Advantages of outsourcing back-office operations
Running a successful corporate, whether big or small, requires a lot of back-office tasks to keep things running smoothly. When these office functions are performed in-house, it can be a time-consuming and costly process. The business owner must set up separate infrastructure, install IS/IT systems, and hire and train new staff, which adds to the overall cost of production.
But there’s a solution to these problems – outsourcing back-office processes. By outsourcing, companies can save money on infrastructure, labor costs, and the time and energy required for managing back-office operations. Plus, the business owner can concentrate on their core business functions.
Back-office outsourcing can encompass a range of tasks such as HR, finance, IS/IT, and management of large and complex data. These essential, yet mundane activities, can be managed by a third-party company that works as a business partner with the parent company.
Unlock your business’s full potential with Maxicus back-office outsourcing
Outsourcing has become a popular business model worldwide because of the many benefits it offers, including reduced costs, increased efficiency, and the ability to focus on core business functions. However, it’s important to be aware of hidden costs and choose a reputable outsourcing partner. Whether it’s data entry or more complex functions, outsourcing back-office processes can give companies a competitive advantage in the market.
Advantages of back-office outsourcing
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. The outsourcing company optimally utilizes its resources by handling low volumes of calls from the parent company and reallocating idle manpower to other clients.
Plough back of financial surpluses
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. Back-office service providers allow for flexibility in scaling operations by handling essential, yet mundane tasks for the organization’s profitability.
Manpower support in back-office outsourcing
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.
Concentrate on core competencies
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.
Disadvantages with back-office outsourcing
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. Businesses should be aware of the cons and downsides associated with outsourcing. Some of them are:
Risk of information exposure
Back office outsourcing usually involves some sensitive information that the organization needs to keep private. When a company decides to outsource, they entrust sensitive information to an outside service provider. This means they give up control and visibility into how their data is being stored. It’s important for companies to carefully consider the security and privacy implications of outsourcing and choose a service provider they trust to properly handle their information. 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.
Cost considerations often lead companies to outsource to companies across national borders. However, communication issues due to different languages and cultures can arise. To avoid these problems, companies may choose to outsource their back-office operations to BPOs within the same national boundaries, despite the higher cost, because of the shared language and culture. Partnering with an outsourced provider who handles these demands can be an added benefit.
Difficulty in controlling quality
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.
Different time zones affecting the quality of back-office outsourcing
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.
Back Office Outsourcing: A Cornerstone for Success
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.
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 back-office operations is increasing rapidly as companies have come to realize that to sustain cut-throat competition and ensure the 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.