Back Office Outsourcing Pros and Cons

Back Office Outsourcing Advantages and Disadvantages

Back Office Outsourcing Pros and Cons

Back-office functions often account for about half of an organization’s operational budget. These functions are also critical to the success of your business. Back-office outsourcing offers a way to reduce costs and improve the effectiveness of your operations.

Over two-thirds of businesses outsource some portion of their labor. While large organizations are more likely to outsource, businesses of all sizes benefit from contracting out some of their work. However, every business has different needs.

Before moving forward with back office outsourcing, you should take the time to explore its potential pros and cons.

What Is Back Office Outsourcing?

Back-office outsourcing refers to the sourcing of back-office support roles to a 3rd party service provider. The back office is the part of your company that does not involve direct customer interaction. It is the backbone that keeps your business running.

Administrative tasks, accounting, compliance, and IT services all fall into the “back office” category. The success of your business depends on your ability to handle these tasks efficiently and with minimal errors. If your office is unorganized, stressed, or struggling to keep up with its responsibilities, outsourcing may be the best solution.

Compare the following back office outsourcing pros and cons for more insight into whether outsourcing is right for your business.

Back Office Outsourcing Advantages

Back-office outsourcing helps save time and money. You may also increase the efficiency of your office. Keep in mind that the pros and cons of back-office outsourcing depend heavily on the service provider that you hire.

Here is a closer look at why you should consider outsourcing.

Back Office Outsourcing Pros and Cons

Reduce Your Overhead Costs

The main reason for outsourcing is to save money. Outsourcing can reduce labor costs by 40% to 70%. Reducing your overhead costs can make your small business more profitable without making other changes or cuts to your operations.

Direct labor costs are just one area where you save money. There is also cost saving on hiring and training. When you start factoring in employee turnover, additional office space, and new equipment, you receive even more savings compared to hiring in-house.

Gain Access to Experienced Talent

Back-office outsourcing often helps cut labor costs, but you still gain access to experienced workers. Business process outsourcing (BPO) companies often develop teams of talented workers with the skills that you need.

The typical hiring and onboarding processes are streamlined. You can quickly develop the necessary back-office outsourced team without the usual challenges of recruiting new staff, such as getting new hires up to speed.

Improve Efficiency and Reduce Errors

Saving time and resources allows your staff to handle their responsibilities with greater ease. Your office may become more efficient.

The increased efficiency provided by outsourcing may also lead to fewer errors. When employees do not feel rushed, they can concentrate on the task at hand.

Better Morale and Customer Service

A more efficient back-office may lead to unexpected advantages, such as increased employee morale and customer service. Reducing the burden on your staff often results in a happier workforce. There is less stress to meet tight deadlines and more freedom to focus on core competency.

Improving the morale and efficiency of your staff should also lead to better service. Happy, focused employees can better address the needs of your customers.

Receive Scalable Solutions

Back-office outsourcing is also scalable. Maintaining an efficient back-office becomes more of a challenge as your business grows. You may need to hire more staff and manage more processes. The obstacles that you face become less of a struggle when you outsource.

Back-office outsourcing provides increased scalability compared to managing a growing team of in-office workers. The logistics of scaling your operations become simpler. You save money compared to hiring more staff. You also have fewer demands related to resources, equipment, and office space.

Disadvantages of Back-Office Outsourcing

Back-office outsourcing offers many advantages but may also come with a few disadvantages. Explore some of the potential drawbacks of back-office outsourcing.

Disadvantages-back-office-outsourcing

Cultural Barriers

Businesses throughout the United States, Canada, the UK, Australia, and parts of Europe often outsource to companies in the Philippines. Business processing outsourcing (BPO) companies in the Philippines account for 15% of the total outsourcing market worldwide.

Outsourcing to workers in another country can create cultural barriers. The team handling your back-office tasks may not fully comprehend certain phrases, slang, or cultural norms.

Shifting Timeframes

Along with cultural barriers, outsourcing to another region may lead to time barriers. If the outsourcing firm you hired is in a country with a major time-zone difference, you may struggle to maintain communication with your offshore team.

Different regions also have different holidays and time off for employees. The different time zones and work holidays may lead to interruptions in your daily operations.

Quality Control

Quality control is more of a challenge when you outsource back-office support. You have less direct control over the work of your offshore employees. You cannot directly oversee their day-to-day work.

The lack of control can be frustrating, especially when issues arise. Without direct control, there is an increased risk of lower-quality output, delays, and other problems that disrupt your operations.

Information Security Challenges

Outsourcing your back office means that external workers may access sensitive information. You may risk leaking sensitive data, as you have less control over the security protocols used by your outsourcing provider.

Working with a BPO may also create challenges with data compliance. Depending on your industry and region, you may need to comply with specific data protection regulations. Your business pays the price when information leaks or regulations are violated. You may lose customers and face penalties.

Lack of Coordination with In-House Staff

Managers often find it difficult to coordinate between departments within a single office. Coordinating with teams in different countries poses even more problems. Information may get lost in translation or delayed.

Many business operations involve multiple steps. If you outsource to a team in another country and time zone, in-house employees may occasionally need to wait for the offshore team to complete a task.

Conclusion: Is Back-Office Outsourcing Right for You?

Conclusion

When it comes to back office outsourcing pros and cons, the advantages often outweigh the disadvantages. You can save time, reduce costs, and get work done faster.

Luckily, you can avoid most of the drawbacks discussed by working with the right BPO. Choosing the right partner ensures that you receive a flexible solution designed around your needs.

Digital Minds BPO is the leading outsourcing company in the Philippines due to our versatility and experience. For over a decade, we have helped businesses around the world streamline their operations.

Our services eliminate many of the potential concerns of back-office outsourcing. We are based in the Philippines, which shares many cultural traits with the US and English-speaking countries. Our staff understands the nuances of the English language.

We also operate around your schedule, no matter the time zone difference. You do not need to worry about waiting until the next business day to receive a response. Quality control and information security are also major concerns when offshoring.

We work closely with you to ensure that your offshore team follows all protocols. Your new team will have the training, resources, and environment needed to work seamlessly with your existing operations.

To make your business grow faster than you ever thought possible, you need to get the right outsourcing partner to help you out.

Some of the business function you should consider outsourcing are:

 
Contact the experts at Digital Minds BPO to explore back-office outsourcing!

Ready to grow your business?

Find out how much our outsourcing services cost. It usually takes only 1-2 days to receive your proposal.

Once signed, the recruitment of your team will begin immediately.

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