Back-office operations include the most important daily functions of a business. It includes departments such as IT, human resources, accounting, and legal. Since it is composed of departments working behind the scenes to keep the business running, it has been considered the backbone of an organization.
Despite not having the need to face the customers, the back-office operations are still as important as the front office. These functions support how effectively and accurately a business operates.
However, the lack of quality back-office operations can have a major negative impact on a business’s time and money. Poor-quality back-office practices and resources could lead to compliance gaps, unnecessary risks, and lower employee morale.
That’s why, nowadays, most companies consider back-office outsourcing. It has been proven that outsourcing back-office services could help reduce costs and improve operations. Businesses, both big and small, benefit from getting extra assistance from outsourcing providers.
But keep in mind that every business has different needs. Before moving forward, it is important to explore the potential pros and cons of outsourcing back-office solutions.
Pros of Back-Office Outsourcing
As we have established, back-office functions can be pretty costly. Overhead costs for infrastructure and technological resources such as software and applications can be quite a burden especially as the business grows.
Outsourcing back-office support means worrying less about manpower, equipment, and infrastructures. Usually, these are already provided by the outsourcing provider. They will have the necessary equipment and a professional team to handle the tasks.
This only means that back-office outsourcing is a much more inexpensive solution. A business can utilize an existing infrastructure with low labor costs and end up with an affordable option.
Access to Back-Office Expertise
Another perk of back-office outsourcing is having access to highly-skilled workers. Since finding people with the skills and experience fit for a position can be tough, a BPO company could be helpful.
Most outsourcing providers have a larger pool of talent to choose from than most businesses. They often develop teams of talented workers with the skills that a business needs. Moreover, outsourcing providers regularly train their employees to ensure that their clients receive nothing but the highest quality service.
For instance, when a business needs help with IT operations, its BPO partner could provide an expert depending on the required field. It could be a network engineer, software programmer, computer scientist, or computer supports specialist.
Focus on Core Goals
Back-office functions are vital, but maintaining it might be an overwhelming task. Not to mention that it could also pull the focus away from the core competencies of the business. If too much time will be spent on non-core tasks like some back-office functions, other important aspects of the business might suffer.
By allowing an outsourcing partner to work on the back-office tasks, the business could concentrate on the crucial facets of running a company like strategizing or planning. Let the professionals do what’s best for the business so the business could do what’s best for its customers.
Back-office outsourcing is also scalable. It allows a business to scale up or down, depending on what is needed, in terms of productivity, size, and profit.
When outsourcing, scaling a business’s operations becomes simpler and easier. It saves the business time, money, and effort from hiring more employees and conducting training and seminars. Also, there would be a lesser need for resources, office space, and equipment.
For example, when a business hits a rough patch and needs to downsize, outsourcing back-office is a great solution. It can scale down to a smaller group of agents without affecting the quality of work. This way, the business could save financial resources and energy.
Most BPO companies also keep up with outsourcing trends so businesses can be sure that they are getting the best services.
Cons of Back-Office Outsourcing
In-house operations are easier when it comes to quality control. Since everything is done in the same office, managers have a chance to oversee all work being done on a daily basis.
Meanwhile, it is different for back-office outsourcing because clients have less direct control over the work of the outsourced team. This might be frustrating, especially when it comes to special projects. Issues may arise because of misunderstanding and miscommunication.
During these instances, there is a greater risk of low-quality output and delays in accomplishing tasks. Problems that might disrupt the operations would most likely arise.
A great way to resolve this issue is that the business and the provider should talk about decision-making. Both parties should agree on who has a say on certain matters.
Letting an outsourcing provider handle some internal functions sometimes requires entrusting sensitive information. Because the business may have lesser control over security protocols, there might be a risk of leaking sensitive data.
Depending on where the BPO company is located, data protection policies may vary. The business must comply with these regulations to ensure that no issues would arise.
Keep in mind that the business would be the one paying the price when confidential information is leaked. It may result in loss of customers or the business might face penalties.
That’s why it’s important to ensure that the outsourcing provider values and takes care of all information shared. See to it that they follow rules and regulations on data privacy.
In outsourcing front office operations, having time differences is an advantage. However, for back-office outsourcing, this may not be the case.
Outsourcing services to another region may lead to time barriers. For instance, scheduling meetings would be challenging because of the major timezone difference. It would be difficult for the business to sync its operating hours with its outsourcing partner.
In addition, different countries also have different holidays and off days. Having different workdays and holidays might lead to interruptions in daily operations.
The best way to resolve this is to ask the outsourced team if it’s okay to have one working schedule. For example, an outsourced team from the Philippines would follow US holidays since they have a US client.
When availing back-office services from another country, businesses need to have strong communication with their provider. But because of distance, time difference, and language difference, this could be a challenge.
Communication is important in outsourcing to ensure that both parties understand each other. That’s why it is better to choose an outsourcing provider that utilizes all communication mediums such as phone calls, video conferences, and e-mails. This would make it easier for the business to reach out to its partner in case of any issues.
Furthermore, it would be preferable to have an outsourcing provider that is proficient in the English language. This way, there would be no problems when relaying instructions and assigning tasks.
When it comes to back-office outsourcing, the advantages often outweigh the disadvantages. In fact, back-office functions are part of the most outsourced services, especially in the Philippines.
Usually, most of these drawbacks are avoidable by simply choosing the right BPO company. The cons may be resolved by doing research and background checks on a provider’s competency.
Outsourcing back-office services is undeniably a great solution for businesses that find it hard to balance everything. Just keep in mind that a business should define the tasks and have open communication with its partner to have effective back-office outsourcing.