ARTICLE TABLE OF CONTENTS
This is the complete guide to back office outsourcing.
- What back office outsourcing is
- How to outsource your back office
- Lots more
So if you want to learn the essentials of back office outsourcing, then this article is for you.
It’s time for the first step!
The Complete Guide to Back Office Outsourcing
Back office outsourcing trends have fluctuated in recent years, but over 50% of businesses use outsourcing to help cut costs.
If you want to start outsourcing, your back office is the perfect area of your company.
Your back office employees rarely, if ever, communicate with clients.
So by outsourcing those jobs, you can reserve your office space and resources for other work.
While you might not see a financial return immediately, it can happen.
You can keep marketing and sales teams in your office, but you can easily outsource accounting, HR and IT support.
All of these departments are essential, but you may be able to save money on them.
Then, you can spend more time growing your company and making more money.
Keep reading to learn more about back office outsourcing and how to go about it.
What Is Back Office Outsourcing?
Back office outsourcing involves hiring companies or contractors to do certain jobs, rather than full-time employees.
If you want to reduce business expenses, outsourcing departments such as accounting and IT can help.
It can be easier to outsource your back office because they don’t work directly with your customers.
Outsourcing back office functions can cover essential responsibilities so that you can focus on other areas.
Small business back office outsourcing can also be useful if you have a small office.
You don’t have to spend money on a larger space, but you can still get your work done.
One example of back office outsourcing is working with an accounting firm.
Instead of hiring a full accounting staff, you can utilize the accounting services when you need them.
You can use various types of back office outsourcing based on your needs.
You don’t have to follow a strict outline for outsourcing, which can be helpful in the beginning.
Back Office Roles
You can decide on a few types of back office outsourcing for your company.
Perhaps you prefer to keep your accounting staff in-house, but you don’t mind working with someone else for IT or HR.
Departments such as accounting and human resources (HR) rarely work with customers.
Because of this, you can put these employees in the back or at a separate office.
They’re also some of the easiest positions to outsource.
You can give the service provider your information so that they can do their job well.
Outsourcing these positions usually doesn’t require a ton of training.
As long as you choose a company with capable workers, you can focus on the customer-facing departments in your business.
If you’re looking to outsource your back office, you can start with one department.
Or you could outsource all possible positions.
Then, you can enjoy the benefits of filling those jobs without having to provide office space for the workers.
Without a proper accounting department, it would be hard for any company to manage its revenue and expenses.
Your accounting staff manage the books and report business spending and income.
Accountants track accounts payable and note when the company pays bills it owes.
They also work with HR to manage employee payroll and time off.
Recording big expenses, such as inventory, is also a necessary task for your accountants.
But as essential as accounting is, it’s not necessary to employ accountants directly.
Accounting work encompasses some of the easiest back office outsourcing projects.
You can provide them with your financial records, and you shouldn’t have to give a ton of guidance.
A general outsourcing service can also have accountants available to work on your business.
As long as you don’t have a complicated bookkeeping system, you can outsource your accounting to save space and time.
When outsourcing this service, make sure the people working on your business have the proper training.
If they don’t, you will have to spend time and money redoing your company’s books.
Another example of back office outsourcing is your IT department.
As technology becomes a more important part of doing business, IT professionals have also grown to be essential.
Your IT services department is available to help with hardware and software issues.
If someone on your marketing team can’t access their email, they can contact your IT department.
Solving technology problems is a crucial function of your IT team, but they don’t always have to be in your office.
IT professionals can use remote desktop access to help other employees with their computers.
The department can also help with cloud issues and customer support.
While you may not want to outsource your customer IT support, you can do so for your employee support.
The IT provider should understand how to use your network and the various programs involved.
Then, you and your employees can get the technical help they need regardless of if they’re in the office.
Policies and Procedures
Creating policies and procedures can help any company improve its operations.
Depending on the policy in question, any department may take on this responsibility.
For example, your sales team may come up with a procedure for turning leads into paying customers.
However, your back office team can comprise workers who specialize in researching and setting policies and procedures.
