By Bhagirath Sindhav Published on: October 19, 2023 Updated on: Contact Center Software
10 effective ways to reduce costs in your bpo contact center

10 Effective Ways to Reduce Costs in Your BPO Contact Center

Business Process Outsourcing (BPO) contact centers play a vital role in today’s modern businesses. They help manage customer interactions by serving as the initial point of contact. BPOs offer a comprehensive range of services, including but not limited to customer support and sales.

As per a report, the customer care BPO market is estimated to rise from US$22,598.82 million in 2022 to US$34, 570.73 million by 2028; it is likely to record a CAGR of 7.5% from 2023 to 2028.

However, as the demand for exceptional customer service continues to rise, the operating costs associated with BPO contact centers are also rising greatly. Businesses in today’s highly competitive industry, looking for the best strategies that they can implement to reduce costs while maintaining the quality of their service.

In this blog, we will discuss various practical strategies for reducing operational expenses associated with BPOs.

1. Call Routing Optimization

Call routing optimization plays a vital role in reducing the costs in your BPO contact centers while maintaining the quality of service. Call routing optimization or efficient call routing simply means intelligent routing of incoming calls to the most appropriate agent or department. This not only helps in reducing call handling times but also results in improving efficiency and minimizing operational costs. Some of the key ways to optimize call routing in your BPO contact center include-

  • Skill-Based Routing:

    Skill-based routing is an excellent strategy used in call/contact centers to efficiently direct incoming calls to the most suitable agents based on their skills and expertise. When calls are routed to the right agent, it ensures faster issue resolution, reduced handling times, and increased customer satisfaction. 

  • Self-Service Options:

    Self-service options in call routing optimization are another effective way to enhance contact center efficiency. By providing self-service options like IVR (Interactive Voice Response) systems, automated chatbots, virtual assistants, and others for routine inquiries, customer’s routine queries can be resolved efficiently without agent intervention. 

  • Priority Queuing:

    Priority queuing is also an effective call routing strategy that ensures fast resolution of urgent issues. Using this strategy, high-priority customers or critical issues can be directed to the priority queue. By managing urgent issues on priority, customer satisfaction and loyalty can be enhanced greatly. 

2. Workforce Management

Another key strategy to reduce costs in your contact center is optimizing workforce management. By optimizing workforce management, contact centers can ensure the right allocation of resources, including agents, resulting in smooth and efficient operations while minimizing expenses. To achieve cost savings in your BPO contact center, you must be aware of the following workforce management tools-

  • Forecasting and Scheduling:

    Accurate forecasting of call volumes and staffing requirements is essential for workforce management. The best way to do this is by analyzing historical data and identifying key patterns. This will help in efficient allocation and utilization of resources including the agents, preventing understaffing during peak call times and overstaffing during quieter periods.

  • Real-Time Monitoring:

    With the help of real-time monitoring tools, customer wait times can be minimized greatly. A constant monitoring of call queues, agent availability, and quality of service, helps in efficient allocation and utilization of resources based on current conditions. 

  • Performance Metrics:

    Implementing key performance indicators (KPIs) can also help in efficient workforce management. Metrics such as average handling times (AHT), call abandonment rates, and customer satisfaction rates can be used to determine the areas that require improvement, ultimately leading to cost reductions. 

3. Technology Integration

One of the best and most powerful strategies to reduce costs in Business Process Outsourcing contact centers is the implementation of the latest technologies. Effective use of technology not only helps streamline operations but also improves the contact center’s efficiency. Technology integration can further assist in reducing costs in your contact center-

  • Automation Tools:

    Implementing automation tools like Chatbots, virtual agents, and AI-powered systems in contact centers helps in the efficient management of routine and repetitive tasks. These tools can be used to address common or routine customer inquiries, reducing the need for human agents’ interference. Agents can focus on other crucial tasks, leading to reduced costs and increased customer satisfaction. 

  • Omnichannel Communication:

    Omnichannel Communication is another technological advancement that allows the integration of multiple communication channels into a unified system. Various communication channels like voice, chat, email, and social media can be used to reach and interact with customers. Seamless customer interactions across platforms help to enhance efficiency and reduce operational costs. 

