Contents

IndustryAnalysis...................................................................................................................................3
1.1 CurrentIndustryLandscape.............................................................................................................3
1.2 AnalysisofMarketConditions.........................................................................................................3
1.3 NeedforaCallCenter......................................................................................................................3
1.4 KeyFactorsthatInfluenceCallCenterSuccess...............................................................................4

BusinessModel.....................................................................................................................................5
2.1 WhatServicestoOffer.....................................................................................................................5
2.2 HowtoOfferServices......................................................................................................................5

PlanningforaCallCenterImplementation..........................................................................................7
3.1 SettingtheObjective.......................................................................................................................7
3.2 SizingtheCallCenter.......................................................................................................................7
3.3 DeterminingCallTechnologyandEquipment.................................................................................9
3.4 AdditionalTechnologyInvestments..............................................................................................10
3.5 PlanningDataAvailabilityandTechnicalIntegration....................................................................11
3.6 InvolvingKeyStakeholdersinthePlanningStage.........................................................................12
3.7 ManagingOperationalCosts..........................................................................................................12
3.8 MakingyourCallCenterFutureReady..........................................................................................13

CallCenterOperationsManagement.................................................................................................14
4.1 HumanResourcesManagement....................................................................................................14
4.1.1

MinimizingStaffCosts.........................................................................................................17

4.1.2

StaffRosteringandScheduling...........................................................................................17

4.2 BusinessContinuityPlanning.........................................................................................................17
5

CallCenterPerformanceMetrics........................................................................................................19
5.1 AgentPerformanceMeasurement................................................................................................19
5.2 OtherPerformanceIndicators.......................................................................................................20
5.3 PerformanceReportingtoClients.................................................................................................20

ProjectFinancials................................................................................................................................22
6.1 StartUpExpensesandFunding.....................................................................................................22
6.2 SalesPlan.......................................................................................................................................23

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6.3 PersonnelPlan...............................................................................................................................24
6.4 FinancialPlan.................................................................................................................................24

6.4.1

BreakEvenAnalysis.............................................................................................................24

6.4.2

ProjectedProfitandLoss....................................................................................................24

6.4.3

ProjectedCashFlow............................................................................................................25

6.4.4

ProjectedBalanceSheet.....................................................................................................26

6.4.5

BusinessRatios....................................................................................................................27

References..........................................................................................................................................30

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Industry Analysis
1.1

Current Industry Landscape

With more and more companies turning to superior customer service as a means to stand out from
their competition, the call center industry is growing. As the economy becomes tough, companies
are looking to outsource customer handling to third party vendors who specialize in the call center
business. Call centers can be broadly classified into two types captive call centers and third party
call centers. In a captive call center, the agents handle only one organizations customers. It is
usually set up as a subsidiary of the parent company and functions as a cost center. The main
objective of such a call center would be to optimize the operational cost while offering superior
customer service. A captive call centers business grows in direct proportion to that of the growth in
the parent company.
In the case of third party call centers, the call center may serve multiple clients either in the same
industry or varying industries. Here the growth can happen either when the clients organization
grows, or by acquiring new call center clients. The operations of a third party call center are run as
a profit center and the focus is on improving the revenue billing as well as profits of the company.

1.2

Analysis of Market Conditions

The call center industry is fragmented in nature, and market players vary widely in terms of call
volumes handled and services offered. While some players focus on a specific sector, others offer
services across a wide variety of industries. Some players only offer call center services while
others handles endtoend customer service including reverse logistics. In the initial days,
companies had their own call centers. However, today the trend in call centers is skewed towards
outsourcing. Call center operations are outsourced typically to English speaking third world
countries where cost of operations would be only a fraction of the cost that you may incur in the
United States.
An inbound call center is usually used for offering additional services to customers such as
complaint handling, and information on products and services. An outbound call center typically
focuses on lead generation for sales. They can also be used to conduct customer satisfaction surveys
and for campaign management activities.

1.3

Need for a Call Center

A call center can provide several benefits to an organization. That is why a wellplanned call center
has a high chance of being profitable. In this section, we will look at some of the reasons why
organizations opt for call centers. Industries such as financial services, where there is a high volume
of transactions with the end customers, would benefit from a call center by helping to reduce
transaction costs. The majority of simple transactions can be carried out by the caller himself with
the help of a simple IVR system.

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In addition to lowering the transaction costs, call centers also offer convenience to callers who may
not have the time for, or access to, the branch network or client organization for a facetoface
transaction.

