Introduction
Looking to grow your business without having to expand internal backend team, back-office outsourcing will be a viable choice. In today’s digital landscape, companies be it small, medium or large, all scale of enterprises are shifting their internal administrative tasks to offshore outsourcing companies.
Why? Is it just to save cost or reduce the burden?
It is much more than cost-saving and enhancing productivity. Outsourcing services allows compony to allocate resources towards innovation and formulation of new strategies/services/products that they believe will give them a competitive edge in future marketplace.
In this blog, we will understand the brief definition of back office outsourcing, its benefits, challenges and risks associated with it and how you can choose the right service provider for your business. We will also learn how companies are using these services to streamline their monotonous repetitive tasks and operations.
What is Back Office Outsourcing?
Back Office Outsourcing is the process of delegating repetitive, time-consuming tasks to external or third-party service providers who specialize in those aspects, while also staying up-to-date with industry trends and changing software updates within the specific sector.
Be it a family-owned business, private limited, public companies, individual or proprietorship, every business in its growth and maturity phase delegates some or most part of their administrative tasks to outsourcing companies, so they can focus on their core-objectives and operations.
Key Back Office Functions That Can Be Outsourced
- Data Entry & Management: From processing of data to categorizing it, storing it, managing it and retrieving it when needed, companies can outsource data entry services to expert bodies that can handle such tasks effortlessly. The specialization reduces the work burden. What might take you an hour to complete, will be done in a gist – 20 min approx., with their latest updated software’s and automation tools.
- Payroll and Accounting: Calculating the expenses accurately with necessary tax and employee benefit deductions to giving the salary on time, every time, to seeing that the increment of the employees for the financial year are accurate, payroll is a time-consuming process that requires your full attention. Where to deduct, how much to deduct and when is a question you have to answer differently for every employee. Same goes for accounting with all the financial statements preparation- where one small mistake, even not reporting a minute expense can have a significant impact. A single oversight can distort the entire financial picture, leading to incorrect financial reporting, tax miscalculations, and even compliance issues.
- IT Support: Many companies outsource IT services without having to hire and train an in-house team. This reduces the overhead expenses and helps businesses focus on their revenue-generating cycle/process. Technical assistance, managing software and cybersecurity can be handled by a team of experts at lower cost, saving both the firm’s resources, time and thinking capacity.
- Human Resources: Process-driven companies often outsource their recruitment, onboarding formalities, and employee record management to dedicated HR bodies – with specialized team and equipment aiding in effortless task completion.
- Non-Front Line Customer Support: Handling queries, complaints and feedbacks via back-end system demands the same amount of care as front-end customer service. After onboarding of client, it is this team of service providers that regularly updates the client with work done, and follow-up procedures.
Differentiating Between Front Office vs Back Office Outsourcing
Front office outsourcing focuses on client-facing tasks such as sales, customer support on-spot. The employee represents the organization, its values and principles. Whatever interaction and perception the customer has towards the brand, directly depends on these employees. Many companies that are starting or have different working commitment outsource front-office duties to specialized service providers that can handle all client-related task, at the same time represents the unique value of the brand.
Back office outsourcing, as mentioned above are the tasks that are time-consuming and not directly related to generating revenue, but are the backbone of any organization’s work process. Without back-office optimal operation, front-office staff cannot function. Some examples of back office operations include – Finance and Accounting, Human Resources, IT support etc.
The Benefits of Back Office Outsourcing
- Cost Savings: Reducing Overheads Without Compromising Quality
Outsourcing eliminates the need for an in-house team and infrastructure, significantly reducing overhead cost and labor expenses. This enables the business to focus solely on its core-operations, with all its resources allocated towards major functioning bodies and departments. In a way, it increases revenue of the company, while optimizing its functioning cost.
- Access to Skilled Expertise: Leveraging Specialized Knowledge
Outsourcing firms employ skilled and expert individuals with years of practical experience in the job. Such firms are multi-functional with experts in different region, all in one organization. This enables the firm to complete the task accurately without compromising on quality or missing deadlines.
- Scalability: Adapting to Growth Without Operational Bottlenecks
When businesses are able to reduce the overhead cost, and direct all their attention towards operations, they are able to scale and expand. Outsourcing partners gives such flexibility to business owners – allowing them to either continue the contract or cease, depending upon the requirement. This is particularly beneficial for seasonal industries.
- Enhanced Focus: Allowing Core Teams to Prioritize Strategic Goals
By delegating routine tasks to external providers, internal teams can concentrate on strategic initiatives such as product development, market expansion, and customer engagement. This enhances the focus in creating driving strategies that can lead to growth and expansion within a niche at a specific point of time. The adoption of changing trends become a necessity then.
- Improved Operational Efficiency: Streamlining Processes
Outsourcing companies use modern tools and established workflows to increase efficiency. Such level of Automation and process optimization, minimizes errors and turnaround times, resulting in more efficient operations.
