What Is Back Office Outsourcing?
A car won’t start without its engine working properly. This goes the same with a company that does not provide a good handful of people to work for its back office function.
But what is back office anyway?
A company is composed of three parts: the front office, the middle office and the back office. This categorization mostly applies to financial services companies. But most companies could do with just a front office and a back office.
The front office is where the company’s main business is run. It brings revenues and it is the one that the customers see. On the other hand, the back office is where all supporting functions are located to make the main business run smoothly. The main business of the company generates revenue, while the back office sees to it that the company operates efficiently. It usually holds the administrative functions.
Typical back office functions include inventory management, finance and accounting, human resources, payroll, logistics and information technology.
The back office is considered as the company’s engine room. If these functions are mismanaged, these could create a domino effect to other administrative functions, and worst, create chaos to the front office. The last thing that any company wants is for its main business transactions to be jeopardized.
One concrete example for these is the information technology (IT) department of the company. It is an important back office function. If technological tools like telephones and computers are inoperable, it could affect not only other back office functions, but also the front office functions. Keeping the IT department updated and well-maintained will ensure a steady flow of maintenance of technological office tools.
Setting up an office with a complete set of back office services is important for any company but, at the same time, is costly, both in office space and employee maintenance (recruitment, hiring and retention). Most employees who provide back office services have higher salary fees compared to people working in the front office or in the operations. The jobs in the back office require more specific skills, i.e. human resource functions, accounting skills, marketing skills, etc.
Thus, for companies to save on office space and the cost of hiring and retaining a group of people with higher salary fees, they have opted to outsource back office functions.
Back office outsourcing is the act of outsourcing one or more back office services to third party service providers. This is done to help companies lessen their expenditures on acquiring more office space and the cost of hiring and retaining employees.
Most of the functions outsourced are recruitment, human resource, accounting, payroll and IT. These functions can be offered by call centers with non-voice services.
These back office services are deemed important to make a company run smoothly. It is a must to acquire and maintain these services. But, it is also not prohibited to hand over these services to the people who specialize on these functions.
But what is back office anyway?
A company is composed of three parts: the front office, the middle office and the back office. This categorization mostly applies to financial services companies. But most companies could do with just a front office and a back office.
The front office is where the company’s main business is run. It brings revenues and it is the one that the customers see. On the other hand, the back office is where all supporting functions are located to make the main business run smoothly. The main business of the company generates revenue, while the back office sees to it that the company operates efficiently. It usually holds the administrative functions.
Typical back office functions include inventory management, finance and accounting, human resources, payroll, logistics and information technology.
The back office is considered as the company’s engine room. If these functions are mismanaged, these could create a domino effect to other administrative functions, and worst, create chaos to the front office. The last thing that any company wants is for its main business transactions to be jeopardized.
One concrete example for these is the information technology (IT) department of the company. It is an important back office function. If technological tools like telephones and computers are inoperable, it could affect not only other back office functions, but also the front office functions. Keeping the IT department updated and well-maintained will ensure a steady flow of maintenance of technological office tools.
Setting up an office with a complete set of back office services is important for any company but, at the same time, is costly, both in office space and employee maintenance (recruitment, hiring and retention). Most employees who provide back office services have higher salary fees compared to people working in the front office or in the operations. The jobs in the back office require more specific skills, i.e. human resource functions, accounting skills, marketing skills, etc.
Thus, for companies to save on office space and the cost of hiring and retaining a group of people with higher salary fees, they have opted to outsource back office functions.
Back office outsourcing is the act of outsourcing one or more back office services to third party service providers. This is done to help companies lessen their expenditures on acquiring more office space and the cost of hiring and retaining employees.
Most of the functions outsourced are recruitment, human resource, accounting, payroll and IT. These functions can be offered by call centers with non-voice services.
These back office services are deemed important to make a company run smoothly. It is a must to acquire and maintain these services. But, it is also not prohibited to hand over these services to the people who specialize on these functions.
About the Author
Miche is a self-employed blogger and copywriter from Philippines who has a love on writing and always happy to share his passion on blogging.