In economic terms, diminishing returns refers to how the marginal production of a factor of production, in contrast to the increase that would otherwise be normally expected, actually starts to progressively decrease the more of the factor are added.

The priciple also applies to operational situations, such as in resourcing in contact centres.  Once the optimum number of resources are in place, each additional resource will not bring an equivalent return.

In telesales, where agents average x sales per day, the average will eventally reduce the more agents that are added. 

The same can be said of service level achievement.  Once the optimum number of resources are in place to achieve service level, the addition of additional staff will only serve to diminish the overall return.

The operation then starts to become over-resourced with an increase in cost and reduction of calls per agent.