To BPO, or Not to BPO
Outsourcing Pros and Cons for Back Office Support
Quality back office support can make or break your business, and with back-office functions often driving 50% or more of total operational costs, you may be looking for a solution to tighten efficiency. For many U.S.-based businesses, this process of cost-cutting leads to the practice of outsourcing.
Fortunately, with the right outsourcing strategy, many companies today can cut their costs in half while improving their productivity and focus at the same time. In fact, according to Statista, 59% of businesses stated that they used outsourcing to help them cut costs.
Back office support doesn’t usually become a noticeable problem until a business starts to get larger. As your company grows in size, managing the business processes that are crucial to everyday operation becomes an increasingly expensive and time-consuming challenge.
Departments have to be expanded or created from scratch, and then you are stuck managing the cost and effort of hiring and training new employees.
That’s where outsourcing comes to the rescue.
When you outsource your back office support, you gain numerous advantages that improve your business as a whole. Once you have the right partner working to supplement your business needs, you can place your focus on core business competencies and leave the secondary concerns to the experts.
However, outsourcing can come with challenges and downsides, too. It’s important to understand what outsourcing is, how it can help, and how it can hurt before you make any decisions.
What Is outsourcing?
Outsourcing simply means that one company hires another company to handle some part of their business needs and functions.
This can happen within a company’s own country, but more often it expands globally to offshore labor that is much more affordable. Every company has its own unique back-office needs, which is why it’s important to find a high-quality back office support partner that can give you everything you need with as few downsides as possible.
The best way to find out how outsourcing can help your business grow and succeed is to consult with an outsourcing expert. This can help you determine whether business process outsourcing (BPO) is an appropriate and affordable measure for you take.
In the meantime, these back office support outsourcing pros and cons will help you make a more informed decision.
The Pros of Outsourcing Your Back Office Support Needs
Though the specific back office needs of each company may vary according to size and industry, there are many general back-office needs that are common to virtually every sizable company. These include important administrative functions like accounting, data entry, order processing, data collection, market research, and much more.
At first, administrative work may not seem like a lot to handle, but as the company scales up, it can become one of the biggest challenges that companies face.
Here are some of the top advantages to be gained with BPO fulfillment.
1. Cut costs
The first and maybe most obvious advantage to outsourcing your back office is simply improving your bottom line. Developing the infrastructure to manage your back office needs is expensive, not to mention time-consuming. The cost of maintaining this infrastructure after you develop can also be very high.
When you factor in labor costs, employee turnover, and investment in the newest technology and training, you end up with a large and ever-growing number that can dwarf many of your other business costs.
Outsourcing your back office support is a much more affordable solution. You can utilize an existing, well-maintained infrastructure, along with low labor costs offshore, and end up with a much more affordable option that allows your business to thrive.
2. Reinvest in your business
It’s not just about cost savings – the true value of BPO lies in the potential of the budget that it makes available. By no longer having to pay an in-house team – or find the funds to expand on it – you open up endless avenues for reinvestment.
If you were considering scaling your business, outsourcing can lay the financial foundations and offer you the flexibility you need to make it happen. With the time and budget freed up by outsourcing, you can set your sights towards your business goals and use increased reinvestment to achieve them at whatever pace you want.
You could even use it as a quick-fix buffer to invest more time in recruiting the right talent for your in-house teams, reducing the employee turnover costs often created by a rushed hiring process. The choice is entirely yours.
3. Get back office support expertise
Finding people with the skills and experience you need can be tough, especially in a tight labor market, but outsourcing provides top talent for your business without the hassle of hiring.
Whether you’re amending an existing team or outsourcing nearly all of your back office functions, a BPO can hire administrative experts who are skilled at handling a variety of back office support needs.
These experts then undergo regular training in all the latest technology, tools, and best practices to ensure that you receive nothing but the highest quality service to keep your company competitive.
4. Concentrate on your core competencies
Back office support is vital, but taking the time and effort to build and maintain it yourself often pulls the focus away from the core competencies of your business. It can be frustrating to spend so much time on admin tasks and not on the growth of your business.
