Outsourcing the Back Office

On December 8, 2011, in Outsourcing, by Business Development Group
The back office is a function of a company where administrative operations such as human resources or accounting take place. More of like a company's engine room, it is in charge of running the company by itself, not the company's business. The back office function vary depending on a business' activity.

The back office is a function of a company where administrative operations such as human resources or accounting take place. More of like a company's engine room, it is in charge of running the company by itself, not the company's business. The back office function vary depending on a business' activity.

The back office is a function of a company where administrative operations such as human resources or accounting take place. More of like a company’s engine room, it is in charge of running the company by itself, not the company’s business. The back office function vary depending on a business’ activity.

Many companies today outsource to other establishments to do some of the back office operations for them. These includes payroll and human resources operations. In this way, companies can save on staff and office space costs.

Read related article: Steps to take before Outsourcing

Outsourcing plays a great value on point of security concerns and possible issues regarding the quality of outsourced staff. Back office services are those services which are never seen by the public but which are truly at the heart of any successful business. Services such as IT support, accounting and even human resources can be outsourced to companies internationally which focuses in taking over these back office services to assist your company with more cost-efficiency.

Read related article: Call Center as a Marketing Channel

Typical Back Office Functions

a. Inventory management – Concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and demand forecasting. Balancing these competing requirements leads to optimal inventory levels, which is an on-going process as the business needs shift and react to the wider environment.

b. Finance and accounting – The accounting and finance outsourcing market has three major segments: payment  services, such as check clearing and credit card authorizations; compliance  services, such as tax reporting and regulatory reporting, and analytic services,  such as payroll and receivables collection. Start small with one or two  processes, such as payroll processing or credit card authorizations. This will  give you a chance to evaluate your outsourcing partner and plan the internal  transition.

c. Human resources – Human resources department deals with dozens of forms daily and you need to  create an efficient documentation process from day one. Electronic records help  you cut down on storage costs for records and make documentation easier for  inexperienced workers

d.  Payroll – Assess the amount of time and money you will save when you outsource payroll  tasks. Most companies farm out their payroll duties because the manpower used on  weekly payroll tasks takes away from other duties. If the savings are marginal,  you should consider keeping payroll duties within your company to maximize  quality control.

e. Information technology – Outsourcing information technology (IT) operations is relevant due to the advancements in  technology and rising costs. Finding skilled employees who understand the latest  technology can not only be a challenge, but also these employees often come at a  high price. Upgrading systems and networks to stay competitive can also bring  extensive costs to an organization.

Read related article: Outsourcing Services Effectively

Front and Middle Office

Typically, a financial services company has three parts: front, middle and back office. The front office is the one that operates the company’s main business, for example banking or brokerage. It brings revenues and is the part customers see. The middle office meanwhile manages risks, calculates profits and in some companies, runs computers.

In-house or to Outsource? Know the difference!

Meet outsourcing Casey!

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