1.4

Key Factors that Influence Call Center Success

The call center industry has a high entry barrier, as clients do not wish to change the call center to
which they have outsourced their operations due to the significant switching costs associated with
changing partners. The learning curve of agents is also quite steep, as they need to learn the
business processes and products of the clients being serviced. Intense competition among call
centers makes it difficult to increase billing to clients. Therefore, the operational costs have to be
kept as low as possible. Given below are some of the key success factors for a call center:
1. A robust technology framework that can accommodate year on year business growth
2. A welltrained and motivated staff who would strive to achieve quality and productivity
goals
3. A diverse clientele which would reduce dependence on a single client for revenue and
margin

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Business Model

A key step in starting a call center is preparing a business plan. This must cover aspects such as
what services you would offer and which customer group you would like to target. Both of these
decisions depend on two key factors the competition and your skill set. You can be successful if
you can identify a profitable niche without a great deal of competition, that can be wellserved with
your skill set.

2.1

What Services to Offer

Call centers face competition from players all across the globe. The industry is fragmented in nature
with several small firms catering to small organizations, while some of the bigger players cater to
large clients such as GM, Citi and Amex. Since the competition is intense, it is difficult to get good
rates by offering plain vanilla solutions. If you can offer services catering to highend niches such as
legal services or medical services, then you will have better margins.
Market penetration is difficult unless you are a captive call center with assured business volumes.
This is because contracts are usually awarded to firms with a reputation for high quality services.
One way to break through the barrier is to have industry veterans with good professional networks
in your top management. The other step to take is to opt for quality certifications for your
operations, which can act as an assurance of your professionalism to potential clients. As a new
player, you would also need to participate actively in industry forums that will act as a means to
introduce your services to potential buyers. By keeping operational costs as low as possible, you
would be able to give better rates to clients that will go a long way in winning new business in this
price sensitive industry. In the initial stages, you must also be willing to offer customized solution
packages for your clients in order to capture market share. It is best to have at least a couple of
contracts under your belt before you start setting up your call center. This will help to assure
revenues from dayone of operations.

2.2

How to Offer Services

Before an organization decides to set up a call center, careful thought should be spent on deciding
which service strategy is best. Some of the options for a call center include hotlines, shared
infrastructure arrangements, establishing an inhouse call center or outsourcing the call center to a
third party vendor. Each option has its advantages and disadvantages and you must evaluate each
of these options carefully before determining the most suitable approach for your needs.
Hotlines
Hotlines are not exactly call centers. But if you are an organization considering establishing a call
center to address a temporary spike in customer queries or complaints, then this is a better option
to consider. This can also be used for new product launches and campaign management activities.

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The advantage of opting for a hotline is that it does not require a heavy upfront investment on
telephony and IT infrastructure, and it can be made operational quickly. The main focus will be on
training agents to handle the calls. However, hotlines cannot be a permanent strategy, as the
operations will not be able to handle heavy call volumes for an extended period of time.
Shared Infrastructure
This option can be considered if you do not have sufficient call volumes to necessitate setting up an
independent call center. You can piggyback on the existing infrastructure of another organization
that already has an established call center by creating SLAs for quality and productivity. You would
only incur contractual costs and all setup costs can be completely avoided in this case.
Organizations looking to start a call center must also carefully evaluate the benefits of outsourcing
the call center operations before opting for an inhouse call center. In the next section, we will look
at how to plan a call center implementation.

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Planning for a Call Center Implementation

Proper planning is an essential step in determining the success of call center implementation and
operation. A well laid out business plan is a key factor in ensuring that the call center is aligned to
the objectives of the parent organization and has a profitable and cost effective operation. The
business plan should also include key service level requirements for operations, key considerations
that shall be kept in mind while sizing the call center, selecting the right site for operations as well
as the extent of change management and process reengineering needed for the implementation. A
period for key activities shall also be drawn out so that the call center is operational without undue
delays. The business plan should also provide the organizational and financial reasons for choosing
to set up the call center.

3.1

Setting the Objective

Before deciding on the infrastructure, enablers, technology, and staff needed for the call center, it is
essential to lay down the business objectives of the call center. The choice of infrastructure,
technology, and number of staff and their skill levels all depend on the objective of the call center.
This should be set forth before any procurement or hiring activity is commenced. The objectives
should be as narrow as possible as this will help to procure the ideal technology and staff mix to
serve the needs of the call center.
Some of the key objectives of why organizations opt for setting up a call center are given below:
1. Improve customer service levels and offer 24*7 support for customers
2. Reduce the number of customer complaints received
3. Cost reduction of transactions without affecting service quality
You need to identify the main objectives behind setting up your call center so that you have clearly
defined measures of success.

