Traditionally, the activities of a business are divided into two offices: the front office and the back office. The separation between the two is fairly intuitive: the front-office acts as the profit center of the business and supports all of the functions that drive revenue into the business. The back office is the cost center of the business – it supports all of the functions that the business needs to operate efficiently, while trying to minimize costs as much as possible. Back office processes are a money sink for organizations, but they provide functions like human resource management, accounting, and payroll that are required for the business to function.
To help reduce costs and drive business efficiency, an increasing number of companies are choosing to outsource their back office processes to offshore corporations that can provide flexible labor at a cheaper rate. If your organization is expanding back office operations of struggling to keep up with growing demands for labor in the back office, you could probably benefit from outsourcing all or part of your back office processes to a reliable partner.
If you’ve never looked into back office business process outsourcing for your organization, it’s worth investigating whether an outsourcing service could actually help your operation run more smoothly. To help get your started, here’s our list of the top ten things you need to know about back office business process outsourcing.
Many Types of Organizations can Benefit from Back Office Outsourcing
If you’re considering back office process outsourcing for your organization, you should realize that a huge variety of organizations are already benefiting from these valuable outsourced services. Every organization has a back office that’s costing them money – human resource professionals that manage hiring and employee retention, people doing payroll, people doing accounting, a team of data entry people, analysts, etc. To determine whether your organization could be a good fit for outsourced back office processes, just ask:
- Am I spending too much money on accomplishing repetitive or process-oriented tasks?
- Is my back office struggling to keep up with our business needs?
- Am I focusing on efficiency of operations more than on my customers?
Back Office Process Outsourcing Provides Big Cost Savings
Organizations around the world can realize significant cost savings by switching from in-house to outsourced back office processes. If your business operates in a competitive labor market, the cost of hiring local labor for tasks like data entry is often prohibitive. A company that wants to process data in-house must hire and train new workers, pay them a salary, provide them with office space, pay for the equipment they need and provide them with benefits like health insurance or a pension.
Back office outsourcing enables organizations that operate in high-cost labor markets to access less expensive labor that can accomplish the same things for the business. As a result, these organizations reduce their operating overhead, simplify operations, and save money by outsourcing.
Organizations Still Need to Protect Data
If your company collects data from your customers or users, it is important that you maintain the privacy and security of that data. If you collect data from European citizens, your organization will be subject to the legal requirements of the European General Data Protection Regulation (GDPR). If you deal with medical data, you are probably subject to the HIPAA requirements in the United States.
It is important that you choose a back office service provider with an exemplary track record of adequately safeguarding customer data, along with the appropriate certification for Information Security Management Systems (ISMS). A service provider that holds a current ISO 27001 certification already has the policies and procedures in place to protect any confidential data they receive from your organization.
Small and Medium Businesses Benefit Most From Back Office Outsourcing
What kinds of businesses can benefit the most from business process outsourcing? The truth is – all kinds. Large enterprises have the largest back-office operations, and consequently, the greatest potential to save money through the establishment of a relationship with a reliable outsourcing partner. At the same time, large enterprises spend a lower portion of their overall revenue on the back office, so the cost savings are less significant.
For small and mediums-sized businesses that find themselves resource limited, there’s often a great opportunity to save meaningful cash with outsourcing. Businesses of this size have smaller back office operations that cost a greater proportion of their budget than for large enterprises, so it’s really small-medium businesses where outsourcing can create the most impact.
Back Office Processing Can Improve Business Visibility
One of the major questions and concerns that business owners have is whether outsourcing will create a lack of visibility into their business processes. After all, how do you know what’s going on if someone else is doing all of the work? This especially applies for businesses that are outsourcing their accounting or financial reports.
In fact, outsourcing frequently improves business visibility because documents or reports can be digitized and made accessible online. With the fast turnaround times available in the industry, this translates to more information and data being available sooner for more people – who can then use it to make better business decisions.
Outsourcing Companies Do More Than Data Entry
Outsourcing companies today can handle a diverse range of tasks, including back-office tasks like payroll and account, document and image digitization, optical character recognition services, data migrations, real estate title searches, equity research and other research tasks, form processing and more. An outsourcing partner with diverse service offerings can even open up new business opportunities for your organization.
Back Office Outsourcing Companies Can Help Digitize Existing Records
Many companies hire a back office service provider to process documents or data on an ongoing basis, but these services are also useful for organizations that have a backlog of data or forms that must be digitized, analyzed or processed. When the United States introduced the mandate for electronic health records, thousands of health care providers saved millions in costs by digitizing patient care records with back office outsourcing firms.
Customized Services are Always Available
Back office outsourcing service providers will frequently provide a menu of services that are available – you’ll see things like form processing, data conversion and digitization, along with the typical BPO items like payroll and accounting. If your business does something unique, however, that does not fall into any of these categories, that doesn’t necessarily mean you’re out of luck. A professional outsourcing firm backed by adequate resources can build source and train labor to deliver a customized service that meets your exact needs – all you have to do is ask!
Don’t be afraid to reach out and start a conversation about your needs if you’re not sure – this is also a great time to evaluate the customer service that a particular outsourcing company provides.
Back Office Outsourcing Helps Maintain a Customer Focus
In addition to reducing their costs, organizations who use back office outsourcing can free up more of their resources to focus on the front office – the part of the business that actually generates revenue. As a business owner, your customers should always be your first priority. While it’s important to run an efficient back office that is lean and cost-efficient, it’s your customers that put money into the business. Many small and medium-sized business owners find that outsourcing the back office allows them to spend more time focusing on customer satisfaction and revenue generation.
Outsourcing Helps Organizations Access Wider Talent Pools
Getting the best talent into your company is one of the major challenges faced by small business owners everywhere. In addition back office staff are often more costly to hire because they have specialized skill sets like HR management or accounting.
One of the key benefits of outsourcing is that it enables your business to access and leverage a wider pool of labor, talent, skill sets and educational backgrounds for a fraction of the cost. Outsourcing companies invest in developing their talent and capabilities so they can put them to work for your business – so take full advantage!
We hope that our list helps get you started in back office process outsourcing. Back office outsourcing services can help your organization access a wider talent pool, reduce costs and stay focused on your customers. A variety of services are available, including customized solutions that can be designed to meet the specific needs of your business. Best of all, virtually every type and size of organization can benefit from back office services.