Shrinkage

Definition

What is Shrinkage?

Shrinkage is a call center term for the period that people are paid for when they are not available to answer calls. Shrinkage is the difference between the actual amount of working employees (budget) and those required to perform the primary duties (work) by which they are employed.

Several reasons can induce shrinkage. This includes some unknown ones that are not as apparent as some that are outside your reach.  Make consideration about shrinkage percentage scheduling the number of agents required to manage incoming call volumes. Call centers that regard shrinkage as a major predictor of labor-management (WFM) while recruiting and scheduling strive to reach a high quality of operation at a lower rate.

Why is it necessary to measure shrinkage?

Calculating the shrinkage predicts the average number of employees who would not answer calls over the interval. This volume can vary, but the normal range is between 10% and 40%. For this figure, you should now split your base personnel requirement by the consequence of arriving at the number of employees you should schedule.

Call centers that take shrinkage criteria into account of their planning and scheduling reach higher service levels at lower operational costs. They also do this by incorporating all call-related tasks in the forecasting and scheduling process.

How to calculate call center shrinkage

To get the shrinkage, add the total hours of external shrinkage to the total hours of internal shrinkage. Then, divide it by the total hours available. Then, multiply it by 100.

During slow times, agents can take longer breaks or spend more time talking with their colleagues. And if these extended periods of unavailability exist at times when your company does not accept a lot of consumer requests, you will need tests to assess the degree of shrinkage.

 

What is Shrinkage
What is Shrinkage?

Outsourcing FAQ

What is Business Process Outsourcing (BPO)?

What is Business Process Outsourcing BPO?

Business Process Outsourcing (BPO) is the engagement of services from a third-party provider. BPO uses various technology-enabled services to hasten the delivery of services. The business activities could be back-office such as, but not limited to, payroll, accounting, human resources, or front office jobs like customer service, sales, and marketing, etc. In the case of content providers, these business activities could mean hiring writers, remote editors, or virtual assistants.

BPO speeds up processes and enhances efficiency. Companies that outsource some of their business activities use their time on core services and competencies. With this shift in focus, companies improve their current processes that may result in improved customer satisfaction. BPO helps companies divert their resources to more critical business strategies. Often, companies find it impractical to hire a full-time position in-house because of the cost associated with doing so.

How does Business Process Outsourcing work?

When a business engages an external specialist to manage and operate some of its internal processes, it's referred to as business process outsourcing. Such ‘processes’ include customer service, accounting and finance, or sales. It is different from hiring an agency to do specific tasks, as the outsourcing provider (BPO) is more concerned with the ongoing production of labour-intensive tasks, instead of the higher-level strategy and guidance.

Now, business process outsourcing has broadened and is more akin to staff augmentation, or staff leasing.

What are the benefits of business process outsourcing?

There are many benefits to outsourcing, as well as some downsides and risks. The common benefits include:

Cost savings: significant savings of up to 70%, leveraging the lower global salaries Global market: access to a bigger employment pool of talent Global presence: having operational across the globe increases trade opportunities Flexible workforce: reduces internal local labour and employment compliance obligations Leverage skill: leveraging the skills of other specialist companies Focus: enables the client company to focus on their core functions

 

Business process outsourcing examples

The business process outsourcing sector is a vast industry, generating over $200bn annually, and employing many millions of people worldwide. Some examples include:

Big enterprise

Facebook and Uber outsource many of their operational functions, including content moderation for Facebook, and customer service for Uber

Medium-size businesses

A medium business with 50-500 staff might outsource the labour-intensive accounting and finance functions to a team in the Philippines.

Small business and entrepreneur

It is common for small business owners to have a Virtual Assistant (VA) working for hem full time, remotely from the Philippines.

What are the different types of BPO?

The type of business process outsourcing can be characterised by their specialisation, location, and size.

Generalist or specialist BPOs

Business process outsourcing is in the human resources and professional services sector. However, their services extend across all industries. The majority of BPOs are generalist, in that they offer a full range of professional services, although some specialise in certain verticals (ie accounting, or animation).

Location

Business process outsourcing typically operates form developing nations such as the Philippines, India, and Colombia. They typically have cheaper cost-of-living and bigger populations. Different locations offer different advantages.

Size of BPO

The bigger BPOs employ more than 250,000 people. They are huge, global operations. Medium-sized BPOs range from 500-5,000 staff and offer a full range of services. The smaller BPOs might have 1-500 people.

