Cost Efficiency in Public Services: The Role of CCaaS in Budget Optimization

David Mason at Odigo explores the concept of cost efficiency, its relevance to public sector contact centres, and practical strategies for achieving it.

Public sector organisations are under constant pressure to deliver high-quality services to citizens while managing tight budgets.

Unlike private enterprises, these organisations must provide equitable, accessible services to large and diverse populations, all while being held to high standards of transparency and accountability.

At this scale and level of complexity, technology becomes indispensable, equipping users with the tools to implement and monitor a range of cost-efficiency strategies. 

Defining Cost Efficiency

Cost efficiency isn’t just about cutting costs or cost reduction, it’s about achieving desired outcomes or delivering essential services while maintaining standards and minimising the use of resources: time, money and materials. This makes cost efficiency a process-orientated goal, focused on optimising how resources are utilised.

To effectively pursue cost efficiency in public sector contact centres, three key components need to be established:

1. Service Delivery Standards

A clearly defined set of services and standards ensures that while costs are being managed, service quality remains uncompromised.

2. Cost Efficiency KPIs

A balanced set of key performance indicators (KPIs) provides a replicable method for assessing how efficiently resources are being used relative to the outcomes achieved.

3. Continuous Improvement Strategy

The pursuit of cost efficiency is ongoing, so establishing a schedule for review and long-term strategy ensures constant refinement as circumstances evolve.

These elements ensure cost efficiency measures are both strategic and sustainable, enabling public sector contact centres to deliver high-quality services without unnecessary expenditure.

Cost Efficiency vs. Cost Effectiveness

While often used interchangeably, cost efficiency and cost effectiveness represent different concepts. Cost efficiency is process-oriented, focusing on how resources are used to produce a service.

In contrast, cost effectiveness is result-oriented, emphasising the achievement of desired outcomes at the lowest possible cost.

Another related concept in cost efficacy: achieving intended results with precision but not necessarily at the lowest cost.

Maximising Cost Efficiency: Key Concepts and Benefits

Tangible Benefits

Tangible benefits are measurable and quantifiable outcomes directly resulting from cost efficiency initiatives. In public sector contact centres, these benefits include:

• Reduced Operational Costs: Lower expenses in areas such as staffing, technology, and facility management.
• Improved Service Metrics: Enhanced performance indicators like reduced average handling time and increased first-call resolution rates.
• Resource Optimisation: Improved resource utilisation leads to cost savings and better service delivery.

Intangible Benefits

Intangible benefits are less easily quantified but equally important, contributing to the long-term success and sustainability of contact centre operations. These benefits encompass:

• Enhanced Customer Trust and Satisfaction: Providing consistent and efficient service builds public confidence in government services.
• Improved Employee Morale and Engagement: Well-optimised working environments, where agents are not overworked and have the right tools to perform their tasks, can lead to better job satisfaction, lower turnover rates and a more engaged workforce.
• Strengthened Public Image and Reputation: Effective and efficient service delivery enhances the overall perception of public sector organisations.

Marginal Gains

The concept of marginal gains emphasises that small, incremental improvements across various processes can cumulatively lead to significant enhancements in cost efficiency and service quality.

Examples of marginal gains in contact centres:

• Optimising Call Scripts: Minor tweaks to language and structure can improve communication effectiveness and reduce call times.
• Streamlining Routine Processes: Simplifying everyday tasks can save time and reduce workload stress on agents.
• Enhancing User Interfaces: Small improvements in software usability can increase agent productivity and reduce errors

Economies of Scale

Economies of scale occur when increasing the scale of operations leads to a reduced cost per interaction, thereby improving overall cost efficiency.

Achieving economies of scale in contact centres:

• Technology Scaling: Leveraging cloud-based CCaaS solutions allows for scalable infrastructure that spreads costs over a larger volume of interactions.
• Bulk Procurement: Purchasing technology licenses and resources in larger quantities often results in discounted rates and lower per-unit costs.
• Centralised Training Programs: Developing comprehensive training applicable across multiple teams reduces redundant efforts and ensures consistent service quality.

How to Judge Cost Efficiency in Public Sector Contact Centres

When judging cost efficiency, it’s crucial to establish predefined limits or standards-sometimes called guardrails-that indicate when cost-saving measures might be compromising quality and corrective action is necessary. A balanced overview may include the following:

Service quality benchmarks: for example, customer satisfaction scores, first call resolution rates, and average handling time.

Employee wellbeing assessments: for example, agent satisfaction scores and when things go wrong exit surveys or interviews to try and identify agent pain points.

A Simple Formula for Calculating Cost Efficiency

Before diving into specific KPIs, it’s helpful to consider a basic formula for calculating cost efficiency in a contact centre. This formula provides a straightforward way to assess how efficiently resources are being used:

Cost efficiency = Total output / Total costs

In the contact centre:

• Total Output Represents measurable outcomes e.g., number of interactions handled, number of successfully resolved calls or customer satisfaction scores.
• Total Costs Include all expenses associated with achieving this output e.g., labour, technology, training.

The aim is to achieve the same or greater output with the same or fewer resources.