By placing these crucial but secondary processes in the hands of trusted professionals, you and your team will have more time to concentrate on the most important aspects of your company. Let the back office experts do what they do best for you, so you can do what you do best for your customers.
These are just a few of many advantages that can be yours with the right outsourcing partner for back office support. If you’re looking to compete in a tough market, maintain efficiency, focus on your core business, and save money all at the same time, outsourcing is probably the best solution.
The Cons of Outsourcing Back-office Support
It’s important to know that outsourcing isn’t necessarily all positives. There are some potential downsides that come with any outsourcing strategy, especially if you choose a partner who isn’t 100% dedicated to quality service.
Here are some important potential disadvantages to consider.
1. Sensitive information may be at risk
Back office support often involves some quantity of sensitive information that you need to keep private. When you outsource these services, you are placing this information in the hands of an outside company.
You won’t have control over their information security practices, or how they are storing your data.
The fear here is that a careless outsourcing partner can be the cause of leaked information that can harm your company.
The best way to counteract this issue is to make sure you are working with a company you can trust. Find out how they handle security and dispose of sensitive information. Look for certifications or lengthy experience in your particular industry and don’t forget to get references from clients that are similar to your business model.
2. Language and cultural barriers may interfere
Outsourcing often means working with an offshore company to provide the back office support that your business needs. While this means more affordable labor, it can also bring language and culture difficulties, too. Some businesses choose to outsource domestically to prevent such difficulties, even though it comes with a higher price tag.
If you want offshore but you are worried about cultural and linguistic barriers, choose a partner with extensive experience working globally.
Find out where their offshore sites are located. Some countries that are newer to BPO, like the Philippines, offer a culture strikingly similar to the U.S., with English language capabilities that are near indistinguishable to native speakers. And the best way to find out if this will be a problem is to visit the BPO office overseas.
There you can talk with management, see the office in action, and make a better-informed decision.
3. Quality is more difficult to control
BPO means placing important business processes in the hands of another party and relinquishing some control. Although you remain at the helm of your operations, you must rely on your provider to keep day-to-day operations running smoothly.
This causes concerns such as technological failure, low-quality output, and high attrition. In some cases, clients have seen service delays, miscommunication, and general operational problems, which can make outsourcing seem like more trouble than it’s worth.
The best way to overcome the issue of control is to hire a provider who understands that you are in charge and, as the client, your vision is most important. Look for a partner, not just a provider, who will hire talent to your specifications, include you in the process, work in your systems and keep quality as a top priority.
4. Time zones can affect service hours
Accomplishing work with remote employees, even just a few time zones away, can be problematic.
When you factor in the large time differences and varying work holidays that come with outsourcing offshore, you could be looking at some frustrating business interruptions.
Who wants to think about what time it is halfway around the world when sending an email?
The good news is that many BPOs will work during U.S.-based hours. In fact, it’s quite common for many of their foreign workforces to work during their nights to accommodate American businesses.
Make sure your provider is flexible and has a history of communicating any potential interruptions or conflicts as they arise. Any BPO that has endured the test of time will work with you to ensure that your new workforce is accessible when you need them.
There aren’t many downsides that come with outsourcing, and the ones that do exist can be overcome with effort and a partner who cares about your business.
Don’t let the downsides of outsourcing hold you back. The key is to find an experienced provider who can mitigate these issues.
Not all outsourcing companies are created equal, so find one that is willing to evaluate your needs and offer viable solutions for the potential difficulties of outsourcing.
Let Personiv Show You Quality Back Office Support Outsourcing
BPO has its disadvantages as well as boasting many advantages, but the real key to its success lies in its correct deployment. With Personiv, you gain access to over 30 years’ experience of helping businesses meet their goals with BPO. Save money, save time, and achieve your goals now. Get in touch today for your free consultation and find out just how much you can benefit from process outsourcing.
Have a question about outsourcing?