Many employees find doing mundane and repetitive tasks a dreaded part of their jobs.
While most of these duties are essential for an efficiently functioning business organization, they also take up a lot of an employee’s time.
For example, team leaders get bogged down by paperwork instead of finding ways to improve their department’s productivity.
To address this problem, an increasing number of companies are opting to outsource some or all of their back-office functions to offshore service providers.
What are back-office functions?
Back-office functions are business operations that support customer-facing front-office services, such as sales and customer care.
In contrast with the operations they support, back-office functions have no interactions with their company’s clientele and don’t directly generate revenue for the company.
Instead, these functions tend to the administrative side of business operations like – managing employee records and other pertinent company documents.
Despite being a behind-the-scenes operation, the functions delegated to back-office staff are crucial to a business’s smooth and uninterrupted operation.
Without these supporting functions, employee experience would plummet, and a business’s compliance with existing laws will be in jeopardy.
In a way, the services provided by these functions can be considered the lifeblood of business organizations just as much as customers are.
Types of back-office functions
Back-office functions aren’t just a bunch of non-specific duties grouped into an umbrella term.
These functions include whole departments, such as human resources, accounting, and IT, that may have their own subdivisions.
Read on below to find out more about the departments that make up a company’s back office:
Accounting and finance
A business’s accounting department is responsible for managing the financial records and finances of the whole organization.
This responsibility includes everything from payroll management to recording the company’s cash flow transactions.
Accounting personnel prepares and handles the tax returns and statements of an organization. This includes employees’ government-mandated contributions and other benefits.
In addition, the accounting department sends out and receives invoices, accounts payables, and receivables of the company, should there be any. They also oversee the company’s books to see if there are any discrepancies in their records.
Human Resources (HR)
The complete breakdown of an employee’s salary falls under the purview of the accounting and finance department. However, employee data entry for the payroll is under the HR department.
HR is also responsible for managing a company’s entire roster of employees, including:
- Storing and managing employee records
- Overseeing compensation and benefits
- Employee performance management
- Timekeeping
Larger firms have a recruitment and hiring department separate from HR. But in smaller companies, the tasks of the recruitment team fall under the HR department.
In such cases, HR will also be responsible for:
- Creating job descriptions and posting these on online job portals;
- Maintaining a recruitment database; and
- Hiring and onboarding process of new employees.
IT services
This back-office department handles the electronic equipment and software used in a business’s daily operations.
IT personnel set up and maintain the electronic hardware used by employees in their tasks. These may include computers, physical database servers, and even the internet modem or router and connected wirings.
They are also responsible for installing software used by employees and troubleshooting any IT-related issues.
When a company adopts new technologies, such as advanced software or automation of existing processes, the IT department takes charge of its implementation.
Legal services
While not all businesses have dedicated legal departments, it is nonetheless important to have a team responsible for a company’s legal legwork.
A legal department ensures that a company remains compliant with existing laws and regulations regarding its business operations.
Its functions also include – delineating the legal framework upon which the company operates, representing the company in case of legal disputes, and drawing up agreements and other legal documents.
Offshoring back-office functions vs keeping back-office in-house
Offshoring – or delegating business functions to an overseas outsourcing firm – has been a common practice for years.
Partnering with a trusted outsourcing company to handle non-core business processes gives organizations a competitive advantage in the market.
Here are just a few benefits companies gain by outsourcing back-office functions instead of keeping them in-house:
Cost reduction
Cost-efficiency and cost-effectiveness are among the most touted benefits of outsourcing any business function, including back-office operations.
Offshoring offers a cheap source of skilled labor for companies due to the disparity between their countries’ costs of living.
For example, the average monthly salary of an accountant in the US is about USD 3,796. Their Filipino counterparts are typically paid only about USD 530 on average, roughly 86 percent lower.
Aside from reduced labor costs, businesses also save money that would otherwise be spent on renting additional facilities and purchasing equipment.
Access to skilled workers
BPO companies rely on their customer service agents to keep clients satisfied.
As such, most outsourcing firms ensure to hire only the top five percent of talents in the functions they would perform.
Outsourcing companies also give these already-experienced agents additional training to further boost their skills. It also ensures that each agent will give their clients a competitive advantage.
Easier scalability
Outsourcing solutions give outsourcers access to an easier way of scaling their back-office operations.
Outsourcers can tap into their BPO partner’s talent pool to scale up their operations as demand increases. Because these additional agents are already trained by the outsourcing firms, organizations don’t waste time on the end-to-end recruitment, training, and onboarding process.
Improves in-house staff productivity
Relieving a company’s in-house staff of routine back-office duties gives them more time to focus on the core aspects of their jobs.
This is especially helpful to startup businesses as it allows employees to attend to activities that directly contribute to their company’s revenues. Delegating back-office functions to offshore companies also improves employee experience, which, in turn, increases their productivity.
