Back office business process outsourcing represents a significant opportunity for organizations of all sizes to achieve cost savings. Instead of creating new departments, hiring new employees and conducting back-office processes in-house, organizations can choose to outsource things like payroll, manual data entry, repetitive research tasks or image scanning to a third party – typically for a fraction of the cost.
The advantages of back-office process outsourcing in this way are three-fold. First, the organization gains access to a large, trained and managed pool of talent without having to take on any additional burden in HR – no hiring process, no more payroll. Second, the organization reduces its costs by hiring an outsourcing company for less than what it would cost to develop the capabilities to do the work in-house. Third, having effectively managed its back-office processes through outsourcing, the organization can now direct its resources towards more value-added tasks and initiatives.
From our perspective, small and medium-sized enterprises (SMEs) stand to benefit the most from business process outsourcing. SMEs often face resource limitations when it comes to developing new capabilities in-house, and excess funds are best allocated towards expanding production and sales channels to drive growth.
To ensure a great customer experience and a positive return on investment, it is vital that organizations of all sizes choose a back office outsourcing partner with the right qualities. To help out, we’ve created this short guide to choosing the right back office outsourcing services. Keep reading to get our own insights into how you should choose the right back office outsourcing services.
Is Back Office Business Processing Right for My Organization?
Before you begin looking for a back office services provider, it is important to define your business need for back office outsourcing. With a thorough understanding of your own business requirements, you will be better equipped to assess your options in terms of their ability to meet your needs.
Back office business processing companies are good at handling repetitive tasks including things like research and data entry services. You can also outsource processes like payroll, accounting and human resources management – entire departments of your organization. Additionally, if your organization deals with high volumes of data that must be analyzed or otherwise reviewed, a back office outsourcing company can do things like process form data, create spreadsheets and reports or provide document and image scanning services at scale.
To begin assessing your needs, ask yourself:
- What processes am I managing in-house right now that I could outsource instead? (existing processes)
- What processes am I not doing in-house that I could be doing if I used outsourcing? (Unused data, resources)
- What quantity of services do I need? (How many people on payroll? How many forms per day to process?)
- What am I currently paying for services? (What does it cost to do this in-house?)
- How will my needs change in the future? (More quantity? More departments/projects?)
Once you have conducted an internal needs assessment, you’ll be ready to start shopping around for a company that can meet your requirements.
How to Choose the Right Back Office Outsourcing Services
Choosing the right back office outsourcing services can be a time-consuming process, but it’s important to conduct your due diligence investigations at the beginning. Remember, you’re looking for a partner that can help to unburden you with administrative tasks and free up more of your time. You want to set up the working relationship and rely on them to deliver in the future with minimal drama or intervention.
You’ll want to evaluate each candidate based on the service they provide, their track record, the cost of service, what contract options are available, and the range of services on offer. Of all the criteria, we’ve created a list of the most important qualities you should look for in a potential partner.
Choose a Partner with Diverse Service Offerings
When choosing a business process outsourcing partner, the first criteria you should look at is the range and diversity of services that the partner can provide. Some back office outsourcing companies are only handling manual data entry tasks – they’re great to use for outsourced labor and you can save on costs for those activities but they may not be able to handle things like payroll and accounting.
A partner with diverse service offerings must have access to a large pool of talent and the resources to source and train talent across a variety of disciplines – that’s the kind of networking ability that your company should want to leverage. Additionally, a partnership with a back office outsourcing company with multidisciplinary capabilities may reveal new opportunities for your firm that were previously undiscovered or overlooked.
Here’s a simple example: you hire a back office outsourcing company to manage your payroll, but find out that they also do data entry. Later on, you expand your web sales channel and begin collecting lots of new customer data. Your existing relationship with a back office outsourcing company that provides data entry services helps you leverage that data in new ways, finding insights that you can use to further drive profits.
Choose a Partner with Flexible Capacity
For some organizations, the need for back office outsourcing is consistent month after month. For others, the demand for work is flexible, so it’s important to choose a partner that can supply that labor with some flexibility as well. Some business process outsourcing companies use tiered contracts that offer pricing incentives for high volumes of data processing, but these often turn into penalties in months where volume is low.
Ultimately, back office process outsourcing is supposed to be a solution that helps you save time and resources – not a problem area. Consistent pricing and flexible capacity are two signs that the partner company values your business and is willing to work towards a long-term and mutually beneficial relationship.
Choose a Partner that can Grow With You
Smaller back office services companies may offer more attractive pricing options, but what happens when you grow your business 50% by next year and they can no longer keep up with the increasing volume of work? To keep things running smoothly as you grow, you need to choose a right-sized partner with the resources at hand to scale with you. If your outsourcing partner is using 50% of its resources to service just your firm, your growth could actually create a crisis for them. That’s not a beneficial arrangement.
Choose a Communicative BPO Partner
Effective communication is obviously very important in business relationships, but especially with your back office outsourcing partner. Some organizations want a partner that talks to them everyday, while others want to automate the process as much as possible, keeping communications to a minimum unless an issue arises that needs to be addressed. The most important point here is to find a provider that can match your needs: someone who is always there when you need them, respects your time, and checks in once in a while to make sure you have everything you need.
Choose a Partner with Information Security Compliance
A back-office outsourcing company will handle precious data about your employees and customers, and in an age where data breaches and fraud are becoming increasingly common, you need to hire an outsourcing partner you can trust. Back office outsourcing companies should establish and maintain an Information Security Management System (ISMS) and relevant certification indicating their ongoing compliance with information security best practices.The most common ISMS standard globally is ISO/IEC 27001.
A data breach can cost your organization millions, so ensure that you understand your liability when your outsourcing activities involve sharing private data.
Choosing the right back office outsourcing company starts by assessing your own needs and capacity to benefit from the service. Once you understand how you will use back office services, choose a partner with diverse service offerings, a flexible capacity for work and the ability to scale with you as you grow your business. To ensure the privacy and security of your employees and customers, choose a service provider that complies with ISO 27001 or whatever ISMS standard applies in your industry (HIPPA, PCI, etc.). Finally, choose a partner that is ready to help when you need them and willing to communicate with you on your terms.