  • Cloud-Based Solutions:

    Implementing cloud-based contact center software offers better flexibility, scalability, and cost-efficiency. This technology allows contact centers to easily adjust their resources as per the call volumes, reducing the risk of overstaffing or underutilization.

4. Quality Assurance

Improving quality assurance has great potential to reduce costs and improve overall efficiency in your BPO contact centers. Quality assurance generally means reducing the chances of errors and rework and ultimately minimizing the need for additional resources and time. By maintaining high service quality, the customer dissatisfaction rate can be reduced to a great extent-

  • Identifying and Rectifying Errors:

    The quality assurance process starts with identifying and rectifying errors in customer interactions. Delivering incorrect information and inappropriate handling of customer inquiries can lead to costly callbacks and the involvement of other important resources. 

  • Compliance and Regulatory Adherence:

    Quality assurance also includes compliance and adherence to regulatory requirements. This not only helps in building trust among customers but also helps in avoiding penalties and legal issues that can be a costly affair. 

  • Agent Performance and Process Optimization:

    Monitoring agent performance is an important part of quality assurance. It is vital to monitor agent’s performance regularly to identify underperforming agents. This will help to provide necessary support or training to the agents to improve their efficiency. Besides, continuous quality monitoring can help in getting better insights into process inefficiencies, if any. Optimizing the process can lead to streamlined operations, reduced handling times, and decreased costs.

5. Training and Skill Development

Training and skill development are also among the critical strategies for reducing costs and enhancing efficiency in BPO contact centers. Develop cost-effective training programs that focus on improving product knowledge and customer service skills to help agents in the efficient handling of customer inquiries. Calls managed by well-trained agents result in shorter call durations and increased first-call resolution rates-

  • Comprehensive Training Programs:

    Implementing comprehensive training programs for contact center agents is essential for the efficient handling of customer queries. When agents are well-trained, they can resolve customer issues in the first call itself, leading to a reduction in long calls and call backs. This further helps in saving costs and enhancing customer satisfaction. 

  • Soft Skills Development:

    Apart from technical skills and knowledge, agents must be encouraged to work on their soft skills development. Soft skills such as responsiveness, communication, tone, and problem-solving can lead to more efficient issue resolution and enriched customer experience.

  • Continuous Learning and Quality Monitoring:

    Ongoing learning and development programs are required to keep agents up-to-date with the latest technologies and industry trends. Also, cross-training the agents in different roles within the contact center can help in smooth adaptation to fluctuations in workload, eliminating the need to hire additional staff. Together these not only help in enhancing agents’ skills but also contribute to cost reduction. 

Read Also: Why BPO Companies Must Adopt Multichannel Customer Support Center

6. Vendor Management

Companies that are planning to outsource some of their BPO services, must select their vendors carefully. Effective vendor management is one of the key strategies to reduce costs in your BPO contact center. Vendors who understand your business well can provide customized solutions for better productivity and cost reduction. Just make sure to negotiate favorable contracts, and monitor their performance regularly. Here are some of the key things to consider for effective vendor management-

  • Service-Level Agreements (SLAs):

    It is important to clearly define service-level agreements with your BPO vendor which must include response times, performance metrics, and quality standards. SLAs are the best way to ensure that the vendor meets your requirements efficiently. 

  • Cost Negotiation and Performance Monitoring:

    To obtain favorable terms, you can negotiate pricing structures with vendors on various options like volume-based pricing, performance-based incentives, etc. It will help in cost reductions. Also, make sure to monitor the performance of your BPO vendor against agreed-upon SLAs to pinpoint areas for improvement and cost-saving opportunities. 

  • Conduct Regular Audits:

    Regular audits help to ensure that the vendor’s operations are aligned with cost-saving measures and quality standards. If you find any inconsistencies in the vendor’s act, address them promptly to ensure smooth operations and cost reduction. 

7. Cost Tracking and Analytics

Cost tracking and analytics are also among the most critical strategies to reduce costs in your BPO contact center. It is important to note that having accurate data related to cost-tracking systems can help in reducing costs greatly. By analyzing the data, businesses can easily identify the areas where they can minimize or control spending. To make the best use of this strategy, you must understand how it works-

    • Data Collection and Tracking:

      Start by collecting all the relevant data on various aspects of contact center operations such as agent performance, call volumes, customer interactions, and service level agreements (SLAs). After gathering all the data, implement a strong cost-tracking system to monitor all expenses including technology expenses, labor costs, overhead expenses, and others within the contact center.