3.2

Sizing the Call Center

If you are thinking of establishing a call center to handle the customer calls for your organization,
then arriving at the right size for the call center is extremely important. You can start this process
by collecting data pertaining to the calls that you currently receive. The following data points need
to be collected and analyzed to determine the call centers size:
1. The number of calls currently received
2. Call duration metrics average duration of call, minimum and maximum duration of calls,
bucketing of calls into various buckets in terms of duration

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3. Metrics related to nature of call bucketing of calls into inquiry calls, service calls,
complaints/escalation calls.
Once this data is collected, it should be corrected to account for the likely increase in calls when a
dedicated call center is introduced and customer awareness about the option increases. You must
also collect data related to competitors call center size, if it is publicly available.
Other factors that can influence the size of the call center include:
1. Time spent on data processing activity pre and post call.
2. Likely availability of staff (leave policy and absenteeism)
3. Potential gains to be achieved if the right expert is made available to answer the call, so that
multiple calls can be avoided. This needs to be measured both in quantitative terms of agent
time saved as well as qualitatively in terms of improvement in customer satisfaction and
brand perception
4. Variations in peak traffic at different times of the day as well as between weekend and
weekdays
The growth plans of the parent organization should also be considered. Thus, if the parent
organization plans to expand geographically, then you would need staff capable of handling
language and cultural requirements of the new geography. Similarly, if the organization is planning
to enter into a new product line, then the call center staff should be technically capable of handling
queries related to the new product.
In general, sizing an inbound call center is more challenging than sizing an outbound call center. In
the former case, the organization cannot control the call volumes or the variation in peak traffic.
While a huge organization may hire external consultants to arrive at the size of the call center, a
simple process of sizing the call center is shown below:
1. Arrive at the inbound and outbound call volume
2. Arrive at the average time for each call and related processing time for each call
3. Arrive at the actual work hours of an agent
The average time of each call should take into account only the actual time that is spent talking on
the telephone. The processing time includes all paper work and data analytics work associated with
a call. Typically, if you consider an eighthour shift, the productive time or actual work hours for an
agent is likely to be six hours or 360 minutes.
Once these numbers are estimated, the average customer time can be calculated as follows:

Average customer time (in minutes ) = Average call time + Average processing time

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Average number of calls per agent per day = 360/average customer time

Staff required = Total call volume expected/average number of calls per agent per day

If the sizing of the call center is correct, then it goes a long way in ensuring that the human resource
management of the call center is a success. Sizing should also consider the levels at which agents
need to be hired as well as the recruitment and promotion policies of the call center. Once call
center sizing is complete, the output should be a staffing plan, which includes the following
elements:
1. Number of agents initially required as well as year on year growth plan for the next 3 years
2. Identify the organizational structure and determine skill levels needed for each role
3. Develop the recruitment process and the timelines
4. Design the induction training for initial hires

3.3

Determining Call Technology and Equipment

Based on the level of sophistication needed for the call center as well as call volumes and the budget
available for setting up the call center, the choice of technology can vary widely. The various
options available for telephony technology are summarized below:
1. A single contact number: This is the most rudimentary approach towards establishing a call
center where you have a toll free number that customers can call without having to pay for
it.
2. Basic Telephone System: Here the agents will have separate lines, which can directly receive
and make calls.
3. PABX system: A Private Automatic Branch Exchange is a set of specialized equipment that
can allow calls to be transferred internally while retaining individual numbers for different
telephones. Callers can dial a specific extension to reach a specific agent or department.
4. Automatic Call Distribution (ACD): This is an advanced system, used in almost all call centers
today. This system provides the flexibility of offering improved customer service by
allowing the calls to be placed on hold until an agent becomes free to answer the call. This
can drastically reduce call drop rates and achieve load balancing by effectively distributing
incoming calls based on a defined set of rules. Most ACD systems today have the ability to
generate comprehensive MIS reports on a near real time basis to help in analyzing call
patterns and changing rules to prioritize calls based on real time variations in call traffic.
5. IVR: IVR systems can also be used to route the calls to the most relevant agent based on
choices that the caller makes. One of the major negatives with an IVR system is that often a
caller has to navigate through several menu options before he can speak to a real person,

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which can lead to a loss in customer satisfaction. Thus, it is important to pay close attention
to the design of the menu in an IVR system.
6. Computer Telephone Integration (CTI): Today, Interactive Voice Response systems are used
mostly by inbound call centers to automate many activities, which callers can handle by
themselves. For a financial services call center, this would mean providing details of the last
five transactions or the current balance in the account. However, this would require the IVR
system to be linked to the underlying IT system and customer database for authentication
of the caller and data retrieval. This is achieved through CTI, which also allows the agent to
view the transactions and customer information related to the caller as soon as the call is
routed to him/her. The flip side of CTI is that it can be extremely expensive depending on
the features chosen, and typically only very large call centers would have a fullfledged CTI
system. In a CTI system, agents typically have headsets, and separate telephone equipment
such as handsets is not required.

