What Does ‘Shrinkage’ Mean For BPO Agents?

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Handling The Largest Call Center In The Philippines By Shrinkage Management

One of the most important parts of call center-specific workforce management is monitoring and reducing shrinkage. 

But what is a call center ph Shrinkage?

Call center shrinkage refers to the time for which agents are paid to answer calls and serve customers versus the actual time they spend doing so. It tells you how much time agents spend doing something other than helping customers.

There are several other definitions too similar to the one above in concept: 

  • Shrinkage is the unscheduled or scheduled activities that prevent employees from doing their duties right. 
  • Shrinkage is the element that takes your customer service agents away from being productive and serving their customers right. 
  • Shrinkage is the amount of difference between the number of staff employed, budget-wise, and staff available to take responsibility for the primary tasks for which they have been employed.

While the definition of call center shrinkage can vary from one company to another, the reasons behind the event happening are classified into two primal parts. 

External factorsInternal factors
Leaving earlyCoaching/Training sessions
AbsenteeismOne-on-one meetings
HolidaysPaid breaks (eg: Lunch)
Coming lateSystem downtime
VacationTeam meetings

Here’s an example of a contact center services Philippines shrinkage calculator that would help you understand more. 

Bob leads a team of 12 agents in a call center. 

On any particular day, Bob might have an agent who’s gone on a vacation. Another agent who’s out sick. Maybe another one who’s not shown up for work yet. 

Among those who have shown up to work, one is on a break and the others are at work. So now you have 8 agents who are actually attending to customers. So how do you calculate the shrinkage of those 4 agents that are unavailable?

To calculate the overhead/shrinkage for your call center, you’d need the following details handy:

Number of hours for a full-time equivalent (FTE)

  • Total vacation days/year
  • Total sick days/year
  • Total statutory holidays
  • Total absent days
  • Total other days off

The calculation is based on:

  • Total working days = 261 
  • Total working hours per week = 40
  • Total number of agents = 100

Now that we have looked into the elements that constitute the call center shrinkage number, let us move to the section where we look into the calculation part of the shrinkage. 

There are two ways to calculate the call center shrinkage value.

Shrinkage % = Number of agents needed to take calls/ number of agents available to take callsShrinkage % = Total Hours (External + Internal Shrinkage) / Total Hours Available x 100


While calculating shrinkage, managers must consider both external and internal sources. Likewise, they must focus on both in-center and out-of-center components while implementing a plan to reduce call center shrinkage.

The manager cannot calculate shrinkage without collecting information about the shrinkage amount per agent over a period of 12 months. The average shrinkage rate for the call center industry ranges from 30% to 35%.

The manager needs to explore ways to reduce call center shrinkage if the shrinkage percentage exceeds 35%. However, they must remember that the shrinkage rate keeps changing across the day or year. Hence, they need to measure and monitor on a regular basis.

External &

Internal shrinkage

In days/year
One-on-one meetings1
System downtime1.5
Team engagement sessions2.8
Toilet breaks4.3
Training sessions5
Public holidays8
Paid breaks10.8
Team meetings1.5


The total shrinkage, in this case, will be 31.9%.


How shrinkage impacts efficiency of BPO companies in Metro Manila

A high shrinkage rate is an indicator of low performance. When agents are not available to attend to customers, it will ultimately lead to longer wait and hold times, resulting in reduced satisfaction. 

Though shrinkage is not a performance metric, managers sometimes use it to determine if the overall customer satisfaction can be improved. High shrinkage rates could put undue pressure on other agents causing a dip in overall productivity.

Calculating shrinkage also helps managers decide the required number of agents to handle incoming/outgoing calls. Managers take shrinkage into account to meet predefined service goals. 

Managers must regularly monitor and track this metric to meet staffing requirements and to ensure overall call center efficiency.

Managers cannot boost call center productivity and efficiency without reducing the shrinkage rate. They must keep in place a robust strategy to reduce shrinkage rate on a regular basis. 

The strategy must focus on implementing a dozen of the commonly used best practices for reducing shrinkage of inhouse call center in the Philippines.

Measure Shrinkage Rate Continuously

No manager can boost call center performance without measuring and monitoring shrinkage rate regularly. The new age call center solutions enable managers to measure and monitor shrinkage based on a variety of criteria – call volume, service level, and average call handling time. They even make it easier for managers to monitor fluctuations in call center shrinkage and identify the factors increasing them.

Track and Improve Schedule Adherence

The cloud-based contact center solutions enable managers to monitor and assess agent productivity based on real-time data. The managers can use the dashboard provided by the cloud-hosted call center solutions to check schedule adherence by generating reports. The managers can easily reduce shrinkage in the call center by generating reports and sharing the reports with agents on a regular basis.

Keep in Mind Unproductive Time

As noted earlier, the shrinkage can be caused due to both internal and external components. The managers can reduce shrinkage rate by keeping in mind some of the components while forecasting or planning schedules. For instance, while planning call center schedules the managers must consider important components like breaks, meetings, training, coaching, and after-call work time.