Setting policies may be a part of the HR team’s job, such as how to handle workplace conflict.
Accounting may set policies for reporting business expenses, such as how the receipts should look.
While almost any department can set policies and procedures, it can help to outsource that function.
You can hire experts who know how to set new policies and implement them, and they don’t have to work in your office.
With back office outsourcing, you can set up procedures that will help you increase company revenue and productivity.
And since you probably won’t need to change these every day, you won’t have to hire a team full-time.
Almost every business needs to comply with regulations.
If you manufacture products, you need to make sure they don’t contain harmful chemicals.
Banks need to comply with federal laws that dictate when to release funds after a deposit.
Service-based businesses need to use the proper tools to provide their services.
But regulatory compliance applies to everything from how to hire employees to how to maintain employee privacy.
Workplace safety requirements and minimum wage laws can change relatively frequently.
Compliance is a great option for back office work outsourcing because every business needs it.
Laws change, and you need to stay on top of them to run a successful business.
You can hire an expert to stay on top of changes to regulations.
They can then update you when new laws come out so that you can adapt to fit the new ruling.
Even if you have the perfect office staff, eventually, you will need to hire more people.
Whether your company grows, or a current employee leaves, you should have someone who can help with staffing.
Staffing is a vital function of your HR department, and outsourcing back office functions like staffing can be useful.
Unless you have a high turnover rate, you probably don’t need to hire new people very often.
Because of this, outsourcing your staffing coordinator position can be a smart decision.
You can contact the staffing coordinator whenever you have a new opening.
They can use their resources to find good candidates, and they can vet the first round of applicants.
While you should review the applications and interviews in-house, outsourcing the first steps can save you time.
You can interview the top candidates, and you won’t have to search through a pile of resumes to find those people.
Front Office & Middle Office & Back Office in Detail
Besides the back office is the front and middle office. Do you know what each one does?
If you want to understand in-depth each office type and get it explained with examples, then take a look at the following articles:
Why Outsource the Back Office
Outsourcing your back office can be a tough decision.
You have to select a company that understands your industry and outsourcing needs. In some cases, you may need to outsource the roles to individuals.
However, once you find the right agency to work with for outsourcing, you will notice a difference.
One advantage of back office outsourcing is that it can make your company more efficient, and it can save you time and money.
You won’t have to hire a large staff just to fulfill every necessary role. Instead, you can focus on tasks that will grow your company.
If you choose the right outsourcing agency, you can contact them whenever you have questions or problems.
They can help you address those concerns regarding the services they offer.
A stable, in-house back office can support your company, and so can a stable, outsourced back office.
Consider a few benefits you can enjoy from outsourcing certain positions:
Downsizing your office space is one of the best ways to lower the cost of doing business.
If you have a large workspace in a high-cost area, odds are your rent is high.
Various back office outsourcing examples, like HR, can cut down on office space.
You’ll need fewer desks, and you won’t have to spend as much on computers or other supplies.
Removing your back office can also help you lower employment costs.
If you outsource positions, you won’t have to pay for health benefits or retirement contributions.
You also won’t need to pay for excess work time since you can work with the workers when you need them.
Moving some or all of your team to a non-traditional work environment can help you save money, which can be useful at any stage of your company.
When outsourcing back office functions, you can put more energy into your client-facing positions.
You can offer more insight and training to your marketing and sales teams, and you can focus more on growing your revenue.
Now, outsourcing tasks like accounting can be scary because you may not know who is managing your books.
As long as you vet the company you want to work with, you can ensure they hire trained accountants.
Outsourcing can even help the people who work in your back office.
While having a large office gives employees the chance to socialize, it can be distracting.
Separating teams can help everyone stay focused on their work for the day.
Then, you and your entire company can be more productive.
The added efficiency can help your company’s bottom line, and you can put those extra resources back into your business.
Improve Customer Service
If you outsource your back office and have less to manage, you can dedicate more time to your customers.
Customers want an excellent experience, and that can be hard to provide if you have to field questions from IT and accounting.