3.4

Additional Technology Investments

Once you have finalized the type of telephony equipment that you want to use in your call center,
the next step is to consider whether any of the additional equipment mentioned below is required
for your call center:
Predictive Dialers
If you are looking to set up an outbound call center, then you may want to consider investing in
predictive dialers which can auto dial numbers from a database so that busy numbers as well as
unanswered calls can be filtered out and live agent time is only spend on live calls. Again, before
deciding on the purchase, a cost benefit analysis has to be done on the cost of agent time saved as
compared to the cost of the equipment.
Automatic Call Recording
If your call center is handling sensitive customer information or if you operate in a sector or
geography where there is likely to be a high percentage of disputes, then it may be a wise idea to
invest in automatic call recording equipment. This will help to record the call transcripts, which can
be used for resolving disputes as well as for training agents on how to handle specific situations. It
is important to keep in mind that if you use callrecording equipment, then you need to inform
customers that their calls may be recorded and provide them the option of either hanging up or
being excused from the live recording. You must have your legal team address the privacy related
regulations that you will need to comply with while using call recording.
Noise Reduction Headsets
A call center environment can become very noisy with the constant calls attended by agents who
may be seated very close to each other. Noise reduction headsets go a long way in increasing the

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productivity of agents as well as improving the customer call experience, as it increases call
response time as well as post callprocessing time. Since agents would be using the headsets for a
long time every day, lightweight, comfortable headsets are the optimal choice.

3.5

Planning Data Availability and Technical Integration

Data architecture is a key element to consider when setting up a call center. While this may not be
necessary in the business plan that you may submit to a financial institute for funding, it is an
essential part of your operational plan and it directly affects the cost of technology that you will
incur in setting up your call center. If you are not running a captive call center, then data access and
integrity is even more critical and you will have to design your system in such a way that the agents
have access to information on a strictly need to know basis. Some of the key factors to keep in mind
while designing the data and server architecture and information security policies are given below:
1. Location of data servers
2. Ownership of data being used
3. Integrity of existing data
4. Ways to prevent duplication and reconciliation problems when agents access and modify
data
5. Access control methods
If you are planning to set up a third party call center to serve multiple clients, then you need to
estimate what part of the IT costs you would incur and what part of the cost would be borne by
your clients. You would also want to decide on the service levels of uptime that you plan to offer
your client, as that would determine the amount of redundancy that you will have to build into the
system architecture.
You would also need to determine the kind of CRM system that you want to use to provide agents
with customer information needed to handle calls effectively. In addition to the customer
information, the system that you choose should be able to automatically track the outcome of a call
and timestamp the call. Followup action should be seamlessly integrated into the system. Today,
several vendors offer this kind of software, and you can choose the one that best meets your needs
and your budget, keeping in mind the following criteria:

Relationship management features

Response time

Ease of use

Compatibility with other hardware and software systems

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Call routing and scheduling features

Vendor support for training and maintenance

If the parent organization is willing to share the customer databases and allow direct access to
information, then you would only need to set up an interface to the customer database from your
call center IT system.
A wellmaintained and robust customer database is even more critical in the case of an outbound
call center. If the customer database, transaction database of the parent organization and the call
center database can be interlinked, then it can be a powerful tool for the parent organization in the
following areas: customer segmentation, targeting, product design, and developing marketing
strategies.

3.6

Involving Key Stakeholders in the Planning Stage

While setting up a call center, it is important that you involve the key stakeholders from an early
stage. This will help to make your business plan as robust as possible and would the top
management team ownership of the plan. If you are planning to set up a totally new call center, then
you must hire the call center operations head, the IT head and the HR head before you finalize your
business plan. This will help to incorporate their ideas into the choice of equipment and agents.
Another key stakeholder group who should be involved in the planning stage is your clients
customer base. These individuals would be utilizing the services of your call center. A wellplanned
survey would help you to identify the kind of services to offer through your call center, as well as
the preferred technology to be used (such as whether customers are positive about IVR and speech
recognition or would prefer to speak directly to an agent).

