Outsourcing Back Office Operations

While cost reduction and labor arbitrage are certainly a part of outsourcing's allure for some corporations, it's worth noting that the practice originated as a means of helping organizations focus on core activities amid corporate expansion instead of utilizing existing, higher value employees to administer to operational tasks. Nowhere was this need more evident than in the operations that collectively constituted the "back office."

Back Office Outsourcing

The term "back office" comes from the original layout of a traditional business where the "front office" handled revenue-generating activities such as sales and customer service, while the back offices were reserved for operations that served a critical administrative role such as accounting, information technology and more. Today, with the rise the of the e-commerce industry, back office operations have expanded to include processes like photo retouching, content moderation and more, but the principle remains the same.

Why The Back Office Matters

In the past, the assumption was that back office operations did not directly impact revenue, but in the Age of the Customer, it's not as simple. In today's environment, customers want seamless experiences - and they want it now. Any disruption or impediment to an experience risks earning their wrath, which means a faulty billing system, labyrinthine customer support process or poorly presented images or content on a website can all degrade their impression of a company.

Presented with this context, operations like accounting, billing, content moderation, photo retouching and data entry are no longer tasks that live under the proverbial rock: they're an essential component of delivering an exceptional experience and a hallmark of companies who utilize an 'outside in' - or customer-centric - approach.

Making every operation failure proof is probably enough to overwhelm even the most proficient of operations professionals, not to mention impossible. It's simply not feasible to ensure that an internal team can achieve operational excellence across every aspect of an organization. Adding headcount to achieve this capability may be a great way to expand operational teams, but it is not an intelligent way to scale.

This is where outsourcing back office operations can be helpful.

What Back Office Operations Should You Outsource?

If you're new to the concept of outsourcing back office operations, you may not know what - if anything - you should outsource. If that's the case, chances are you need to take another look at your existing operations, as well as your company's trajectory.

Outsourcing can be used for a number of reasons, but if you're considering outsourcing a back office process, check to see if the task or process you want to delegate meets the following criteria:

You don't have the resources to do it yourself: If you don't have enough manpower to manage a process and can't afford to hire for it, outsourcing is a good option. That's especially true if you're compensating by using the wrong resources - a software engineer to retouch photos instead of deploy code, for example - to manage.

You don't have the know-how to do it well: Not every businesses can afford to hire specialists for every task. If that's the case, outsourcing is a good bet. You'll get experts who hit the ground running and know what to do.

You don't have the experience with the process at all: Outsourcing doesn't have to be a long-term solution. You may not know how to run a back office operation like cleansing your CRM data, but a good outsourcing partner may be able to show you how so that you can give yourself the option of getting the job done and learning how to do it for the long run.

Trying to manage the process internally will actually hurt you: Back office operations may seem like trivial tasks because they can often be mundane but the opposite is true. Processing invoices or retouching photos, for example, may seem insignificant but remember that even poor product photos or badly moderated content can have an impact on your reputation and bottom line.

Are You Ready to Outsource Your Back Office?

Delegating the tasks you don't want to do anymore can sound like a dream come true, but it would be disingenuous to oversimplify the process in this way. Outsourcing your back office operations is an effective tool -- it certainly has helped TaskUs clients scale effectively -- but it can be destructive if you don't have a strategy in place.

Defining what you want to accomplish with outsourcing is as important as finding the right partner. Without a plan for outsourcing and how to account for it and manage your responsibilities (as well as your outsourcing partner) you're more likely to create work for yourself or set the stage for unrealistic expectations.

Before you begin any kind of outsourcing activity, think about what you want to achieve. Ask yourself how you can use outsourcing to make yourself more effective, not just reduce costs. Your goal should be to use outsourcing to build a foundation for effective and meaningful growth, not just pinch pennies. Ultimately a strategy of this nature will ensure that you deliver value to your customers by effectively managing operating the back office.

Michael Buenaventura

April 22, 2014