What’s Your True Cost?
A Practical Guide to Contact Center Economics
Running a contact center isn’t expensive because people make mistakes. It’s expensive because
most budgets don’t reflect the full cost of delivering each productive hour. This guide breaks
down what it really costs to operate a 150-agent contact center in Phoenix, AZ—and what that
means for planning, budgeting, and strategic decisions.
1. Total Cost Goes Beyond Wages
When we look at the true cost of a contact center, seven major cost categories emerge:
1. Direct labor
2. Management and supervisory overhead
3. Real estate and utilities
4. IT infrastructure (telephony, CRM, WFM, QA)
5. Recruiting and training
6. Quality assurance, compliance, and security
7. Attrition and unproductive time (shrinkage)
2. Real-World Example: 150 FTEs in Phoenix, AZ
Here’s a breakdown using current cost assumptions for the Phoenix market:
Hourly Cost Benchmark
$10M ÷ (150 agents × 2,080 annual hours * 80% productive hours) ≈ $40 per productive hour— more than 2X higher than the base wage.
3. Why These Costs Often Go Unnoticed
Contact center expenses are often spread across different departments and GL codes, making the true cost hard to see.Here are a few common blind spots:
• IT and facilities costs often sit outside the CX budget.
• Recruiting and attrition costs are seen as one-time expenses, not recurring operational burdens.
• Unproductive time (shrinkage) isn’t tracked carefully, but it has a direct impact on staffing requirements.
• Legacy technology can silently increase handle time and reduce the effectiveness of managers.
4. How to Regain Control of Your CX Budget
If you’re managing or evaluating a contact center operation, consider these practical steps:
- Get a single, bundled view of total cost. Ask for an all-in rate that includes labor, systems, space, and support costs.
- Track shrinkage more precisely. Separate scheduled time (breaks, training, PTO) from
actual time spent helping customers. - Invest in visibility tools. Workforce management systems and quality monitoring platforms can highlight inefficiencies you can act on.
- Benchmark externally. Compare your internal costs per productive hour to what reputable outsourcing partners can deliver
5. The Metrics That Matter Most
Whether you’re managing an internal team or evaluating a BPO provider, these six KPIs help anchor decisions:
- All-in cost per productive hour
- First contact resolution (FCR) – repeat contacts drive up volume and cost
- Average handle time (AHT) – shorter isn’t always better, but it shapes staffing models.
- Customer satisfaction (CSAT/NPS) – quality outcomes must accompany cost
efficiency. - Attrition and retention – hiring costs and lost productivity are real
- Shrinkage – measure and manage it like you would payroll
When tracked together, these metrics move CX budgeting from estimates to evidence
6. From Expense to Strategic Lever
What matters is that decisions are grounded in accurate data, not assumptions.
