Back Office Services and How to Outsource Them

Your customer-facing office generates revenue for your business, but it needs support to do so effectively. The foundation of your business depends on proper bookkeeping, accounting, data entry, human resources, and more. Although these functions may not directly relate to your primary business model, they play a crucial role in your overall success.

Back-office services need professional management from experts; however, an internal team can often be a financial hassle. If you’re running a business, you might be better off outsourcing these functions to a third-party provider.  Here’s a quick guide on how to outsource back-office services and why it’s important.

What Are Back Office Services?

Back office services are business processes performed to keep operations in the office running smoothly. They involve a range of tasks and roles, depending on the structure of your business.

Traditionally, back-office services are divided into two main categories of activities: administrative functions that keep the business running and customer support that is responsible for fulfilling customer service requests. 

Administrative Functions vs. Customer Support

Admin functions keep the operations running and typically consist of the following:

• Information technology
• Data management
• Human resource
• Finance and accounting
• Legal
• Compliance, risk, fraud management
• Procurement

Meanwhile, customer support functions are:

• Client services
• Transaction processing
• Order fulfillment
• Dispute resolution
• Customer onboarding
• Account maintenance
• Document preparation

Other Back-Office Services

There are also other industry-specific back-office services:

• Field servicing operations
• Claims underwriting and processing
• Credit card processes
• Mortgage and loans operation

These back-office services often involve multi-step, complex processes. They often require many people or highly focused and functional teams. Back office functions do not generate revenue for the company but are vital for operations and data security. 

But because back-office services do not necessarily involve clients, companies may consider outsourcing them to save money, energy, and time. 

In addition, complex operations can consume a company’s limited human and financial resources. Using back-office outsourcing services is often an optimal move. 

Why Are Back Office Services Important?

Back office services are essentially the backbone of your company. They organize and manage all important information, operational tasks, and other practical aspects of the business, ultimately allowing smooth workflow. 

Even if a back-office team does not directly affect sales, most customers want to buy from businesses that are well-run. They want an excellent overall experience. And this is made possible by a company that has strong back office service. 

A strong and well-managed back office may boost employee morale, address compliance issues, and help a company avoid unnecessary risks. Employees who are confident in their company’s operations express a sense of satisfaction. They are able to engage their clients with confidence and provide exceptional customer service.

What Is Back Office Outsourcing?

Back-office outsourcing is the practice of contracting low-value transactional back-end processes to an external vendor. It allows organizations to focus on essential business and revenue-generating processes while freeing up internal staff time and costs. Outsourcing saves money by delegating low-hanging fruit to specialized agencies.

Companies typically outsource data entry services, customer service desks, data entry, invoice management, payroll management, insurance administration, market research, email management, and IT support to BPO providers. 

How Do Companies Outsource Back Office Services?

Companies outsource back-office services by first identifying their requirements and then finding a service provider who can best meet those needs. The steps that most businesses take when outsourcing back-office services are outlined below.

1. Determine What You Want to Get

If you only know that you need some functions removed from your plate, but have no idea what that entails, then you need to start brainstorming. 

Figure out the tasks you want to delegate to your outsourced team. It could be to outsource data entry services or human resource management, for instance. Keep your overarching goals in mind, then work backward to formulate the necessary steps.

2. Decide Which Functions to Outsource

You can outsource all sorts of back-office services – from accounting to HR, IT, and payroll. It’s a good idea to delegate as many repetitive, non-revenue generating tasks as possible. This frees up you and your employees to focus on what you do best and on the activities that add more value to your business. 

It also helps to start small by outsourcing parts of larger tasks as opposed to outsourcing an entire department.

3. Spend Time on Training

Outsourcing back-office services should be a long-term investment. It takes time to onboard and train reliable outsourced employees. Invest in onboarding them as you would your internal staff.

If your outsourced team doesn’t interact with your in-house employees, then make sure they understand your organization’s value, mission, and vision by heart.  Doing so will allow them to provide services better aligned with your goals.

When choosing an outsourcing partner, make sure that a provider is the right one for you. It’s worth keeping in mind that outsourcing is not only about costs and skills but also about personality and cultural fit.

Training Outsourced Employees for Back Office Services

Using a variety of training modalities is the best way to train outsourced employees. It aids in better knowledge transfer and keeps things interesting. Here are some training examples to consider.

Live Training

Without a doubt, live training is the most crucial form of training, especially in customer service. This is where theoretical knowledge is put into practice. More importantly, it gives your outsourcing service provider a chance to see how employees handle pressure. As such, BPOs include live training as part of their initial onboarding and ongoing training.

Classroom Training

Although most BPO providers conduct training away from the classroom, this formalized learning modality also has its place. It also doesn’t have to follow the classic setup where students are facing the teacher. This type of training can include group activities and workshops,  allowing practical learning.

Online Training

Online training is an excellent way to complement in-house and practical learning. BPO companies provide their agents and employees with various online materials to bolster their skills. However, this modality has the lowest level of engagement.

One-on-one Training

One-on-one training is among the most challenging modalities but can be highly effective when done correctly. It’s a great idea to do one-on-ones during the onboarding process. That way, managers have the opportunity to interact with new agents and see their strengths and weaknesses.

Why Outsourced Back Office Services Are More Popular

Many companies, regardless of size, resort to outsourced back-office services to cut back on costs and to dispense with paperwork if a third party can do it cheaper.

Thanks to technology, many firms may now provide remote work options. Back-office services are increasingly located away from corporate headquarters. And many are positioned in cities with lower commercial leases and labor expenses and a large talent pool. 

More importantly, outsourcing saves companies money and increases productivity. Companies that modernize and improve their back-end operations eliminate compensation and benefits costs and can dramatically increase their productivity.  

However, a few things need to be considered before outsourcing back-office services. First, check a BPO provider’s security and privacy standards to ensure your sensitive data is protected. Also, when outsourcing, you must consider culture and reputation.

How Do Outsourced Back Office Services Improve Efficiency and Optimization?

Efficient management of back-office services enables companies like yours to focus on servicing clients and other more pressing issues. For instance, having an efficient workflow and prompt access to required data makes way for:

• HR to find and attract the best candidates;
• Risk and compliance management to understand and rectify non-compliant practices before you receive penalties; and 
• IT to access the tools and provide employees with the right data to meet their responsibilities.

On top of that, efficiently managed back-office services, especially in customer care operations, allow companies to meet the implied expectations of clients for fast and accurate delivery of products. Reports show that one of the top causes of customer dissatisfaction is failure to meet perceived expectations.

The Bottom Line

To succeed and generate higher profits, your business needs unwavering support. This is where back-office services come in. Although back-end functions are not entirely related to your core business, they have a massive impact on the stability of your business operations.

Large organizations may have complex back-office tasks, requiring more people and other resources and creating additional costs. It makes sense to outsource back-office services instead. You can relax and focus on other company priorities while back-office duties are completed for you. 

At Unity Communication, we help you manage your back office so you can continue being there for your clients. Whether it’s payroll, HR, data entry, or IT support, you can rely on us to streamline your workflow processes.

Visit us at unity-connect.com to find out more.