3.7

Managing Operational Costs

Once the call center is operational, it is essential to be aware of any unplanned cost escalations,
which can set the project financials in disarray. It is essential to put aside a contingency fund to
ensure that the cash flow is not squeezed should such events occur. Some of the operational events
that can have an unplanned cost impact are listed below:

Cost of client acquisition this can soon spiral into a very large number, especially for third
party call centers

Manmade or natural disasters than require the business continuity plan to be set in motion

Unexpected system downtime

Relocation or expansion due to sudden growth in client base

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3.8

Making your Call Center Future Ready

Call center architecture needs to be futureproofed. Changes in the underlying technology can prove
to be costly in terms of the effort, time, and money spent on change management, technology
enhancements, and reskilling agents. You need to be aware of the latest developments in the call
center industry as well as your client industry in order to make your call center future ready. For
example, most financial institutions today offer customers the ability to conduct transactions
through multiple remote channels such as mobile, fax, web, and ATM, not to mention the call center
as well as the branch itself. The call center would be increasingly expected to take over some of
these remote service channels and effectively manage them in future.

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Call Center Operations Management

Good operations management practices are an essential element in achieving the objectives of the
call center. The diagram below depicts the key aspects of operations management in a call center,
each of which is discussed in subsequent sections:

Account
Management&
GrowthPlans

Human
Resource
Management
Performance
Management
CallCenter
Operations

Business
Continuity

Quality
Assurance

Financial
Management

Key Elements of Call Center Operations

4.1

Human Resources Management

Staffing is the highest operating cost of a call center. So, it is imperative to incorporate structured
growth paths as well as retention strategies for agents and management staff in the call center.

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As part of the operations management of the call center, it is essential to have documented and well
laid out processes and policies for the following HR activities:
1. Recruitment
2. Training
3. Staff Welfare Health and Safety, Leave and Benefits
4. Compensation Structuring
5. Promotions and Career Paths
6. Separation
7. Staff discipline
Motivation and retention strategies should also be well thought out based on a scientific cost
benefit analysis. It is essential to recognize the importance of agents and managers in helping the
call center achieve its stated objectives and goals. Some of the key areas are listed below:
Staff Training
Staff training is an essential part of call center success, as callers perceive the agents as the face of
the parent company. Therefore, allocating adequate budget and time for staff training is essential.
Some of the key areas of training can be:

Technical Skills and Product Knowledge

Call Handling Etiquette

Communication Skills

Negotiation and Sales Skills

Stress Management

Use of IT systems

Familiarization of the policies and processes of the call center

Team leaders and managers need to be trained on aspects such as quality assurance, monitoring of
performance metrics, and staff management.
Training plays a key role in improving agent performance, and there should be a planned induction
training program for all agents who join your call center. You must budget for annual training costs
in your staff plan and financial projections.

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Career Progression
In order to maintain the quality levels and service standards of the call center, it is important that
you have a documented career progression plan for agents to move to the level of team leaders
based on a list of skills that they need to acquire. A competency based assessment and performance
management system needs to be designed and implemented in line with the objectives of the call
center. Some of the key metrics that can be measured include call quality, understanding of
business processes and keyboard speed. You must also train team leaders to provide immediate
feedback to agents rather than waiting until the formal appraisal period. A welldefined career
progression path should be designed and communicated to agents, so that attrition rates can be
minimized.
Staff Retention
Staff retention has been a major challenge in call center operations all across the globe. Hence, you
need to pay special focus on this aspect while creating your call center business plan. Often, the lack
of career progression, the monotonous nature of work, and the odd work hours have been cited as
top reasons for high staff turnover.
To avoid the monotonous nature of work the following aspects need to be taken care of while
recruiting and training staff:

Provide job rotation between customer facing and back end operations

Provide job rotation between different types of activities

Train staff to be multiskilled

Compensation and Benefits

While designing the compensation and benefits package of staff, make sure that you include
performancelinked incentives so that agents are encouraged to consistently achieve high quality
performance. Bonus payouts should be linked to the performance metrics that the call center
targets to achieve. Team leads and managers should also be offered variable pay based on these
parameters, so that the organizational objectives as well as the individual objectives are in perfect
alignment. One key aspect to keep in mind while designing the compensation and benefits package
is that it should not only encourage individual excellence, but it should also motivate agents to work
together as a team.
Creating a fun environment at work is an important factor to retain agents. You may want to set
aside a fixed monthly budget for conducting staff wellbeing activities such as celebrations and
motivational events.

