Written by Dion Jay Tality
Companies usually have two primary business function arenas: the front and back offices. While the first works directly with customers, the second provides support to the business itself and its administration.
However, businesses and entrepreneurs often lack the workforce, technology, and resources they need to handle many front- and back-office tasks. That’s where outsourcing comes in as a growing business strategy.
This article covers the differences between the front- and back-office functions. Learn more through our business process outsourcing (BPO) examples.
Front Office vs. Back Office
The front office refers to the client-facing part of a business, where employees directly interact with customers. These employees usually work in customer service, technical support, and sales departments.
The back office isn’t client-facing but supports the front office. Back-office personnel performs administrative tasks in accounting and finance, recruitment and human resources (HR), and research and development (R&D). They also provide services such as data entry, inventory management, and information technology (IT) support.
Generally, a business firm consists of three primary operations: front, middle, and back offices. The middle office links the other two. Its personnel get tasks from the front office and forward them to the back office.
Types of BPO Outsourcing
The outsourcing sector has grown tremendously over the years. A new Grand View Research study reveals that the global business process outsourcing market will reach $525.2 billion by 2030. It will achieve a compound annual growth rate (CAGR) of 9.1% from 2022 to 2030.
You know that many companies hire front- and back-office BPO services–to their benefit. But before we go any further, what is business process outsourcing?
BPO is when a company entrusts some of its business operations to a third-party service provider. You can work with a BPO company to handle some of your front- and back-office tasks.
You can use offshore, onshore, and nearshore outsourcing companies.
- Offshoring deals with an overseas BPO company.
- Onshore outsourcing works with another business within your country of operation.
- Nearshore outsourcing refers to outsourcing to a nearby country. For instance, a U.S.-based company contracts with a BPO company in Canada.
Exploring the Benefits of Outsourcing Front- and Back-office Functions
Outsourcing front and back offices come with several benefits, including:
- A significant reduction in operating costs: Deloitte reveals that cost reduction is back on top as the main reason for outsourcing. It’s no longer just an ancillary benefit to attaining business agility and improving the service quality. About 70% of businesses outsource to reduce operating costs.
- Focus on core business operations: Apart from cost reduction, companies outsource to focus on core business functions. Your in-house employees can focus on business growth strategies through outsourcing. They don’t have to take customer service calls (front office) or accomplish administrative tasks (back office).
- Access to a global workforce, technology, and resources: Outsourcing offers access to a global talent pool of highly qualified workers. You can also incorporate digital tools such as robotic process automation (RPA), artificial intelligence (AI), and progressive web apps (PWAs) into your business processes.
- A boost in service efficiency, quality, and productivity: Access industry experts and capitalize on the latest technological resources. The workforce and technology can boost service efficiency, quality, and productivity. Ultimately, these key aspects can help yield positive business process outsourcing results.
- Business growth and scalability: Startups and small businesses have jumped onto the BPO bandwagon. While the latest technologies can scale a business, a robust workforce can help it grow and succeed over time. Hence, always consider BPO for long-term planning and implementation.
Business Processing Outsourcing Examples: Front Office
To further understand how front office tasks can be outsourced, let’s look at some examples of business process outsourcing.
- Customer service involves assisting customers in various ways, such as answering simple questions, processing orders, managing disputes, and more. Outsource your customer service to a BPO company with a team of highly knowledgeable and skilled representatives.
- Sales or telemarketing involves contacting potential customers to sell products or services. Leave this customer-facing task to competent sales representatives or telemarketers. Typically, a third-party service provider has a BPO learning center that helps train sales agents on products and hone their soft skills such as telemarketing.
- Technical support involves assisting customers with technical concerns. The task includes troubleshooting computers, fixing mobile phones, and repairing electronic devices. It’s best to entrust your technical support to a BPO service provider with expert tech specialists.
Business Processing Outsourcing Examples: Back Office
To further understand how back office tasks can be outsourced, explore some examples of business process outsourcing below.
Generally, a company has several departments fundamental to its continuous operations. Outsourcing can be a viable solution if you cannot handle some departmental units and accomplish administrative tasks.
You can outsource administrative functions such as:
- Accounting and bookkeeping: Every business needs proper financial management. Bookkeeping is recording all financial transactions, while accounting involves tracking, analyzing, and reporting these transactions and ensuring compliance with financial regulations. Consider outsourcing finance services, including accounting, bookkeeping, and payroll.
- Recruitment and human resources (HR): These business functions involve hiring and managing people. While recruitment focuses on talent acquisition, HR ensures employee retention. Because these administrative functions can be tedious and cumbersome, you should consider outsourcing them.
- Procurement: This administrative department handles obtaining goods or services for business purposes. The process requires proper planning, preparation, solicitation, and payment. You can entrust this business function to BPO experts.
- Legal affairs: This department handles all legal business matters, including business licensing, employee contracts, and mergers and acquisitions (M&As). It requires legal expertise, which a third-party service provider can readily provide.
- Research and development (R&D): This involves all business activities for innovating and launching new products or services. This administrative task requires extensive legwork and thorough analysis, which a team of specialists from a BPO company can offer.
The back office provides the front office with support services. It is the company’s backbone to ensure smooth operations and disruption-free workflows.
You can also outsource back-office support services:
- Data entry involves recording and managing business and customer data. Data entry specialists encode, sort, and organize information. Consider outsourcing and hiring data entry specialists from a BPO provider to protect your business data.
- Inventory management includes obtaining raw materials, storing goods, and item delivery. Tracking, monitoring, and reporting raw materials and finished products are part of this service. Because this task can be repetitive and mundane, consider outsourcing to a BPO service provider.
- Supply chain management refers to the flow of goods or services, from procurement to delivery. It entails turning raw materials into finished products and sending them to customers. The complex process often requires a third-party service provider to handle parts of the operations.
- Invoice processing refers to managing supplier invoices, from receipts to payments. The accounts payable department usually handles this business function. Consider hiring a BPO service provider for your accounts payable team.
- IT support involves network management, system maintenance, software update, hardware deployment, and troubleshooting. The global IT third-party support sector is considered the most widespread and is forecast to hit $395 billion this year.
- Digital marketing aims to reach out to customers and promote products or services. But the focus now is on online marketing strategies such as search engine optimization (SEO), pay-per-click (PPC), content creation, and social media management.
The Bottom Line
Businesses of all sizes have various business operations categorized as front and back offices. While the back office provides the support, the front office can satisfy and win customers for you.
If your business struggles to handle certain operations, outsource them to a reliable BPO firm. Consider some business process outsourcing examples mentioned above, whether front- or back-office functions. Most importantly, look for a BPO service provider best suited for your business.
Well-planned and well-executed outsourcing enables you to focus on your core business. You’ll also reduce operating costs and access more resources. Ultimately, you’ll improve service efficiency, quality, and productivity to scale your business for the long term.