Being able to focus on your front office and customers means that you can solve customer problems.
You can work with your production team to address concerns about product quality.
If an advertisement has a problem, you can work with your marketing team to correct it.
And if you ever have clients visit your office, you don’t have to worry about hiding your back office employees.
You can make the office organized and ready for the public.
Then, you can give off a better impression to current and potential clients.
And while you can also outsource your customer service department, keeping that in-house means you can offer better support when issues arise.
Another advantage of back office outsourcing is that you can hire specialists.
For example, if you need a software engineer to update your company’s software, you can hire that person.
You don’t have to hire a general IT professional and hope they can do the job.
If you have a complicated tax structure, you can hire an accounting firm that has experience in that area.
Then, you can make sure they file your taxes correctly.
Hiring a staffing coordinator can also help when compared to a general HR team.
The specialist will know where to post job ads and how to find good candidates.
No matter what department you need to outsource, doing so gives you more flexibility with who you hire.
You could employ a variety of people for IT support, so you can find people with different focus areas.
How to Outsource Your Back Office
If you want to improve productivity and reduce costs, consider back office work outsourcing.
The exact plan will vary based on the size of your company and your needs.
While one company might benefit from outsourcing their accounting department, another business might need to outsource their entire back office.
Think about why you want to outsource your back office.
If your goal is to save money, you can focus on that.
Consider the departments that take up the most room or funds to run in-house.
Then, you’ll know which types of back office outsourcing you need.
You can start small, or you can hire other companies to handle everything.
If you find that you need to outsource more, then you can do that.
You’ll be able to work with experts who can help with almost any non-client-serving part of your company.
Determine Where You Need Help
The first step is to consider what types of back office outsourcing you should do.
Perhaps you can’t afford to pay a full accounting staff.
Or maybe you rarely use HR, so you’re wasting their time as well as yours.
Starting with outsourcing one department allows you to dip your toes into it.
If you find that outsourcing isn’t right for you, it will be easier to stop with one area in your company.
You may also find that you can hire one or two IT support professionals, but you and your employees need more assistance.
In that case, you can outsource all or part of your IT department.
Try to get as specific as possible to help narrow down your needs.
If you know you want to outsource your accounting department, consider if you need help with taxes or daily bookkeeping.
Outlining your needs can help you figure out where to start with back office outsourcing.
The more specific you can get, the easier it will be to find an individual or company that can provide those services.
Set a Realistic Budget
Saving money is one of the best back office outsourcing benefits.
However, you also want to be realistic about how much it will cost.
When it comes to outsourcing your accounting, for instance, you still need to find good quality accountants.
You may be able to find someone who works where there is a low cost of living.
Then, you can still pay them a liveable wage, but you won’t have to pay as much.
But outsourcing departments like legal services may not save you that much.
Sure, you won’t have to pay for full-time benefits. However, you’ll need to pay for an attorney’s expertise and services.
You can save money when back office outsourcing, but it’s a delicate balance.
Consider how much you want to save with outsourcing.
Shop around for contractors or companies who can offer the services you need for an affordable price.
Decide Between Domestic and Overseas
When outsourcing your back office, you can also decide where you outsource the work.
You can keep the work domestic, so you can work with experts in your country.
But you may want to consider outsourcing work overseas.
Depending on the country where you send the work, you might be able to get great quality without paying as much as you would domestically.
If you’re outsourcing a department like IT support, you might want to consider domestic.
Then, you can make sure the IT service providers are available while you’re at work.
On the other hand, you can hire IT professionals on the other side of the world for after-hours help.
If you know you need people to work at a specific time, you can consider that.
Otherwise, you can consider both domestic and international freelancers and companies.
Research the Back Office Provider
Once you decide what you need and where you want to outsource work, research different providers.
In the case of accounting, research the accounting firm to see what services they offer and their experience.
If you’re looking to hire a freelance accountant, make sure the individual has experience and certification in accounting or bookkeeping.
You should consider how long the person or company has been in business.