Industries That Benefit Most from Back Office Outsourcing
- Data Security Concerns: Protecting Sensitive Information
When you outsource certain operations, you are not only giving the personal data and information to an outsider, you are handling a major chunk of work process to them which directly impacts on how you cater to your client and business growth. While data security is must, protecting such data is also the duty of outsourcing companies. This is why when you select a firm for outsourcing back-office operations, always look for the ones that has reputation within the industry.
- Communication Barriers: Overcoming Language and Time Zone Differences
When outsourcing to an off-shore service provider, have SOPs in place, standardizing clear communication protocols and overlapping hours. Teams of both firms need to work together, hence clarifying on which communication mode to be used, time preferences and language can help mitigate such issues beforehand.
- Dependency on External Providers: Managing Potential Risks
Too much dependency on one outsourcing partner can pose certain risk, such as service disruptions or vendor lock-in. This is why many businesses opt to hire multiple outsourced providers for different processes, and also an in-house management team to handle unpredictable risks and issues. Business has to be prepared and have a backup every step of the way.
Industries That Benefit Most from Back Office Outsourcing
- Financial Services: Handling Data-Intensive Tasks with Precision
Many financial institutions outsource complex time-consuming tasks such as loan processing, fraud detection, and compliance reporting. The service provider is generally equipped with latest technologies and software, allowing them to carry out task with preciseness and accuracy.
- Healthcare: Streamlining Administrative Processes
Healthcare providers often outsource billing, coding, and patient record management so they can focus on providing high-quality care. Outsourcing assures accuracy and adherence to health requirements.
- E-commerce: Managing Inventory and Order Fulfillment
From product listing to managing inventory by optimizing it as well as updating stocks, for bulk order processing, outsourcing can make things easier for e-commerce business. It can help them adapt to new trends and practices, while high volume order processing and seasonal spikes can be handled by outsourced partners.
- Technology: Supporting IT Services and Data Management
When you’re in the market marked by globalization, access to latest software skills and manpower equipped with such knowledge becomes crucial in your growth and expansion. Many tech companies outsource IT support, software development, and data management services to reduce the operational cost and other overhead expenses.
- Real Estate: Simplifying Documentation and Customer Support
Real estate firms often outsource documentation process, lead generation and back-office support to allow them to solely focus on client relationship and sales. You are not just selling a property, but also the dream that they can fulfill, with a little push.
How to Choose the Right Back Office Outsourcing Partner
- Identifying Your Business Needs and Priorities
Not all internal administrative tasks need to be outsourced. The business needs to select tasks that they feel is good to be outsourced so they can focus on strategies and work, that actually drives growth and sales.
- Evaluating Experience and Expertise in Your Industry
Choose a service provider with an established track record in your industry. Read testimonials and reviews from companies and individuals to see if their work ethics align with your business needs.
- Assessing Technology and Infrastructure Capabilities
Evaluation of the firm should not just be based on their experience, but also whether they have the essential IT and other infrastructure to carry out the task effortlessly. It doesn’t matter if they have the talent pool, without updated and industry standard infrastructure, it counts to nothing.
Technologies Driving Modern Back-Office Outsourcing
- Automation Tools:
There are countless automation tools in the market – based on niche and industry. The Robotic process automation (RPA) tool streamlines repetitive tasks, thereby reducing errors and enhancing efficiency
- Cloud Computing.
Cloud computing enables real time access to data across geographies. Remote workers can easily share and contribute their part with the help of cloud computing software’s. Everyone at some point would have worked with Google Sheet. It is also a cloud-based application that allows numerous users real-time access to data which they can modify depending on the need.
- Artificial Intelligence
AI powered tools can help in better decision-making by analyzing patterns and trends. This help businesses make insightful decisions that will help the company in the long run. It also reduces the time and effort of analyst in interpreting data. The analyst can now focus on optimizing their strategies and work process.
- Data Analytics
Advanced analytics tools can help analyst enhance their operation strategy and focus on the shortcoming and process optimization. It can help business track performance and drive continuous improvement.
Is Back Office Outsourcing Right for Your Business?
In spite of statistical advantages in outsourcing certain tasks, a company should first assess its operational challenges and identify bottleneck in the work process. It needs to calculate the overall expense of outsourcing and current ROI to see if it’s a viable choice. If yes, then setting up of centralized SOPs since advancement should be made clear.
Back Office outsourcing is right for your business only if you can see a long-term benefit. The company’s objectives and mission should align with the outsourced providers work ethics and values. For both the parties to benefit, they need to have a healthy working relationship, where both are an avid contributor and learner. Corient offers back office outsourcing to all size businesses. We have helped numerous companies within different industries to streamline their operations and reduce overall net expense without compromising on quality of work. Read our case studies to know more.
Conclusion
Back Office outsourcing is a strategic move that can help companies to reduce the overall cost, and enhance productivity of each of their employee by focusing and shifting their time on tasks that matters. Streamlining or outsourcing time-consuming monotonous task to specialized third parties only pose benefits. Corient Business Solutions is amongst the reputable and trusted outsourcing companies in US that has helped businesses of all size improve quality and efficiency of workflow, all while maintaining a healthy relationship with them. Choose Corient for all your outsourcing need. Tell us what’s bothering you, and out team of experts will get back in a day.
