Considering Outsourcing Back Office: Here’s What to Expect

May 6, 2022 Sarah Dameron

American company considering outsourcing their back office tasks

A lot of work goes into building a successful business. For many small to midsize companies, it may be tempting to do all the work yourself, including back-office tasks. But this can deprive you of valuable time you could use to focus on higher-level projects. When considering outsourcing back-office tasks, you need to figure out what your current challenges are and how outsourcing can alleviate these pain points. Conundrums like:

  • Lack of quality talent

  • Insufficient resources

  • Inadequate funds

Though the specific back-office needs of each company may vary according to size and industry, there are many general back-office needs that are common to virtually every sized company. These include important administrative functions like accounting, data entry, order processing, data collection, market research and much more. At first, administrative work may not seem like a lot to handle, but as the company scales up, it can become one of the biggest roadblocks that companies face. Below, we will go into detail on every aspect you need to know when considering outsourcing back office.

Explore the:

Benefits of Outsourcing Back Office
Drawbacks of Outsourcing Back Office

What to Expect When Outsourcing Back Office

back office outsourcing provider working for company in the U.S.A.

The back office is like a battery. You can operate many products effectively with a functioning battery, but without it (or if it dies), things start to crumble. Likewise, a well-oiled back-office team gives you the pivotal time you need to scale your business and concentrate on core competencies. Which is why outsourcing back-office tasks to a reputable provider can be a worth-while investment in more ways than one. What’s more, outsourcing is not limited to just large businesses. Small to midsize companies can take advantage of the benefits of outsourcing as well. Consider this: Fortune 500 companies waste an estimated $480 billion due to inefficient back-office processes (Source: SSON).

Tasks to Outsource for Back Office

As you make the leap towards outsourcing, you need to first identify the functions you want to outsource. There are countless reasons why you may need to enlist the help of an outsourcing provider. The truth is, timing is crucial in outsourcing. Maybe your team is growing or your business needs to expand its operations. Perhaps your current team is overwhelmed with too many back-office tasks on their plate. Whatever the reason is, here are a few tasks you can offload:

  • Data entry. Organizations have to work with data in large volumes, but it’s often a time-consuming process.
  • Transaction support & order processing. Imagine trying to process thousands of transactions each month on top of your other job responsibilities. Outsourcing this function allows you to turn your attention towards the most important aspects of your organization.
  • Data collection & processing. The last thing you want to do is spend your time and energy learning the ins and outs of spreadsheets.
  • Market research. Trying to find out whether or not your services and/or products will meet the needs of your customers takes time. And if you’re asking if your business can do this on its own, the answer is probably not.
  • Accounting support. Let’s face it, most leaders dread crunching numbers. Keeping your books updated and accurate can be a headache and take time away from value-added tasks.

Suggested Reading: The Advantages of Outsourcing Your Back Office Support Needs

Benefits of Outsourcing Back Office

corporate meeting to decide on new outsourcing company and to review their benefits

Cost Containment

The first and maybe most obvious advantage to outsourcing your back office is simply improving your bottom line. Developing the infrastructure to manage your back-office needs is expensive, not to mention time-consuming. The cost of maintaining this infrastructure after you develop can also be very high. When you factor in labor costs, employee turnover and investment in the newest technology and training, you end up with a large and ever-growing number that can dwindle many of your other business costs. Outsourcing your back-office support is a much more affordable solution. You can utilize an existing, well-maintained infrastructure, along with low labor costs offshore, and end up with a much more affordable option that allows your business to thrive.

Reinvest in Your Business

It’s not just about cost savings – the true value of outsourcing lies in the potential of the budget that it makes available. By no longer having to pay an in-house team – or find the funds to expand on it – you open up endless avenues for reinvestment. If you were considering scaling your business, outsourcing can lay the financial foundations and offer you the flexibility you need to make it happen. With the time and capital freed up by outsourcing, you can set your sights towards your business goals and utilize increased reinvestment to achieve them at whatever pace you want. You could even use it as a quick-fix buffer to invest more time in recruiting the ideal talent for your in-house teams, reducing the employee turnover costs often created by a hasty hiring process. The choice is entirely yours.

