What Is Shrinkage Formula In BPO?

Are you curious to know what is shrinkage formula in BPO? You have come to the right place as I am going to tell you everything about shrinkage formula in BPO in a very simple explanation. Without further discussion let’s begin to know what is shrinkage formula in BPO?

In the dynamic world of Business Process Outsourcing (BPO), workforce management is essential for optimizing operational efficiency and meeting service level agreements. Shrinkage, a crucial metric in BPO, plays a significant role in this process. In this blog, we’ll explore what shrinkage is, its importance in BPO, and the formula used to calculate it.

What Is Shrinkage Formula In BPO?

Shrinkage in BPO refers to the time during which agents are not available to handle customer interactions or perform their tasks, despite being scheduled to work. It accounts for various factors that can affect an agent’s availability, such as breaks, meetings, training sessions, and other non-productive activities.

Shrinkage is a natural part of workforce management and is essential for realistic scheduling and capacity planning. By accurately accounting for shrinkage, BPO organizations can ensure that they have enough agents available to meet customer demand, thereby avoiding understaffing issues.

Importance Of Shrinkage In BPO

  1. Accurate Scheduling: Shrinkage allows BPOs to create schedules that take into account the time agents are not available for handling customer interactions. This results in more accurate forecasting and scheduling of resources.
  2. Optimized Resource Utilization: Understanding shrinkage enables BPOs to manage their workforce more efficiently, ensuring that agents are available when needed most. This helps in maintaining high service levels while controlling labor costs.
  3. Enhanced Service Quality: By accounting for shrinkage and aligning schedules with customer demand, BPOs can maintain high-quality service delivery, reducing customer wait times and frustration.
  4. Compliance: In regulated industries, accurate shrinkage calculations are crucial for ensuring that agents receive legally mandated breaks, rest periods, and training.

Shrinkage Formula In BPO

Shrinkage is typically expressed as a percentage and is calculated using the following formula:

Shrinkage (%) = (Total Scheduled Non-Productive Time / Total Scheduled Time) x 100

Here’s how to break down the components of this formula:

  1. Total Scheduled Non-Productive Time: This includes all the time when agents are not actively working, such as break time, meetings, training, coaching, and any other non-productive activities.
  2. Total Scheduled Time: This represents the total time for which agents are scheduled to be at work, including both productive work time and non-productive time.

The result of this formula is a percentage that indicates the proportion of scheduled time that is not available for productive work due to shrinkage factors.

Examples Of Shrinkage Factors

  1. Breaks: These are scheduled rest periods for agents, including lunch breaks and short breaks during the workday.
  2. Meetings and Training: Agents may have sessions for coaching, training, or team meetings.
  3. Vacation and Time-Off: Time taken off by agents for holidays, vacation, or personal days.
  4. Unscheduled Absences: This includes unexpected leave due to illness or emergencies.
  5. Auxiliary Work: Time spent on administrative tasks, such as documentation or after-call work.


In the fast-paced world of BPO, workforce management is pivotal for maintaining high service levels and efficiency. Shrinkage, as a key metric, ensures that BPOs accurately schedule and allocate resources, balancing agent availability with customer demand. By understanding and calculating shrinkage, BPO organizations can optimize their operations, improve service quality, and meet their goals effectively. It’s a critical tool for achieving the delicate balance between providing exceptional customer service and managing labor costs in the BPO industry.


What Is The Formula Of Shrinkage?

Calculation of Shrinkage = Planned Shrinkage + Unplanned Shrinkage. Planned Shrinkage = [Total number of leaves + Total number of week-offs] / Total headcount. Unplanned = [Total number of absent + (Half-day/2)] / Total roster-count.

What Is The Shrinkage In BPO?

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.

How Do You Calculate Fte With Shrinkage?

If you need 100 FTE after losing 30% shrink the formula is: (100 = X*. 7). To solve for X you divide both sides by . 7 or 100/.

What Is Shrinkage In Wfm?

Shrinkage is a workforce management metric that refers to time in which agents are being paid but are not available to handle interactions. There is planned shrinkage, like agents being scheduled for staff meetings and trainings, and there is unplanned shrinkage, like an agent calling out sick or on vacation.

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What Is The Formula Of Shrinkage In BPO

What Is Shrinkage Formula In BPO

How is shrinkage calculated in BPO