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4.1.1

Minimizing Staff Costs

In order to minimize staff costs, you may also consider hiring temporary employees to handle peak
loads. This is especially relevant for call centers where there is a huge variation in peak load. It will
also help to have a plan in place to absorb high performing temps into the permanent roles of the
company. The recruitment and selection strategy should be designed in such a way that you
minimize attrition rates among staff, which will directly result in cost savings in the area of
recruitment and training.
4.1.2

Staff Rostering and Scheduling

While preparing the business plan for your call center, pay close attention to the staff rostering and
scheduling aspects. You need to decide on whether you plan to offer remote working options
(which translates to lower infrastructure costs), what percentage of staff would you want to be
temps, and whether you want to operate in shifts to cater to your client operations in remote
locations or different time zones. Studies have shown that shorter shifts are directly proportional to
increased agent productivity. For example, if you operate a sixhour shift, then you need not
allocate time for lunch and coffee breaks, unlike in the case of an eighthour shift. Weekend work
should ideally be scheduled with temp staff, thus allowing permanent staff a more balanced work
life.
If you plan to have a call center with more than fifteen to twenty permanent agents, then it would
be a good idea to invest in workforce management software to help prepare staff rosters after
taking into consideration all the relevant variables. This would help to save the team leaders and
managers time that would otherwise be spent on creating manual rosters which need frequent
tweaking based on leave and load variations.

4.2

Business Continuity Planning

One of the key success factors of a call center is the ability to offer continuous service. Business
plans should have enough redundancy built in at various levels to handle service disruptions due to
factors such as technology failure or staff absenteeism, not to mention unforeseen events such as
environmental disasters or fire.
A separate business continuity plan needs to be developed to ensure continuous service delivery.
One of the expenses related to business continuity planning is the establishment of an alternate site
that can be used during normal periods as a training center. It can also serve as a secondary call
center to which calls can be routed in the event of an unexpected increase in call volumes. The
primary site should also have redundancies in the telephone and IT equipment.
One of the most cost effective ways to ensure staff redundancy is to have a pool of temporary staff
that are well trained in all operations and can be quickly deployed to the alternate site when a
disaster occurs.

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It is also important that the business continuity plan is regularly tested and kept uptodate to
match with the growth of the call center. Simulation tests to check the effectiveness of the business
continuity plan need to be conducted regularly to make necessary changes.

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Call Center Performance Metrics

It is important to focus on quality and productivity from the first day of operations. Thus, it is
important to identify the key performance metrics that you would track regularly and the levels
that you aim to achieve. These metrics also have a direct impact on the kind of technology
infrastructure that you would select as well as the skill levels of agents that you would hire. Both
internal productivity measures as well as caller satisfaction measures must be tracked and
monitored regularly. A recent Gartner study has identified the following industry standards for key
metrics in the call center:

Average call wait time: < 20 seconds

% of calls answered within the average call wait time: > 80%

Call drop rate: < 5%

Agent availability: >99%

First call resolution: > 95%

% of time spend on calls: 83%

Average call duration: 187 seconds

Staff turnover: 22%

Average length of service of agents: 27%

Agent: Team Lead Ratio : 13:1

Average Training Time: 27 days per year

Depending on your capabilities as well as client requirements, you must set your own goals for each
of these parameters and monitor your performance against these on daily, weekly, monthly, and
quarterly levels. Comparing your performance against industry benchmarks would help to identify
areas of improvement.
Key Performance Indicators measure the effectiveness of handling calls, which translate to service
delivery excellence. In addition to these KPIs, you must also monitor the cost per transaction as well
as the earnings per agent as this would help you price your contracts effectively.

5.1

Agent Performance Measurement

Often agent performance is measured quantitatively in terms of the number of calls per hour,
average call time, average processing time and so on. However, it is important to review the call

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records in order to identify areas of improvement for the agent in terms of quality of client
handling.

5.2

Other Performance Indicators

Some of the other performance indicators that you must track for your call center include staff
satisfaction levels and leave levels. Professionally developed questionnaires should be used for
measuring the organizational climate so that corrective action can be taken in areas such as
performance management, team leader roles, and compensation and benefits programs.

