What Is Back Office Outsourcing?

Business process outsourcing has come a long way from its origins in contact centers, data entry, and low-level technical support. The services provided by these companies have expanded into other areas, taking up more and more critical aspects of business without taking over the core competencies of client companies. One area in which offshore outsourcing companies have managed to grow is in the field of back office outsourcing.

back office outsourcing

The Definition

The “back office” is a reference to the functions in a business that are not related to the core of the business, but are necessary for it to function. This includes billing, accounting, legal systems, human resources, and various data and information technology tasks. In simple terms, the “back office” is the support structure of the company that handles the details that allow the core departments to function. While it is possible to go for an offshore outsourcing provider, some businesses prefer to do it nearshore or within the same country. This is particularly true for functions such as accounting and legal support, because there is less hassle involved in navigating financial and legal systems.

Services Offered

A BPO provider can offer a number of possible services. One of the most common that outsourcing companies provide is accounting. Numerous companies opt to have an outside firm look over their financial records, either as a supplement to an in-house accountant or as a replacement. Some aspects of human resources are also covered by back office outsourcing companies, though whether this includes recruitment and hiring may depend on the client and other factors. Payroll services are also commonly outsourced. Some experts consider data entry and minor IT-related tasks as being part of a back office setup. Offshore outsourcing commonly provides the latter form, though it can often be advisable for companies to nearshore accounting tasks.

Benefits of Back Office Outsourcing

The decision to outsource back office functions brings with it a number of potential benefits. Chief among these is the common business process outsourcing effect of reducing costs. With an outside firm handling support functions, the company spares itself the cost of the space, equipment, and personnel that fulfill those tasks in-house. This also opens up the opportunity for a company to tap into the experience of these outside firms in aspects of a business that they are not experts in. This is a benefit because not every business can afford to keep expert accountants on staff, but might be able to afford the fees that an offshore outsourcing provider would charge.

There are some risks involved in outsourcing back office functions, but for many companies, the benefits can outweigh them. The choice to outsource back office tasks can relieve a company of not only expense, but also the burden of keeping potentially expensive specialists in their employ. Offshore outsourcing also allows them to focus their resources on their core businesses. Company productivity and resource management are thus enhanced, making this activity very profitable.

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