Smart Ways to Cut Call Center Costs & Improve CX

There’s an ongoing battle in call centers between improving customer experience and balancing the books. You must continue to deliver the high level of service you promise customers, making it harder and harder to tighten your belts.

The good news is that it is possible to shave fractions off different contact center technologies to save money. And the even better news is that you don’t always need to make feature or license reductions to realize cost savings (though they help too).

Let’s start by assessing the cost analysis of a typical call center — then, we’ll explore all the ways you can save costs in yours.

Typical Call Center Cost Breakdown

A call center’s budget is commonly split into several key areas:

Cost Type	Description	Average Cost (For 20 Agents Annually)
Labor Costs	Salary, benefits, training, and turnover expenses	$694,000
Contact Center Software	Call center and omnichannel licensing with top features	$38,160
Technology & Infrastructure	CRM, VoIP, and other cloud solutions	$18,180
Telecommunications	Phone systems, SIP trunking, internet, and backup lines	$15,000
Facilities & Utilities	Rent, electricity, and hardware maintenance	$30,000
Compliance & Security	Regulatory adherence and data protection measures	$18,030
Total	A rough guideline for a 20-person contact center with all costs considered	$813,370

At first glance, this might seem like a hefty price tag. So if that number made you do a double take, keep reading — we’re breaking down the biggest areas of overspending in call centers.

Common Areas of Overspending in Call Centers

High agent turnover costs

Terminating a call center agent costs $31,416. As a standalone cost — for something no longer contributing to your business — this is the largest area of overspending in call centers.

When you factor in the cost of recruitment, agent training, and lost productivity, businesses lose thousands per agent that needs to be replaced. In fact, call centers with poor retention and high turnover (30–45%) spend disproportionately more on staffing.

It’s safe to say that it quite literally pays to keep employees happy. Invest in their career development, and check on their well-being to minimize the chance of them leaving.

Underutilized software & tools

Are you paying for tools that simply don’t get used? Many businesses pay for extra meeting/chat software, CRM add-ons, or duplicate VoIP services they don’t fully utilize.

The term SaaS sprawl (using too many platforms) is a recent phenomenon that means you increase costs thanks to added tools that don’t actually add efficiency. Consider auditing tools that replicate the functionality of other tools and reduce licenses for agents who don’t need them.

By reducing telecoms costs, you can reduce your budget and allocate that saved money to other call center costs.

Inefficient call routing & transfers

Poorly optimized call flows increase average handle time and frustrate customers. When your call center agents get clogged up acting as receptionists, they’re not able to solve customer issues efficiently.

Excessive call transfers lead to lost productivity and higher telecom costs. Not only are you spending unnecessary time on calls, you’re creating friction between your business and your customers.

Consider configuring interactive voice response (IVR) menus and call routing options to send inbound calls to the right destination the first time.

Lack of self-service options

Many call centers fail to deflect simple inquiries with chatbots, IVR, or online FAQs. As a result, you employ contact center agents to answer the same questions over and over again.

How many times has an agent confirmed your opening times or an account balance? These types of queries are ripe for automation and self-service. As part of your call center software, you should be utilizing built-in drag-and-drop menu builders to remove this friction.

What’s more, studies show that 67% of customers prefer self-service for simple questions. Nobody wants to hold for a two-second confirmation.

Outdated infrastructure & on-premises costs

While legacy on-premises systems require costly maintenance and hardware upgrades, there’s also the rule of thumb that cloud technology is cheaper in the modern age of communications.

Did you know that cloud migration can reduce costs by 15–40%? There may be a small upfront cost to complete your move from on-prem to cloud, but it’s an investment for the future that will continue to pay dividends.

Cost-Saving Strategies for Call Centers

1. Optimize call routing with AI & automation

Using a combination of skills-based routing, artificial intelligence (AI)–powered chatbots, and automated callbacks, you can connect customers to the right agent faster, outsource basic inquiries, and reduce the call abandonment rate.

By outsourcing these tasks to machines, you free up agent time, enabling them to spend more time on value-adding activities like problem-solving and conflict resolution. The more you free up your agents, the less time will be burned carrying out mundane responsibilities and the lower your costs will be.

2. Reduce agent turnover with better training programs & support

Invest in AI-powered tools to improve agent performance and support your agents in the moment. Using tools like Agent Assist, you can get on-screen and post-call support to help coach agents through difficult situations. There’s no need to borrow resources from more experienced agents or supervisors either. So you’re not reallocating time and budget from other departments.

You can pair this with quality assurance analytics to identify training needs rather than doing blanket retraining. The more specific you can be, the better the training and agent experience.

As well as on-the-spot coaching and retrospective action, think about offering flexible schedules, remote work options, and career development programs. When agents feel they’re part of a bigger picture, they won’t feel like they’re turning up every day and simply going through the motions.

3. Move to a cloud-based call center

One of the biggest long-term cost savers is eliminating on-prem maintenance and allowing pay-as-you-go pricing. When you do this, you’re not only adding modern call center features; you’re also removing inefficiencies and the need for agents to be in the office all the time.

The reduction of on-prem IT dependency and need for being on-site enables remote or hybrid working — and remote or hybrid management of systems and software.

Migrating from legacy solutions like on-prem PBXs to VoIP solutions is a game changer when it comes to cutting telecom costs.

4. Consolidate meeting, chat & communication tools

One obstacle when migrating your business to the cloud is the potential to oversubscribe to tools that promise productivity. When chasing operational efficiency, there are a plethora of apps at your disposal. But if you choose them all, most become redundant.

For example, it’s common for call centers to have separate chat, voice, video, and email services. But some are paying for an omnichannel license, as it’s generally the superior option compared to siloed operations.

