What is Shrinkage ? How to calculate it in BPO/KPO?

By Gaurav Chhokar

Updated on July 03, 2020

Shrinkage is common term which is used in almost every BPO, KPO and call centers. 

So without wasting much of time. Let's understand What is Shrinkage ? How to calculate it in BPO/KPO, 

Shrinkage is loss of production time or time for which employees are paid during that time they are not available for production. On other hand, We can say that shrinkage is time of production which is lost. Shrinkage can be planned or unplanned. 

Planned shrinkage are planned leaves, trainings, coaching, team meetings, public holidays and fixed breaks etc 

Unplanned shrinkage are unplanned leaves, early leaving office, latency issue, and technical issues etc. 

Calculations 

Shrinkage calculation for headcount: - 

-)Shrinkage = Planned shrinkage + Unplanned Shrinkage

-)Planned Shrinkage = (No. of week-off + No. of leaves)/Total Head-count

-)Unplanned Shrinkage = {No. of absent + (Half day/2)}/ Total Roster-count

-)Total Head-count = Number of agents available in ERP

-)Total Roster-count = Total Head-count – (Planned Leave + Weekly-off)

Shrinkage calculation for hours: -

-)Shrinkage% = (1- (Total staffed hours/Total scheduled hours))

-)Total Staffed hours = (Total answered calls*AHT) + Avail time + productive hours 

-)Total scheduled hours = Total agent hours rostered for the day/week/month 

Let’s understand these calculations with example

Suppose, we have total 100 head-count in ERP; and out of 100, 12 are on weekly offs and 8 are on planned leaves, hence Planned Shrinkage head-count (employees)will be

20 = (12 + 8) 

So planned shrinkage% will be

20% = (12+8)/100

As we have total planned shrinkage 20. Hence, total roster-count will become

80 =100- (12+8)

Now, we have total roster-count (available employees)80 hence, we will roster all of them for 8 hours in a day.

Suppose, 8 people take full day unplanned leaves and 4 people take half-day unplanned leaves out of 80 roster-count hence, unplanned shrinkage head-count will be

10 = 8 + (4/2)

So unplanned shrinkage% will be

12.5% = (8+(4/2))/80

Let assume that there is no unplanned absenteeism and all 80 staffs are present in office. At the end of the day, they delivered total 600 staffed-hours against the 640 (80 staffs x 8 hours) scheduled hours.

So, the shrinkage hours% will be

6.25% = (1- (600/640))