5.3

Performance Reporting to Clients

If you operate a third party call center, it is important to report your achievements against SLAs,
which would be documented in the contract. Your internal KPIs need to be more stringent than the
SLAs in order to make sure that you do not face the penalties associated with breach of SLAs. Today,
advanced call center IT systems have integrated MIS capabilities, making performance monitoring
and reporting of quantitative parameters an easy task. However, the challenge is to be able to
measure the qualitative aspects of agents call handling.
In addition to reporting performance to clients, these parameters can also be used to set and
monitor internal quality goals. Strategies to improve performance on each of the KPIs need to be
devised and incorporated for the call center to remain competitive. It is also important to achieve
the fine balance between the qualitative parameters and the quantitative parameters that may
often be in conflict with each other.
Some of the techniques in which quality of calls and customer satisfaction with the agents can be
measured are listed below:
1. Call monitoring
2. Customer Surveys
3. Mystery Calling
4. Benchmarking
5. Processes and Policies
Call Monitoring: Call monitoring strategies help to evaluate agents on a real time basis and can be a
useful tool to identify training needs of specific agents. It can be done using various methods such
as silent call monitoring, double jacking or with the help of call recording technology. Advanced call
recording equipment comes with the ability to track and analyze call patterns and voice tones.
You must take care to use call monitoring in a judicious manner. Using call monitoring for negative
aspects such as disciplinary monitoring may result in unmotivated staff, which would ultimately

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negatively impact the success of your call center. Some of the key elements that must be tracked
using call monitoring include the following:
1. Greeting and Acknowledgement
2. Call Etiquette
3. Effective Listening
4. Voice Tone, Pitch and Accent
5. Positive Attitude
6. Knowledge of Products and Services
7. Call Resolution
Team leaders can make use of a structured evaluation form to monitor agent performance and give
feedback.
Customer surveys, mystery calling, and benchmarking against competition are some of the other
ways in which qualitative parameters can be tracked and monitored.

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Project Financials

Your call center may have a service focus or a sales focus or it may be a combination of both. No
matter what the nature and size of your call center, prudent financial management is an essential
factor for the success of the call center. It is essential that sufficient thought is spent in arriving at
the financials for at least the first three years of operations. It is ideal to have a monthly financial
projection for the first year of operation as that is crucial in terms of any course corrections that
you may want to make. The key elements that contribute to the project financials are your sales
plan, your personnel plan, and your technology roadmap.
According to a study by the Gartner group, a typical call center would spend almost 65% of its
operational budget on staff costs, 18% on network costs, 8% on equipment costs, and 7% on
facilities.

6.1

StartUp Expenses and Funding

The first step in arriving at the project financials is to calculate the startup expenses and initial
funding availability. Startup expenses include infrastructure expenses as well as cash needed to
sustain operations until the call center generates sufficient operational revenue. Initial funding can
be in the form of founders equity capital, bank loans, or funding from private investors
A sample template that can be used to calculate startup expenses is given below:
Startup Expenses

Value

Legal & Insurance

Hiring Expenses

Rent & Utilities

Equipment

Accounting

Marketing

Others

Total Startup Expenses (K)

K=A+B+C+D+E+F+G

Startup Assets
Cash Required

Current Assets

Longterm Assets

Total Assets (O)

O=L+M+N

Total Funding Required (P)

P=K+O

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Once you have arrived at the startup expenses and the funding required, the next step is to arrive at
the source of funds. The following template can be used as a guideline to arrive at the funding
details:
Total Funding Required

Assets
Noncash Assets

M+N

Cash Requirements

Additional Cash Raised

Cash Balance on Day 1 of Operations

L+Q

Total Assets

O+Q

Liabilities and Capital

Liabilities
Current Borrowing

Longterm Liabilities

Outstanding Bills

Other Current Liabilities

Total Liabilities (X)

R+S+T+U

Capital

Planned Investment from Founders

Additional Investments

Total Planned Investment

V+W

Loss at Startup (Startup Expenses)

Total Capital (Y)

V+WK

Total Capital and Liabilities

X+Y

6.2

Sales Plan

A detailed sales plan needs to be drawn up for the call centers initial years of operation. Revenue
projections can be made based on the expected call volume per client as well as the number of
clients that the call center expects to handle. Contracts with clients can either be for a fixed number
of agents or for a fixed number of calls handled. The sales plan should take into account expected
revenues from the call centers various service offerings. It should also include the expected cost of

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client acquisition, if it is a third party call center. Before creating the sales plan, it is essential to
identify the market segments in which you plan to operate. Typically specialized call centers such
as those handling highend technical areas or specialized fields such as legal or medical will fetch
better margins than a simple helpdesk operation.

6.3

Personnel Plan

The personnel plan can be derived directly from the call center sizing exercise. The personnel plan
should include expected headcounts for various levels such as agents, team leads, managers, and
senior management over a period of three to five years. Salary expenses, recruitment and training
expenses, and staff welfare expenses should be included in the personnel plan.

