In any business or organization it is usually your sales team or client-facing staff who gets the credit for the growth of your business. This is because they are the ones who interact with customers and generate sales and profits. But to ensure peak performance, they need a support team. Your sales and customer service team wouldn’t be able to succeed without the help of your back office support team.
Back office support works behind the scenes. They are not the ones who deal with customers but they also have an important role in the success of a business. These are the people who provide services like data entry, record maintenance, transaction processing, documentation, and other functions. As a business owner, your focus is on growth and expansion. While back office functions don’t relate to your core business, they are still vital to the overall operations.
If you are just a new or small business, it can be tempting to do most of the back office work yourself. However, this can take away precious time you should be using for improving business operations. This is where back office support outsourcing becomes a viable option. If you are considering it and wondering how to outsource back office support, this article is for you. Here we shall cover the following topics:
- What is Back Office Support Outsourcing?
- Back Office Functions You Can Outsource
- Pros and Cons of Back Office Outsourcing
- Steps in Back Office Outsourcing
Let’s get on with it
What is Back Office Outsourcing?
Tasks like data entry, payroll, or administrative are time consuming and could be draining your resources. These functions are certainly important but spending your time and money on them isn’t worthwhile if you want to stay competitive. You should be focusing on your core competencies instead. If you have limited resources, back office support outsourcing could be right for you.
A report by Shared Services and Outsourcing Network revealed that Fortune 500 companies lose an estimated $480 billion due to ineffective back-office processes. The report cited the following challenges faced by businesses:
- Leadership challenges
- Increasing workload
- Service goals and timelines
- Facilities, tools, and expenses on technological resources
In outsourcing back office support, you transfer certain functions to a third-party provider. Back office functions are also crucial to the smooth operations of your business. Any flaws in your back office can impact your front office. It is important for your back office to be efficient or else it will affect the whole system.
In back office outsourcing, you hand over tasks to a specialized team so you can focus on your core business. Managing an in-house back office team can be a financial burden especially if you are just a small business.
Back Office Functions You Can Outsource
When learning how to outsource back office support, you also need to keep in mind that not all back office functions can be outsourced. Some functions are better handled by your internal staff. These tasks may have sensitive information that may be compromised when transferred to a third party provider.
Data entry is a monotonous task that can also consume a lot of time and resources. In data entry, information needs to be researched, identified, and interpreted. Data entry specialists have the necessary skills to efficiently complete your project.
Catalogs provide a great way of reaching potential customers. Your distributors or manufacturers will need the catalog for product information. Catalog management is another time consuming process that involves updating, maintenance, conversion, and data indexing. Catalog management may require attention to details and time which your employee may not have,
Document verification is vital to your business as it will help detect forged documents. It is vital to ensure the authenticity of your documents. According to Javelin’s 2020 Identity Fraud Study, the total financial loss due to identity fraud in the US alone is $16.9 billion. For this reason, every document should be verified as authentic. Your in-house staff may not have the proper training and skill to verify documents.
You have the option whether to outsource the entire HR department or just specific tasks. For example, you may just choose to outsource recruitment. Another HR function you can choose to outsource is payroll. The right provider can help ensure that your employees are paid correctly and on time. Finding the right partner can help reduce costly payroll calculation errors.
When it comes to IT support, there are specific functions that you can choose to outsource such as help desk, network management, app development, telecommunications. The outsourced partner can efficiently assess and resolve technical issues. The provider has access to the latest tools and technology, which your in-house team might not have.
Marketing and PR
In a competitive industry, you need to establish both an offline and online presence. Implementing marketing campaigns and strategies may not be your team’s expertise. By outsourcing these functions, you will be able to make your presence felt across all channels. Marketing is a costly venture but your partner will handle those costs and functions.
Bookkeeping and Accounting
Let’s face it not all business owners are skilled with crunching numbers like taxes or keeping track of expenses. These tasks are time consuming and also require a high level of accuracy and proficiency to prevent calculation errors. Partnering with an outsourcing company will help you stay compliant with regulations. Most third-party providers can help you with tax returns, cash flow, income statements, bank reconciliations, and other accounting functions.
Pros and Cons of Back Office Support Outsourcing
However, outsourcing back office support isn’t for everyone. Just because it worked for other companies does not mean it will also work for you. In order to determine whether it is right for you, consider the pros and cons of back office support outsourcing.
Pros of Back Office Outsourcing
Back office outsourcing offers a wide range of benefits not only for your business but also to your employees.
- Reduced costs
Managing an in-house team is time-consuming and costly. You would need to develop and maintain the infrastructure to handle your operations. If you will hire employees, they need to be paid their wages and benefits. You may also have to invest in the technology and training of your employees. Not to mention the taxes and overhead costs.
On the other hand, back-office support outsourcing is more cost-effective. It spares you from numerous expenses which include office space and utilities, hiring and compensating staff, hardware and software, equipment, employee wages and benefits, and others.The outsourced partner already has a ready infrastructure and manpower to handle the functions you will outsource to them.
