Organizations in today’s fast-paced business world are constantly looking for methods to optimize their operations, decrease expenses, and enhance efficiency. Outsourcing of back-office activities offshore is an important technique that has gained traction today.
Let’s talk about back office services, how their functions differ from those of the front office, and how to choose the right outsourcing partner for your back-office needs.
What are Back Office Services?
The back-office is the non-client-facing administrative and support staff of a company. Settlements, clearances, bookkeeping, regulatory compliance, accounting, and IT services are all examples of back-office functions.
The back office operates similarly to a company’s engine room. Mishandling the back-office can cause a business to malfunction, just as a vehicle cannot start if its engines are not functional. Employees in the back office perform tasks that are critical to the survival of a business. The following are some of the most common activities:
- Finance management
- Human resources management
- Database administration
- Technical support
- IT development
- Legalization and tax payment processes of companies
- Customer order management
- Generation of digital content
Front Office vs Back-Office
A company has both front-office and back-office operations that allow it to run smoothly. Front-office staff deal directly with clients, while back-office employees perform administrative tasks and other non-customer-facing activities.
Aside from that, below are the key takeaways that differentiate both functions:
- The front office of a company handles direct communication with existing and prospective consumers, whereas the back office does not.
- The front office’s primary duty is generating income and improving the company’s revenue. In contrast, the back office’s responsibility is to reduce the company’s overall costs.
- The front-office contributes to the development of the strategy for obtaining new deals, while the back office ensures compliance control.
- For salary, there is a significant gap. Since front-office employees are the ones who produce income for the organization, their salaries are higher than those of back-office staff.
- Though front-office personnel may believe that they are performing the most vital duty, they are reliant on the operations of the back office, which ensures that all processes — whether administrative, HR, or IT — run smoothly.
- In line with abovementioned takeaway, the duties of various back-office functions have increased rapidly. Previously, for example, IT’s responsibility was primarily limited to hardware. Even today, the IT staff in investment banks consists of employees who create essential technical infrastructure that supports the basic operation.
Benefits of Outsourcing Back-Office Services
Outsourcing back-office functions has been an excellent choice for businesses seeking to increase profits and productivity. From small- and medium-sized businesses to global corporations, many businesses are now outsourcing certain company functions, particularly back-office operations. When done effectively, there are tons of benefits to using back-office outsourcing services.
Here are a few of the more significant benefits:
1. Operational Efficiency
First, back-office outsourcing assists you in streamlining multiple essential and resource-intensive elements of your business. Tasks ranging from basic data input to advanced claims administration and order fulfillment are simplified into a single, straightforward output. This frees up time for you to focus on what you do best: managing your core business.
2. Cost Efficiency
Outsourcing back-office tasks relieves you of the responsibility of funding a whole team of administrators or maintaining costly facilities. Consolidating back-office fulfillment into a single budget line item not only cuts overhead costs but also frees up funds to invest in other parts of expanding your organization.
Back-office duties can also be outsourced to save money as compared to employing and training in-house staff. Businesses can save money and time on recruitment and training. This is because outsourcing agencies already have people trained and ready to work on specific tasks.
3. Access to Specialized Expertise
Businesses that outsource back-office support services can gain access to specific skills that they may not have in-house. Businesses can benefit from the knowledge and experience of professionals who specialize in a specific industry by partnering with a third-party supplier, without having to engage in costly training or recruits.
4. Flexible Business Model
A strong back-office outsourcing service provider will enable your company to grow in size, productivity, or profit. The success of your business is directly proportional to the success of your outsourcing partner. Sometimes, the outsourcing agency would also handle the recruitment and training processes, providing superior support to the employing organization.
5. Availability of Advanced Technology
Third-party service providers can streamline several back-office support chores by outsourcing back-office functions. Likewise, outsourcing companies have access to innovative equipment and resources, which simplifies data administration and ensures that data is accurate, current, and immediately available. By outsourcing back-office support services, you can gain access to technologies that will allow you to analyze data, discover patterns and trends, and gain useful insights.
6. Assurance of Cyber Security
Data security is essential, in this hyper-connected world. Engaging an industry leader for back-office outsourcing entails implementing the most advanced data-security procedures available.
Choosing the Right Back Office Outsourcing Provider
Back-office services are provided by a multitude of BPO firms. However, this might make it challenging for businesses to determine who to entrust with their business procedures. Likewise, successful outsourcing partnerships require clear communication and collaboration between both parties.
If you’re not sure where to begin while looking for a BPO service provider, we recommend looking for:
Proven Track Record
A large majority of businesses will have trusted the right outsourcing partner. They never sacrifice the quality of their services, and the feedback they receive is always positive. Bad reviews on companies are almost impossible to miss. Before signing a contract, do extensive research and background checks.
Budget Transparency
Presenting the cost to a potential client is a critical stage that can either make or break a partnership. If you want the greatest services from a high-end outsourcing agency, you need to plan ahead of time. However, if you opt to work with a small outsourced firm, you can expect lower prices.
Versatile Outsourcing Partner
When selecting an outsourcing partner for your specialized services, flexibility is paramount. They should be adaptable enough to meet your wants and provide immediate assistance before reaching an agreement.
Back Office Services You Can Outsource
It’s no surprise that back-office outsourcing has become such an appealing choice for businesses all around the world. With that in mind, let’s look at the most outsourced back-office functions.
1. Data Entry
Data entry can take different forms, ranging from simple copy-pasting to looking for and evaluating data before entering it into the system. While this may appear to be a low-level duty, it assists businesses in lowering operational costs. Because this operation takes a comparably smaller amount of space to handle the data, the act itself greatly minimizes the infrastructure expenses that a company must face.
2. Accounts Payable and Accounts Receivable
Accounts payable and accounts receivable outsourcing frees up your finance department to focus on higher-level activities and essential business responsibilities. Accounts payable activities include dispute settlement, purchase order distribution, and general accounts payable management. Outsourcing accounts receivable allows you to access more resources than you previously had without increasing personnel in your firm or requesting resources from other departments.
3. Human Resources
Outsourcing HR activities might assist your company in focusing on employee well-being and corporate culture. Your employees will be able to focus on the company’s long-term objectives. Various recruiting jobs and interview pre-screening are common HR duties that businesses outsource.
4. Tech Support
Business owners know that they must be available to their customers long after the sale has been completed. Offering specialized tech assistance lets companies establish a loyal client base, and doing so is no longer difficult or expensive due to outsourcing. This allows start-ups and SMEs to compete with the market’s more established businesses. Moreover, large corporations can benefit from outsourcing tech assistance to supplement the work of their in-house team.
5. Marketing and Public Relations
Maintaining an internal marketing and public relations team can be costly for startups. This is why businesses choose to outsource both strategic and operational functions to suppliers who have the specialized skills, tools, and professional employees to provide the full range of marketing and public relations services. This is an excellent method to supplement some of the skills that your in-house team currently has.
Need an Outsourcing Partner to Handle Your Back Office Services?
Back-office tasks are critical to your company’s financial and operational success. Still, doing these responsibilities can be time-consuming and demanding. You may relieve your in-house team of these mundane activities by using Outsource-Philippines back-office outsourcing services, allowing them to focus on more beneficial efforts such as building go-to-market strategies and improving customer experience. Join forces with us and let our staff improve your business processes.