Monitor and Address Absenteeism

Absenteeism is one of the controllable components of call center shrinkage. The managers can easily identify the agents who remain absent frequently. They must identify the root causes of the frequent or habitual absences.

The managers also need to discuss with the agents to determine the measures required to minimize absenteeism. They can even implement a strategy to boost agent productivity by reducing absenteeism.

Keep Agents Competitive

The managers can easily reduce shrinkage in the call center by keeping agents competitive. In addition to providing coaching and assistance to agents, they need to reward the agents with minimum hours of shrinkage.

The incentive program will motivate agents to explore ways to reduce hours of shrinkage. However, the manager must remember that certain causes of call center shrinkage cannot be controlled or eliminated.

Start With the Finish

To ensure the alignment of assumptions between the business and the workforce management team, these questions must be thoroughly discussed. Spending time up front to agree on reasonable expectations will ensure that business requirements align with workforce management forecasting methodology.

Divide and Conquer

Shrinkage’s components in contact center industry in the Philippines typically occupy two top-level categories of in-office and out-of-office. The former consists of team meetings, one-on-ones, training, employee development exercises, and breaks; the latter refers to PTO, vacation time, FMLA, and planned or unplanned absenteeism. Categorizing your call center shrinkage components to include a secondary level will improve actionable understanding of the opportunity.

Collaborate On What’s Controllable

After you’ve categorized your shrinkage components, collaborate with the business on controllable shrinkage assumptions. Often, controllable elements refer to employee development exercises. Every business may have unique requirements, and all are attainable through forecasting, scheduling, and transparent communication.

Prepare For What Is Not

You can’t control the weather or the bout of flu that hits your staff each January like clockwork. But you can evaluate trends and proactively arrange to account for repeatable situations in your capacity plans, adjusting at the moment with as much lead time as possible for non-repeatable issues. Most contact centers utilizing workforce management implement three practices:

  • Long-term capacity planning
  • Short-term forecasting
  • Real-time adjustments based on daily ebb and flow

The same goes for shrinkage. Rather than driving blindly toward an ideal future state, forgo “vacuum planning” and instead merge seasonal information, historical data, business insights, and real-time trends with actionable game plans to drive a proactive call center shrinkage plan and facilitate positive outcomes.

Get Competitive

People respond positively to evaluation and act in accordance with what they’re being measured on. That said, the more the workforce management team discusses measures and highlights shrinkage variability in a transparent manner with the business, the more positive adjustments you’ll notice as the workforce calibrates toward your feedback. 

Discussing call center shrinkage data on a site-to-site level fosters best-practice sharing across your locations, focused on reducing variability and improving overall results. This transparency also creates a fun air of competition within the sites.

Establish a Baseline & Create a Capacity Plan

Now that you’ve evaluated your trends and obtained business requirements, you can establish a baseline shrinkage percentage to incorporate into your capacity plan. Hiring for work plus shrinkage reduces your risk of understaffing and ensures that you have sufficient resources to balance your employee and customer needs.

Forecast, Review, Refine, & Repeat

Shrinkage management for the biggest call center company in the Philippines is continuous. To implement long-term best practices, you’ll need to constantly review actuals vs. trends, adjust, refine, forecast, and highlight your rationale to the business. Ultimately, your process might look like:

  1. Create a shrinkage forecast by month for a rolling twelve months (or any agreed-upon timespan) based on a combination of trends, business requirements, and insights.
  2. At the month’s end, compare your observed results with the original forecast.
  3. Where appropriate, determine the root cause of variance between your forecast and your results, including a review of variability across locations and teams.
  4. Modify your forecast based on current reality and trends, to make your next month’s forecast as accurate as possible.
  5. Share the reforecast with the business, highlighting the impact of the change to FTEs/costs, and facilitate discussions to reduce variability and obtain the desired performance.
  6. Keep the process going: with each component and time frame mastered, increase your level of granularity and continue refining. Your forecast accuracy, employee satisfaction, and overall productivity will improve with each iteration.


Make shrinkage management a call center experience Philippines

As mentioned earlier, the shrinkage rate in BPO Manila Philippines changes from time to time. The decision-makers need to measure, review, and minimize shrinkage rate on a regular basis. 

The managers must make shrinkage management a continuing process by creating shrinkage forecasts for a month and comparing the forecast with actual results. Also, they need to identify the root causes of shrinkage and take the measure required to restrict the shrinkage rate to 35%.

Overall, call center shrinkage impacts the efficiency and productivity of BPO workers in the Philippines directly. But the rate keeps changing from time to time. The managers must measure and monitor the rate regularly to boost customer experience and meet service goals. 

They need to keep in place a robust strategy that emphasizes reducing internal and external shrinkage hours on a regular basis.

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