Back Office Outsourcing: An Informative Overview

Back Office Outsourcing: An Informative Overview

Picture of Daven Michaels

Daven Michaels

New York Times Bestselling Author, 30-year business veteran, and Executive Chairman of CurrentC Group.

Many businesses are making back office outsourcing a common choice nowadays. Some of the back office responsibilities or functions include managing payroll, creating billing systems, administering health savings account, data entry requirements, IT functions, and running human resources. So, when a back office outsourced service is contracted, some or all of these functions are given to a third party to handle. The number one advantage of this process is cost savings for the company leveraging the service. And, most times, it costs less to outsource back office functions than handle them in-house in terms of salary and other aspects such as health insurance contributions. The volume of cost-saving achieved by outsourcing back office functions depend on factors such as the outsourcing option (offshore vs. onshore).

What You Should Know

You will find a number of providers who specialize in back office outsourcing services. While some offer just any back office function, others may specialize in one or more areas such as IT (information technology) and payroll. Just as it applies to hiring employees in-house, a business should be thorough in hiring a back office outsourcing provider and should consider factors such as reputation, pricing, track record, work structure and overall outsourcing plan. A company should bear in mind that it is virtually handing over control as well as a part of its reputation to a separate entity. Therefore, there should be considerable trust and assurance that the functions will be carried out to the taste of the company and that the overall standard employed by the back office outsourcing provider will reflect the company’s reputation.

Outstanding Benefits of Back Office Outsourcing

Particularly, there is significant financial advantage that comes with outsourcing a company’s back office functions. First, eliminating or reducing departments in a company can help save lots of money in the aspect of salary, overhead cost, employee benefits, as well as letting a company use smaller facilities that will further save cost. Other financial or cost-saving benefits include eliminating costs that add to the overall business operation costs such as printing checks (eliminated by outsourcing payroll).

Also, a company is able to concentrate on its core competencies that boost the reputation of the organization when it frees up more time by outsourcing its back office functions. Often, the core aspects of an organization are neglected as employees and even owners pay more attention to the back office functions listed above. This in return dwindles the company’s growth significantly. Many companies may not even know this is happening until they start outsourcing back office functions and notice the difference that such decision makes in its growth.

However, there are also concerns about back office outsourcing. For instance, some have feared that the employees at home may completely be displaced as companies continue to seek reduced operation cost and other benefits that come with outsourcing back office functions outside of the country where the business operates. But, the argument is, not all the companies opt for offshore outsourcing. Besides, some of the jobs end up coming back home through online outsourcing.

Daven Michaels is a New York Times Best Selling Author and CEO of premiere global outsourcing company, 123Employee. The company employs hundreds of young bright individuals on three continents. His International event, Beyond Marketing Live! inspires entrepreneurs build & grow their business with revolutionary new theories and systems allowing them to design the business and personal lifestyle of their dreams.

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