If you do have siloed operations, audit your SaaS stack and consolidate platforms with unified communications solutions to save on licensing fees.

5. Leverage self-service to reduce call volume

The more time you make available for agents, the more they can spend on tasks that need genuine human interaction.

Instead of having agents burn out answering call after call, allow them to dedicate quality time to complex queries that need empathy and problem-solving.

For basic queries, implement chatbots, knowledge bases, and self-service IVRs. By doing so, you reduce repeat calls by ensuring customers get complete answers upfront. If the path of least resistance is giving the caller an answer without human intervention, enabling it saves time and money.

6. Improve first call resolution

The general sentiment used to be that the faster you got callers off the phone, the better your call center was performing. But in the modern world of sophisticated call center metrics and customer experiences, we know the better key performance indicator is first call resolution (FCR).

There remains an element of speed, but the main criterion is whether the query has been fully resolved on the first call.

You can improve your FCR and contact center efficiency by focusing on a few key areas:

• Integrate your CRM with call center software to give agents full customer history.
• Reduce unnecessary call escalations by training agents on problem-solving skills.
• Use speech analytics to detect common complaints and proactively address them.

7. Negotiate better vendor contracts

One of the most impactful cost-saving measures is to speak with your vendor and see where money can be saved.

When renegotiating terms for existing contracts, make sure you factor in telecom rates, SaaS contracts, and BPO agreements on top of basic call center costs. Look for volume discounts, flexible pricing tiers, and bundled service packages. Different vendors have different packages based on call spend, data usage, and number of users, so ask the right questions to get the best answers.

Before/during these negotiations, audit current licenses and users to eliminate unused seats. Some of the most common cost savings in call center services is simply removing waste.

For example, when thinking about contact center pricing, consider whether you really need omnichannel licenses for every agent.

8. Reduce idle time with workforce optimization

If you have too many agents or not enough agents covering the phones at the wrong times, all the subsequent workflows become inefficient. This leads to unwanted costs and real-time manual changes.

Instead, you could use AI-driven workforce management tools to optimize schedules. With these tools, you can implement basic features like predictive shift patterns and channel activity measurement.

And you can go even deeper by turning on shift bidding to reduce unnecessary overtime and automating performance tracking to identify efficiency gaps. The more time you save on unnecessary agent overtime and cover, the more you have available to improve customer satisfaction.

9. Explore business process outsourcing

It might be the case that hybrid outsourcing models (e.g., offshoring Tier 1 support, keeping escalations in-house) prove more efficient than handling all your customer interactions in your own call center.

If this is your suspicion, evaluate providers based on cost-per-call vs. service quality trade-offs. When gathering information from such providers, they’ll do their utmost to convince you that outsourcing is the best solution for you. But make sure to both compare the cost savings and understand the service level you’ll be getting in exchange.

10. Analyze costs in compliance & security

If you get compliance and security right, there will be no hidden operational costs. But until you can be 100% sure you’re compliant across the board, you must be aware of potential fines for noncompliance with the below regulations:

• TCPA
• GDP
• HIPAA
• PCI-DSS

If you’re new to these regulations or have large call centers, tracking compliance manually is either hard or impossible. It’s well worth investing in compliance automation tools to reduce manual audit costs.

Hidden Costs to Watch Out For

Not all call center costs are obvious on the surface. Here are a few that take some deeper digging to uncover.

Licensing overages

You might be overpaying for unused software licenses. While your monthly bill matches the number of licenses with your number of agents, it might be the case that not every agent is using the license to its full potential.

If there are advanced features in a “pro” license, it’s rare that every customer service rep is using them. These are often sales features for telemarketers or quality monitoring components for supervisors. On a regular basis, review the feature lists vs. what’s actually used by each type of agent.

If you opt for usage-based costs, check every quarter to ensure this system remains the most cost-effective solution for your business. If call rates have spiked, they might be costing you more than a full monthly seat.

Unoptimized SIP trunking costs

If your setup involves calling between sites or systems, you may have redundant or underutilized phone lines adding to telecom costs.

In some cases, using a third party for discounted call costs can actually become more expensive. Moving everything on-platform and into the cloud — via a single provider or one with cloud connect relationships — entirely removes the costs of sending calls to different platforms.

Poorly managed overtime

Without a thorough workforce management process, it’s easy to say yes to too much overtime. Using gut feel and agent experience might be fine when you’re starting out or only have a handful of agents, but call center management at scale is another matter.

Overreliance on overtime can lead to burnout and increased call center expenses. Instead, opt for a workforce management tool that tells you how many agents you need and when the need might change during peak periods or unplanned events.

Lost agent productivity from IT downtime

On-premises and outdated systems not only need constant maintenance and attention; they’re also prone to downtime.

When you can’t make or receive calls, you’re not doing business. As such, customers will become frustrated and you’ll miss out on upsells.

Don’t let legacy equipment be the cause of red lines on your business plan when the cloud alternative is more cost-effective and reliable.

Start Your Call Center Cost Reduction With Nextiva

By leveraging call center automation, optimizing agent efficiency, migrating to the cloud, and consolidating services, businesses can achieve significant savings while maintaining exceptional customer service.

While this might all sound like a lot, having the right call center platform streamlines the cost savings process to the nth degree.

Nextiva provides an all-in-one solution for businesses looking to streamline their call center operations, reduce costs, and improve customer satisfaction. Whether it’s AI-powered call routing, omnichannel customer support, or cloud-based flexibility, Nextiva helps businesses save money while staying ahead of customer expectations.

Need to cut costs in your call center? Check out Nextiva today. 👇