Functions of business process outsourcing

Collectively, business process outsourcing provides any kind of staffing solution. Common functions of BPO include:

Finance and accounting: operational, technical and specialist functions Healthcare: various functions of the backend of the healthcare and health-insurance industries Creative and content: everything from post-production of Hollywood movies to newspaper and website content Tech, IT and development: network management, web and app development and maintenance Sales & customer support: ongoing sales and customer operational support and delivery Marketing: ongoing marketing, communication and branding activities Talent and HR: externalising the management of company HR, recruitment and compliance Administration: general business administration and operational activities Business Process Outsourcing (BPO) services

Outsource Accelerator is the most trusted source for independent information & advisory for Business Process Outsourcing (BPO). We have over 4,000 articles, 200+ podcast episodes, and a comprehensive directory with 700+ BPOs… all designed to make it easier for clients to learn about, and engage with, business process outsourcing.

What is Idle Time?

What is Idle Time?

Idle time, sometimes comparable to waiting time, is the period of time when an employee, machine, or commodity is ready and available but is unproductive. Minimizing idle time is crucial if a company wishes to optimize productivity and efficiency over a long time.

Companies should learn and track down idle time to figure out the difference between the current productivity levels. Simply put, any minute the computer or employee is idle is a minute of wasted productivity. Idle time is costly because the company needs to pay its staff, who are at that point, did not make any profit or income for the company.

Types of Idle Time

There are two major types of idle time, Normal Idle Time and Abnormal Idle Time.

Normal idle time.  Normal idle time is the gradual shortage of productive working hours in the course of business. In any job setting, it is inherent and can not be removed. Normal idle time is inevitable, and the company must also pay the labor expense of this time. Yet, there should be every attempt to minimize it to the lowest extent possible. Abnormal idle time. Abnormal idle time is the time loss that is possible to reduce by using precautionary measures. For example, the time wasted as a result of excessive waiting for instructions.

 

What is Agent Occupancy?

What is Agent Occupancy?

Agent occupancy means that the percentage of time spent on answering inbound calls by a call center agent is against the available or idle time. It can be measured by dividing the workload time by staff time. It is a statistic used to measure the efficiency of a call center agent.

The agent occupancy is sometimes confused with the utilization of agents. Both metrics have the same numerator but they have different denominators. The agent occupancy denominator is the cumulative time the speech, text, or chat agent logs into the framework, far different from agent utilization. Meanwhile, agent utilization indicates the overall time consumed by an agent through chat, voice, and email.

How to calculate the agent occupancy?

Agent occupancy is a standard and significant service desk indicator for monitoring and trends. This is because it gives an example of how active agents are when logging into the system. However, for the reasons outlined. The Occupancy Rate and the Service Level will inform you whether the personnel level is set correctly for any given period.

Here is the formula for agent occupancy rate:

Agent Occupancy Rate = Handle time (talk time + after call work time) / time signed into a queue.

 

What is Staff Leasing?

What is staff leasing?

Staff leasing is where companies partner with a 3rd-party that will handle the administrative aspects of employment, such that the 3rd-party is the legal entity that employs the staff. This is similar to seat leasing where a company that already has the infrastructure in place, will lease the use of that infrastructure to other companies. In the case of staff leasing, that infrastructure is the HR, payroll, and other employment-related processes; in the case of seat leasing, the infrastructure is the IT and telecommunications equipment only.

Depending on the need of the client, staff leasing companies can either provide the employees using their pre-existing pool of candidates, or the client company can handle the recruitment efforts while the staff leasing company handles the compensation and other sundries. Thanks to the scale of staff leasing outsourcing companies, they are in a position to offer more competitive benefits, such as lower-cost healthcare plans, to which smaller companies would not have access to. In turn, clients not only save on administrative costs, but the cost of an employee turns into a single line-item for easier accounting.

Staff leasing in the Philippines

Staff leasing is arguably the most popular type of business process outsourcing, where both employee and infrastructure is provided by the outsourcing company. Lessening the financial risk to the client should they decide to scale their outsourced team in the Philippines.

Outsource Accelerator's directory lists over 700+ outsourcing companies in the Philippines. All of these are carefully selected for innovation, expertise, and technology that will benefit our clients. We also provide you with guidance on the best staff leasing options you can get in the Philippines for your business.

Related outsourcing resources

    Transform your business
    Icon
    CONSULT
    Icon
    3 QUOTES
    Icon
    START
    Icon
    FAST-TRACK
    Icon
    TOOLKIT
    X