6.4

Financial Plan

The financial plan should be documented after taking into consideration interest rates and inflation
numbers. A breakeven analysis, projected cash flows, profit and loss statements and a projected
balance sheet need to be documented. From a financial management perspective, these
components, along with obtaining funding from private investors or financial institutions, are
important aspects of a business plan.
6.4.1

Break Even Analysis

The breakeven point for the call center operations is the point at which the net incoming cash flow
is higher than the net outgoing cash flow. It is important to spread out the staff costs and other
operational costs in such a manner that the breakeven point is reached as early as possible. The call
center operations would become selfsustainable only after the breakeven point has been reached.
6.4.2

Projected Profit and Loss

A sample template for arriving at the profit and loss projections is given below:
Year

Particulars
Income
Revenue from client contracts

R1

Cost of Sales

C1

Gross Margin

R1C1

Expenditure
Fixed Operating Expenses

Personnel Expenses

P1

Marketing and Advertising Expenses

M1

Rent Expenses

RE1

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Utilities

U1

Insurance

I1

Travel

T1

Other

O1

Total Operating Expenses (OE)

OE =
P1+M1+RE1+U1+I1+T1+O1

Profit before depreciation,

interest and tax (PBDIT)

R1C1OE

Less: Depreciation

D1

Profit before interest & tax (PBIT)

PBDIT D1

Less: Provision for Interest

Int1

Profit Before Tax (PBT)

PBIT Int1

Less: Provision for taxes

Tax1

Profit After Tax (PAT)

PBTTax1

6.4.3

Projected Cash Flow

The projected cash flow calculations help you to identify any cash flow problems that can choke the
operations of any business, including your call center. A sample template to arrive at the projected
cash flow is given below:
Pro Forma Cash Flow

Year 1

Year 2

Year 3

Cash Received

Operational Cash Inflow

Cash Sales

Cash from Receivables

Cash from Operations

Cash Inwards

Tax Refunds Received

New Current Borrowing

New Liabilities

Sales of Current Assets

Sales of Capital Assets

New Investments

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Cash Received

Operational Cash Outflow

Cash Expenses

Cash Bills

Operational Expenses

Other Cash Expenses

Taxes Paid Out

Principal Repayment of Current Borrowing

Other Liabilities Principal Repayment

Longterm Liabilities Principal Repayment

Current Assets Purchase

Capital Assets Purchase

Dividends

Subtotal Cash Expenses

Net Cash Flow

Cash Balance

Expenditures

6.4.4

Projected Balance Sheet

A projected balance sheet may be prepared for the initial years of operation. A sample template is
given below:
Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Assets

Current Assets

Cash

Accounts Receivable

Other Current Assets

Total Current Assets

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Capital Assets

Capital Assets

Depreciation

Total Capital Assets

Total Assets

Current Liabilities

Accounts Payable

Current Borrowing

Others

Total Current Liabilities

Longterm Liabilities

Total Liabilities

Paidin Capital

Retained Earnings

Earnings

Total Capital

Total Liabilities and Capital

Liabilities and Capital

Net Worth

6.4.5

Business Ratios

It is important to project key financial ratios and compare it against industry standards to verify
whether your operations are maintained at a healthy financial level. This will also help you to take
corrective action, should you notice any difference in your projected ratios. Given below is a list of
key ratios that you may want to track and monitor:
Business and Financial Ratios

Year 1

Year 2

Year 3

Industry Levels

YoY Sales Growth

8.79%

Percent of Total Assets

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Accounts Receivable

28.12%

Other Current Assets

44.18%

Total Current Assets

76.27%

Capital Assets

23.73%

Total Assets

100.00%

Current Liabilities

38.61%

Longterm Liabilities

13.60%

Total Liabilities

52.21%

Net Worth

47.79%

Percent of Sales

Gross Margin

100.00%

Selling, General & Administrative Expenses

82.68%

Advertising Expenses

1.66%

PBIT

1.37%

Main Ratios

Current

1.59

Quick

1.22

Total Debt to Total Assets

3.09%

Pretax Return on Net Worth

60.22%

Pretax Return on Assets

7.76%

Additional Ratios

Net Profit Margin

Return on Equity

Activity Ratios

Accounts Receivable Turnover

Collection Days

Accounts Payable Turnover

Payment Days

Total Asset Turnover

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Debt Ratios

Debt to Net Worth

Current Liab. to Liab.

Liquidity Ratios

Net Working Capital

Interest Coverage

Additional Ratios

Assets to Sales

Current Debt/Total Assets

Acid Test

Sales/Net Worth

Dividend Payout

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References
1. ICT Strategic Plan for the Malaysian Public Sector: Standards, Policies and Guidelines for
Establishing a Call Center Version 1: March 2004.

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