- Focus on core business
With outsourcing, you can invest more of your time on growing your revenue and getting more clients. Tasks like HR, payroll, data entry, and other functions tend to be repetitive and cumbersome that it can take your time away from what you should be doing. At the same time, they don’t increase your bottom line.
By handing over back office functions to an outsourcing company, you can pay attention to other important aspects of your business like finding ways to better serve your customers or in keeping your employees happy. With outsourcing, you won’t be wasting your time on administrative work but on your corporate mission and vision.
- Ready talent pool
By partnering with a third-party service provider, you gain access to professionals who can get onboard at a moment’s notice. Outsourcing allows you to take advantage of professional services when and how you want it. This talent pool is ready to work with you and provide your business with the leverage you need for expansion.
In addition, the outsourced professional can adjust their schedule to that of the client. With a ready pool, outsourcing will allow you to provide 24/7 service resulting in happier customers and more efficient business operations.
- Access to latest technology
Having the latest technology will help you stay competitive in the market. But investing in new software and hardware can be a financial burden. Not to mention that you would have to train your employees on how to use the technology which can be an additional expense for you.
Partnering with an outsourcing company frees you from having to spend on hardware and software to cover for your technological needs. Also, you don’t need to worry about training as the provider will already have a trained team.
Cons of Back Office Outsourcing
While it has its advantages, working with a third-party provider also has its drawbacks that can make you have second thoughts to partner with one.
- Communication barrier
Not being able to convey what you want to say is one of the biggest challenges of outsourcing. You will have to deal with linguistic and cultural differences. This usually happens when your partner is located in another part of the world and in a different time zone. Affordable labor isn’t always worth the challenge of not being able to bring up problems when they arise.
The good news is that such problems can be easily mitigated by choosing an outsourcing partner with extensive experience working with global businesses. Partnering with outsourcing companies in the Philippines is a good option. They have some influence of Western culture and can work with both US and UK customers.
- Data security could be compromised
When outsourcing back office functions, you also need to transfer confidential information. You are placing all sensitive data at the hands of the outsourced company. They may not know your security policies and processes. One mistake on their part could jeopardize data privacy and harm your business.
According to the Cisco Consumer Privacy Survey 2019, 48% of customers have switched companies or providers because of their data policies or data sharing practices. When you choose to outsource, you need some oversight and ensure that the provider employs the latest security measure. Likewise, check if they have the correct data protection and recovery measures in place.
- Quality control
Another drawback of outsourcing is lack of control. When you outsource back office, you may not be able to fit the service according to your needs. Also, you do not have control of the work which may cause irregularities in schedule and high turnaround times. The lack of control may also extend to the quality of output.
In choosing a partner, ensure that they are able to provide you with regular updates about the status of the functions you have outsourced. At the onset, you should be clear about the standards and set the expectations.
Steps in Outsourcing Back Office Support
After identifying the pros and cons of back office outsourcing and you have decided to proceed with finding an outsourcing partner, here’s what you need to do to make your outsourcing venture successful.
- Determine your needs
Before even starting with your search, you should first have a reason for outsourcing. Start by asking yourself these questions:
- What tasks are you outsourcing?
- Is it the best solution?
- What are your standards and expectations?
- How much is your budget?
It is important to keep in mind that outsourcing is not plug-and-play that is why you need to set expectations and be clear with your potential partner.
- Check their level of experience and expertise
Once you have answered the questions above, you can start searching for BPO partners. Come up with a shortlist and choose the right vendor based on the following:
- Technical expertise
- Talents and skills
- Technology being used
- Passion for meeting your needs
- Experience in handling complex tasks
- Research their market reputation
The reputation of the provider will be vital in your search. You don’t want a partner who misses deadlines or is rude to your staff or customers. You can use platforms like GoodFirms and Clutch to research the provider and the feedback of their customers.
For any doubts, you can check with their previous clients to know about their experience with the provider.
- Set your budget
Before everything else, you need to determine how much you want to invest. When negotiating with a provider, make sure to clearly communicate with them your budget so they can create a pricing model that suits your needs.
- Ensure data privacy
In today’s digital world, data privacy and security is a major concern. When searching for a back office support partner, you need to make sure that they have the right security measures to ensure the safety of your sensitive information. They should have the latest tools and software for protecting your data from leaks or being compromised.
- Look for flexibility
Finally, the potential partner should be flexible enough to provide your requirements or address your concerns at a moment’s notice. Flexibility is very important if you will be working with a partner in a different time zone.
Knowing how to outsource back office support doesn’t have to be that daunting if you know where to start. Hopefully with these tips you can find the right partner to hand over your back office functions and grow your business.
Why Partner with airisX?
Whether it’s accounting, data entry, administrative, or other back-office functions, airisX has got you covered. As a business owner, you should be focused on working “on” your business and not “in” your business. That’s where you can count on our expertise,
Here at airisX, our back-office team is carefully screened and selected to ensure that they are equipped with the necessary skills to perform their functions. Interested to work with us for your back office support needs? Send us an email at email@example.com or simply fill up the submission form found on our website and we will get back to you with the right solution for your business needs.