Read More: Leveraging Outsourcing as a Competitive Advantage

Get Professional Expertise As Soon As When You Start Considering Outsourcing Back Office

Finding people with the skills and experience you need can be tough, especially in a scarce labor market, but outsourcing provides top talent for your business without the hassle of hiring. Whether you’re amending an existing team or outsourcing nearly all of your back-office functions, an outsourcing provider can hire administrative experts who are skilled at handling a variety of back-office support needs. These experts then undergo regular training in all the latest technology, tools and best practices to ensure that you receive nothing but the highest quality service to keep your company competitive.

Concentrate on Your Core Competencies

Back-office support is vital, but taking the time and effort to build and maintain it yourself often pulls the focus away from the core competencies of your business. It can be frustrating to spend so much time on admin tasks and not on the growth of your business. By placing these vital but secondary processes in the hands of trusted professionals, you and your team will have more time to concentrate on the most important aspects of your company. Let the back-office experts do what they do best for you, so you can do what you do best for your customers.

Drawbacks of Outsourcing Back Office

employees experiencing the cons of outsourcing due to lack of preparation

Sensitive Information May Be at Risk

Back-office support often involves some quantity of sensitive information that you need to keep private. When you outsource these services, you are placing this information in the hands of an outside company. The best way to counteract this issue is to make sure you are working with a company you can trust. Find out how they handle security and dispose of sensitive information. Look for certifications or lengthy experience in your particular industry and don’t forget to get references from clients that are similar to your business model.

Language and Cultural Barriers

Outsourcing often means working with an offshore company to provide the back-office support that your business needs. While this means more affordable labor, it can also bring language and culture difficulties, too. If you want offshore but you are worried about cultural and linguistic barriers, choose a partner with extensive experience working globally. Find out where their offshore sites are located. Some countries that are newer to outsourcing, like the Philippines, offer a culture strikingly similar to the U.S., with English language capabilities that are near indistinguishable to native speakers. And the best way to find out if this will be a problem is to visit the outsourcing office overseas. There you can talk with management, see the office in action, and make a better-informed decision.

Suggested Reading: Accounting Talent in the Philippines: How to Build a Global Workforce

Quality is More Difficult to Control

Outsourcing means placing important business processes in the hands of another party and relinquishing some control. Although you remain at the helm of your operations, you must rely on your provider to keep day-to-day operations running smoothly. The best way to overcome the issue of control is to hire a provider who understands that you are in charge and, as the client, your vision is most important. Look for a partner, not just a provider, who will hire talent to your specifications, include you in the process, work in your systems and keep quality as a top priority.

Time Zones Can Affect Service Hours

Accomplishing work with remote employees, even just a few time zones away, can be problematic. When you factor in the large time differences and varying work holidays that come with outsourcing offshore, you could be looking at some frustrating business interruptions. The good news is that many outsourcing providers will work during U.S.-based hours. In fact, it’s quite common for many of their foreign workforces to work during their nights to accommodate American businesses. Make sure your provider is flexible and has a history of communicating any potential interruptions or conflicts as they arise. Any outsourcing provider that has endured the test of time will work with you to ensure that your new workforce is accessible when you need them.

Read More: 6 Key Outsourced Accounting Challenges (And How to Overcome Them)

two employees reviewing business results provided by their outsourcing company

If you’re considering outsourcing back-office, don’t let the potential downsides of outsourcing hold you back. The key is to find an experienced provider who can mitigate these issues. Not all outsourcing companies are created equal, so find one that is willing to evaluate your needs and offer viable solutions for potential difficulties when considering outsourcing your back-office tasks. To find out more about why choosing Personiv is a perfect way to quell all these problems, get in touch with our experts.

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