How Can I Reduce Labor Costs for My Business?

Reduce labor costs and focus on your core business objectives.
reduce labor costs

Can you guess the percentage of businesses, large and small, that want to reduce their labor costs? Well, that is an easy answer even without researching the specific data, as it would be (or should be) 100%.

Large or small companies alike, the number one cost associated with most companies is labor, with workspace being a close second. 

Understanding Workforce Expenditures is Fundamental to Reducing Labor Costs

These days, labor costs are fluid and ever-changing. So when you look at the overall picture of what your actual labor costs are as a company, you need to not only consider the salaries and hourly wages you are paying out but a few more hidden pieces to this burdensome puzzle. 

Let’s review direct and indirect expenses that impact the cost of labor.

Direct Workforce Expenses

A few examples of direct expenses explicitly tied to an employee are:

  • Cost per employee for company benefits
  • Salary, bonuses, and commissions paid
  • Recruiting new employees 
  • Training new and existing employees
  • Employee retention 

These are just a handful of expenses that can help quantify the actual cost of an employee. But unfortunately, the numbers can be staggering and often something that companies all too easily overlook. 

Indirect Workforce Expenses

Indirect expenses, often times referred to as overhead, describe wages paid to workers that don’t directly contribute to or influence the company’s overall success. For instance:

  • The cost of the physical workspace (usually the 2nd highest expense to most businesses). 
  • Security
  • Facilities or maintenance staff
  • Utilities

Many businesses are looking for ways to reduce their indirect expenses and are taking a deep look at ways to reduce the footprint of their physical location(s). 

What to Evaluate

There are several ways to reduce your labor costs. However, some of these can be very detrimental to your overall mission, and others are not thought about often enough as being used strategically as a solution.  

Many companies search for this question without realizing the answer isn’t that far away or difficult to achieve. 

Evaluate your current compensation plans and make the necessary adjustments. 

  • Review bonus plans and benefits. Consider the impact of any potential adjustments. 
  • Weigh out the risk of losing employees you want to retain and how those possible modifications will affect them. 

 Reduce the amount of money spent on overtime compensation.  

  • Is the time spent outside of the regular hours productive? 
  • Identify areas of opportunity to improve efficiency during regular hours. Do the improvements eliminate the amount of overtime paid?

Assess the state of equipment and technology used to perform job functions.

  •  Is the equipment empowering the workforce to be as efficient as possible?
  • Are there productive alternatives to what’s currently in place?

Review expenses associated with recruiting, turnover, and production.

  • Consider processes you can maximize performance with a third party and reduce costs, like a BPO. 


Reduce Labor Costs with a BPO

One of the best and most flexible ways to reduce your labor costs that many businesses have utilized is utilizing a company specializing in Business Process Outsourcing (BPO), as Quality Contact Solutions provides. 

What is a BPO?

Business process outsourcing (BPO) is where a third-party service provider is employed to carry out specific business functions for a company. In turn, the responsibility is placed on the third-party to achieve particular goals and objectives.

A company specializing in BPO often has the solutions to any of your needs regarding reducing your labor costs. There are proven models already established that will support anything from account management to a dedicated sales team.  

Advantages of Working with a BPO

 There are many advantages of outsourcing to a BPO. Some of those reasons are:

  1. Most BPOs use advanced call center technology, enabling agents to execute on a company’s existing processes with higher efficiency and ROI.
  2. The BPO outsourced call center provider must forecast and staff the correct number of resources for the job function. The burden of recruiting falls to the BPO. 
  3.  All product, skill, and technology training is the responsibility of the BPO. 
  4. The shift to a multi-channel contact demand and customer preference has raised the bar on customer experience. The right BPO equips the call center agents to support this multi-channel approach.


How BPO Services Can Reduce Labor Costs

BPO’s provide a wide range of inbound and outbound solutions. Specific services like appointment setting, lead generation, end-to-end sales, lapsed customer engagement, technical support, and customer service are common.

Flexibility & Scalability

Our stable infrastructure offers a capacity to scale as business demands change. We help with overflow, spikes in volume, seasonality, a diminishing labor pool, or expansion due to limited office space.

Reduce Expenses & Increase Revenue

Eliminate costs associated with recruiting, hiring, training, and operations. Sophisticated technology helps improve efficiency and increase productivity for our staff to help maximize your investment and business profitability.

Have More Time to Focus on Core Business

Let your team fully utilize their core competencies by freeing up time spent on time-consuming tasks with little reward. Maintain growth goals while avoiding standard business bottlenecks. We like the nitty-gritty work and are good at it.

By engaging a BPO to reduce your labor costs, you will be placing the burden directly on your BPO partner to recruit, retain and maintain appropriate compensation levels. At the same time, your business wouldn’t have to worry about the costs associated with dedicated workspaces. 

Reducing labor costs doesn’t have to be complicated. Quality Contact Solutions can help. 

Chris Grothe is the Vice President of Operations for Quality Contact Solutions. With nearly three decades of call center experience, Chris is a proven professional with in-depth knowledge of inbound and outbound operations. As an industry pioneer, Chris’s expertise and attention to detail enable him to identify opportunities and executing new strategies help his clients achieve and exceed their goals. Chris leads by example and dedicates himself to teaching his team how to develop successful for their clients. Chris can be reached at or 516-656-5121. 


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