Read as much as you can about them through a website and client reviews, if they’re available.
If you know other business owners who utilize back office outsourcing, ask them for recommendations.
Don’t be afraid to get critical of any company before passing work to them.
You want to make sure that you aren’t throwing your accounting or HR department to the wolves.
Even though you won’t have those services in-house, you still need to ensure you’ll get good quality work.
Review the Service Agreement
Before agreeing to services from any company, you should read their contract or service agreement.
The agreement should detail how often the contractor will provide reports for your business.
If you’re outsourcing your accounting department, the agreement should state how often the service provider will create and send financial reports.
In this case, you should look for more frequent reports so that you can stay on top of your records.
However, you may only need reports from outsourcing HR work every month or so.
In any case, you and the company or individual should be on the same page.
You should also consider how often the company will communicate with you on back office outsourcing projects.
Even if they aren’t due to send a report, they should be able to message or call you with issues or concerns.
You should also be able to contact them with problems.
Customize the Service
Even if you want to start back office outsourcing with one department, your situation is most likely different from other businesses.
You may have different processes or use different software for the work.
Because of this, you should look to outsource your work to a person or company that can handle it.
You should choose someone who can customize the work to fit your needs.
If you need bookkeeping services and you already use QuickBooks, you should look for someone with QuickBooks experience.
Then, you don’t have to worry about them using another accounting program.
You also won’t have to train them to use QuickBooks.
If you’re outsourcing work that you only need occasionally, you should also ask if a company offers that.
Perhaps you need to outsource your hiring position, but you don’t need that all of the time. Ask if the hiring coordinator can work when you need them and not every week.
Flexibility is one of the most significant benefits of outsourcing.
But you should make sure that who you outsource to can do what you need and when with your company in mind.
Consider Customer Support
No matter what department you choose to outsource, you should consider what customer support the provider offers.
Ask them about their work hours and when and how you can contact them.
If you’re outsourcing your accounting department, you may only need support during the day.
But if you’re outsourcing IT support for your clients, you should have support around the clock.
Back office outsourcing to a company is usually easier when it comes to getting customer support.
However, any good independent contractor should be able to communicate with you.
Either way, you should know what to do and who to contact when you have issues or questions.
Whether you’re curious about a line in your budget or a prospective employee’s resume, you don’t want to worry about the small details.
You should communicate often with anyone who works for you, and that includes all types of back office outsourcing.
Make sure that the company or person doing your back office work understands what you need and want.
If you make changes to your company policies, you should inform the freelancer if it affects them.
You don’t want to wait weeks only to find that the company isn’t following your new protocols.
The more you communicate with the people or companies working for you, the more you can stay on the same page.
You don’t have to always be on a phone call or chat box with them.
However, you should check in each day or so.
Then, the company or individual can ask you questions so that they can provide the best service.
You, your in-house team and your contractors can all work together more efficiently.
And with the internet, you can communicate with people who work completely different schedules.
When you first start outsourcing your back office, you may feel a weight lift off your shoulders.
However, you don’t want to get too comfortable.
Just as you would evaluate your in-house employees, you should evaluate your contractors.
Whether you want to do so every year or every month, you should always reevaluate your outsourcing decisions.
Consider if back office outsourcing is saving you money or has improved your productivity.
Think about how your contractors are doing and how well they’re following your instructions.
If you notice that there’s an issue, you can address it.
In some cases, you can fix it by telling the person about your concerns.
But if you have multiple issues, you can decide if you need to stop working with someone.
After all, you can fire in-house workers, and you can do that with independent contractors.
Then, you can find a company or freelancer who can better fill your needs.
Understand Front Office vs. Middle Office vs. Back Office
As you apply for jobs or are researching the infrastructure of an organization, especially in financial services, you might run into the terms: front office, middle office, and back office.
These areas of the company are different in their roles, but each function is vital to the business’s health and growth.
Each section of the company would not be able to survive without the support of the other two.
Learn each office classification’s critical tasks and goals, and how they each interact with each other: complete guide to front office vs. middle office vs. back office.