Any corporate whether big or small has a lot of back-office work to do for its efficient functioning. If such back-office operations are performed in-house, then it involves the creation of separate infrastructure, IS/IT installation, hiring of new manpower, and training them for the tasks. Till such operations are yet to be ramped up, corporate will face both financial and operational stoppers which will add to their cost of production.
To mitigate such problems, back-office process outsourcing is the best solution in terms of cost savings on infra, hiring and training of manpower, overall management of such back-office operations in terms of savings on time and energy.
Back-office outsourcing may consist of a host of functions like HR, Finance, IS/IT, management of large and complex data. All these activities are although mundane but essential for the organization. Such activities are managed by some other company and where such company works with the parent company as their business partner. The parent company can now dedicate its competencies to its core business. This business model is now becoming popular worldwide.
It is important for businesses to know that outsourcing isn’t all about the positives. We wanted to list all of them here before we would proceed explaining you the advantages. There are some cons and downsides that are associated with outsourcing which, businesses should be aware of. Some of them are:
Back office outsourcing usually involves some sensitive information that the organization needs to keep private. When outsourcing is done, they place all such sensitive information in the hands of the outside company. Because of this, the organization doesn’t have any control or knowledge on how their data is being stored. This creates a fear in the organization that if they have a careless outsourcing partner, their information can be leaked affecting the company. Choose a partner which focuses on preventing data leakages and keeps a check on security measures.
There may be some instances when such outsourcing is done to companies that are across the national frontiers of the parent company due to cost considerations. Here, problems may arise due to different languages and cultures and how to communicate with them. Many times, it is found that companies outsource their back-office operations to BPOs that are situated within the same national boundaries due to similar language and culture even if such options are expensive. Having an outsourced partner that takes care of such demands will prove to be icing on the cake.
By outsourcing non-specific tasks to some BPO means handing over these tasks to an outside entity. Controlling the quality of operations by the parent company is not an easy task although it has all the controls and decision-making authority. But it cannot monitor the day-to-day operations of BPO. Not all of the BPOs are alike in their expertise and competencies and their exposure to varied outsourcing assignments. An outsourcing partner which has certified credentials for quality parameters will be the best bet here.
Many times, it is frustrating to deal with BPO which is located in a different time zone. There are different working hours between the parent company and BPO, different work holidays which becomes a cause of the business interruption. Choose a partner which is available based on your time slots, holiday season, and especially during seasonal peak hours which you hold so dear for your business.
Now that, we have a checklist in mind to what to look for while choosing an outsourcing partner, let us briefly understand the advantages of outsourcing back-office services.
Outsourcing back-office operations is the best option in the present condition due to some of its advantages as listed below:
The biggest advantage of this option is its cost-saving. If the company had decided to have its own back-office operation, then it will have to invest heavily in infra, hire and train manpower and acquiring the latest technology. Such infra would start working only when the manpower is trained and have started their operations. Also, there might be several instances of a low volume of calls. As such, there will be a lot of idle time and all such factors would add up to their cost of operations.
Alternatively, the company can outsource its back-office operations to some outside company that has its own infra and trained manpower in handling such operations. As handling such operations can start its operations within a short span of time and at a reduced cost. Also, low volumes of calls of this parent company are handled by the outsourcing company by reallocating its idle manpower to other clients so that its resources are optimally utilized.
Outsourcing enables companies to reinvest their surpluses to scale up their businesses or to create a financial buffer. Their owners can grow their business at whatever pace they want. Such flexibility in scaling up its operations is made possible through back-office service providers doing their mundane jobs which are essential for the profitability of the organization.
Finding and recruiting the right talent has always been an area of concern for an HR Manager. But by outsourcing back-office support service to a BPO, the parent company gets the right manpower without hiring them thus saving them from the botheration of the recruitment process.
Outsourcing allows companies to concentrate on their core competencies after they have outsourced their mundane operations to an outside company. This gives them enough time and resources on the critical tasks at hand which require a different set of skills.
Read more about: The future of outsourcing in India for 2021
According to a 2020 global outsourcing survey conducted by Deloitte, it was revealed that around 75% of companies currently outsource their IT services and around 87% of them are planning on outsourcing either at the same or at an increased speed. (Source)
The need for outsourcing of back-office operations is increasing rapidly as the companies have come to realize that to sustain in cut-throat competition and to ensure continuity of their operations, it is a must for them to optimize their operations. And this model of operations will continue to stay for a long time.Categories: