers. It will result in longer wait and hold times, thereby reducing customer satisfaction.

Using Shrinkage to Calculate the Number of Staff Required

Managers use shrinkage percentages to calculate the number of agents required to handle call volume to meet service level agreements (SLA). 

Here’s how:

Staff required = (Staff demand / (1 – (shrinkage / 100)))

For example, let’s say you need 60 agents to handle your call volume in half-hour to meet your SLAs and your shrinkage is 20%. 

Actual staff required = (60 / (1 – (20/100))) = (60 / (1 – 0.20))= 75

How to Reduce Your Call Center Shrinkage in Your BPO?

Managers cannot boost call center efficiency without reducing call center shrinkage. Here are four ways to decrease your call center shrinkage.

1. Track Schedule Adherence

It is one of the biggest contributors to shrinkage. Even if your agent misses the schedule by fifteen minutes every day, it amounts to 5.5 hours per month (considering 22 working days a month).

Schedule adherence

( Source: callcentrehelper )

Though it might not be possible to adhere 100% to the schedule, you should aim to minimize non-adherence as much as possible.

2. Monitor and Address Absenteeism

You can easily find agents who remain absent frequently. You must identify the reason behind frequent absenteeism to control shrinkage. This will help you determine the possible solutions to minimize absenteeism and boost your call center’s efficiency.

3. Reward Agents With Minimum Hours of Shrinkage

One of the best ways to decrease your call center shrinkage rate is by keeping your agents competitive. Reward agents for minimum shrinkage to encourage them to spend more time attending your customers.

4. Measure Shrinkage Continuously

Shrinkage affects the overall performance of your call center. You cannot make your call center efficient without measuring shrinkage regularly. Calculate the shrinkage rate each month and identify the primary reasons behind it to maintain a near-constant shrinkage rate. 

Conclusion: The call center shrinkage rate directly influences your call center productivity. Use the formula mentioned above to calculate the shrinkage rate and the tips to reduce it. The reduced call center shrinkage not only improves the efficiency of the call center but also boosts the revenue.

How often do you calculate the shrinkage rate in your call center? What measures do you take to minimize it? Please let us know in the comments.

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