Establishing KPIs to Measure Cost Efficiency

With the cost efficiency formula in mind, contact centres can use specific KPIs to measure and refine their cost efficiency. These KPIs provide insights into different aspects of cost management and service quality:

Key KPIs:

• Cost Per Call: Measures the total cost of handling a single customer call, providing insight into the efficiency of call-handling processes.
• Cost Per Interaction Per Channel: Evaluates the cost efficiency across different communication channels, allowing for channel-specific optimisation.
• Cost Per Resolution: Focuses on the cost associated with fully resolving a customer issue, offering a direct measure of the efficiency of problem-solving processes.

Given the complexity of contact centres, various operational efficiency ratios can be used to analyse performance and directly correlate it with cost efficiency. These ratios, such as calls handled per agent hour allow for a more nuanced understanding of resource allocation and its impact on overall efficiency.

Considering ROI in Cost Efficiency

When investing in new technology or processes, ROI is a critical consideration in the pursuit of cost efficiency. ROI helps determine whether the investment will lead to long-term cost savings and service improvements that justify the initial expenditure.

Incorporating ROI into cost efficiency decisions:

• Initial Assessment: Before investing in new technology, calculate the expected ROI by comparing the anticipated cost savings and revenue gains against the investment cost.
• Ongoing Evaluation: Continuously monitor the ROI post-implementation to ensure that the technology or process is delivering the expected benefits. If ROI falls short, adjustments may be needed to align the investment with cost efficiency goals.
• Long-Term Impact: Consider both tangible and intangible returns, such as improved customer satisfaction or employee productivity, which may not have immediate financial returns but contribute to overall cost efficiency in the long run.

Principles and Practical Tips for Cost Efficiency in Public Sector Contact Centres

Cost efficiency is inherently process-oriented, meaning that improvements in how tasks are carried out can lead to significant savings without compromising service quality. Below are insights into common areas for improvement.

1. Tech Ecosystem

Common Inefficiencies:

• Repeated data entry across multiple systems.
• Frequent screen switching.

Action Points:

• Integrate contact centre platforms to reduce the need for repeated data entries across various systems.
• Consolidate tools and databases, leveraging APIs to minimise screen switching and make data readily available.

Outcomes and Benefits:

Time savings, reduced errors, enhanced productivity, and shorter handling times.

2. Utilisation of Agent Time

Common Inefficiencies:

• High manual workload on routine tasks.
• Resource allocation inefficiencies.

Action Points:

• Implement robotic process automation for repetitive workflow tasks.
• Deploy AI solutions like chatbots for basic inquiries.

Outcomes and Benefits:

Frees up agents for complex tasks, increases overall efficiency, and reduces operational costs.

3. Workforce Management (WFM)

Common Inefficiencies:

• Inconsistent staffing levels leading to idle time or overtime.
• Delayed resolution times due to mismatched agent skills.

Action Points:

• Optimise schedules using advanced tools to predict call volumes and adjust agent schedules.
• Ensure that queries are handled by the most qualified agents through skill-based routing.

Outcomes and Benefits:

Reduced idle time, lower overtime costs, quicker resolutions, and improved customer satisfaction.

4. Process Optimisation

Common Inefficiencies:

• Complicated workflows leading to inefficiencies.
• Resistance to change or outdated processes.

Action Points:

• Regularly review and streamline workflows to remove unnecessary steps.
• Establish feedback loops for continuous process improvement.

Outcomes and Benefits:

Faster task completion, fewer bottlenecks, and ongoing enhancements in service delivery.

5. Contact Centre Management

Common Inefficiencies:

• Difficulty operationalising data for data-driven decision making.
• Inconsistent performance monitoring.

Action Points:

• Use data analytics and data visualisation for clarity and alignment with business goals.
• Leverage continuous KPI tracking to ensure that process improvements are effective.

Outcomes and Benefits:

Informed decision-making, optimised operations, and sustained cost efficiency.

6. Agent Skills

Common Inefficiencies:

• Inadequate training leading to errors.
• Limited workforce flexibility.

Action Points:

• Provide ongoing training plans based on individual performance tracking and coaching.
• Develop a versatile workforce by cross-training agents in multiple areas.

Outcomes and Benefits:

Reduced errors, higher agent efficiency, and flexible resource utilisation.

7. Supervision and Support

Common Inefficiencies:

• Time consuming QA and performance processes.
• Insufficient human resources to intervene and support agents.

Action Points:

• Automate the collection of QA and performance data, including setting alerts, so supervisors can focus on providing feedback.
• Utilise AI agent support and unified knowledge management to reduce search times and improve resolution rates.

Outcomes and Benefits:

Optimised use of technology and personnel, faster resolutions, and cost savings.

Conclusion

Cost efficiency is more than just reducing expenses – it’s about optimising processes, using resources wisely, and achieving service delivery goals without compromising quality.

In the public sector, where budgets are tight and service demands are high, the ability to deliver efficient, effective, and equitable services is crucial.

Rationalised spending on technology clearly plays a crucial role in this process.

By leveraging comprehensive CCaaS solutions, which offer omnichannel interaction management, AI orchestration, WFM and quality monitoring, public sector organisations can streamline operations while maintaining or, more likely, enhancing service standards.

These advanced tools not only optimise day-to-day processes but also integrate seamlessly with leading UCaaS and CRM systems, amplifying the benefits.

By implementing the principles and technologies, public sector contact centres can improve operations, ultimately benefiting their employees and the citizens they serve.

Reviewed by: Jo Robinson