    • Performance Metrics and Predictive Analytics:

      Implement necessary key performance indicators (KPIs) like cost per customer, cost per call, and overall operational costs that can help in tracking expenses and reducing costs. It is equally important to forecast future costs. Make use of predictive analytics to determine future costs based on historical data and trends. It will prepare BPOs for proactive cost management. 

  • Root Cause Analysis:

    By identifying the areas where you feel cost overruns, make sure to conduct a root cause analysis. This will help you to understand why they occurred. Root causes analysis may involve investigating underperforming agents, inefficient processes, or technology issues. 

8. Employee Engagement

There is no doubt that highly engaged employees are more motivated and productive. As per a report, companies with a highly engaged workforce are 21% more profitable and 17% more productive as compared to those with disengaged staff. This proves that employee engagement is a fundamental factor in business profitability. Since highly engaged employees are likely to stay longer, it leads to a reduction in recruitment and training costs. To improve employee engagement, you must consider the following points-

  • Skill Development:

    By offering skill development and career growth opportunities employees can be engaged easily. When employees are well-skilled in their work, they can easily handle a wide range of issues, leading to improved morale and productivity. 

  • Innovation and Process Improvement:

    Well-trained and highly motivated employees are more likely to contribute to process improvement and innovation. They can help in identifying cost-saving measures and workflow management. 

  • Recognition and Rewards:

    To improve employee engagement, it is important to make them feel valued. To do so, you must recognize and reward employees for their efforts and contributions. When employees are praised and rewarded for their efforts, they are more likely to perform out of the box, leading to improved customer satisfaction and cost reduction.

9. Self-Service Options

Addressing routine customer inquiries without the need for agent intervention can result in huge cost savings. To achieve this, companies must implement self-service options for customers. Self-service options allow employees to find the answers or solutions to their queries without the need to connect with a live agent. Different types of self-service options that can be implemented to save costs include-

  • Interactive Voice Response (IVR) Systems:

    IVR or Interactive Voice Response is a system that guides callers through automated menu options. It allows customers to get quick access to information like account status, product information, etc., without speaking to an agent. This helps in reducing agent workload as well as costs. 

  • Knowledge Bases and FAQs:

    Creating comprehensive knowledge bases and frequently asked questions (FAQs) on your website can also help reduce the workload on agents as visitors can find answers to their common questions without the need to connect with the agents. 

  • Chatbots and Virtual Assistants:

    Another effective way to reduce costs and agent workload is to integrate AI-powered chatbots and virtual assistants on your website or messaging platforms. These tools can handle routine queries, answer common questions, and even initiate processes on behalf of agents. 

10. Lean Six Sigma Methodology

Last but not least, the Lean Six Sigma methodology is an effective strategy that helps to reduce costs in BPO contact centers. This methodology uses principles to streamline processes and remove non-value-added activities. Lean Six Sigma includes the following factors that help reduce costs-

  • Process Optimization:

    Lean Six Sigma principles highly emphasize identifying and excluding inefficiencies in processes. This further helps in streamlining workflows, leading to time-saving as well as cost savings. 

  • Customer-Centric Approach:

    By implementing a customer-centric approach, Lean Six Sigma helps augment the customer experience. Moreover, aligning processes with customer needs helps reduce churn and lower the costs associated with customer acquisition. 

  • Continuous Improvement:

    It is vital to note that Lean Six Sigma is an ongoing process of development and improvement. It involves continuous monitoring, feedback, and amendments to sustain efficiency and cost savings over time.

In Conclusion, 

Over a while, the BPO industry has undergone a significant transformation. The rise in the demand for customer-oriented solutions and advanced technology are the key factors behind the growth and transformation of the BPO industry. However, to sustain in today’s competitive landscape, it is imperative to implement effective measures to reduce costs in your BPO contact center.

The above blog post discusses all the essential strategies that can help BPO contact centers achieve significant savings without compromising service quality. By focusing on these strategies, you will be able to reduce costs without compromising on customer satisfaction, and service quality.

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