Benefits of Back Office Outsourcing

Back Office Outsourcing - Good or Bad?

The background to back office outsourcing

In today's business marketplace with the current economic climate there is a real drive by business owners to cut costs and increase profit margins. Many see outsourcing as a way to achieve this and the back office functions of organisations actually lend themselves readily to being transferred to specialised companies. Does it really take people on site to manage a payroll, this is one function that a lot of companies have already outsourced successfully, it is natural therefore that other back office processes come under scrutiny with a view to contracting out to professional companies

So why is outsourcing a good idea? Should I not just employ someone for each of the jobs that need doing?  The case for using an outsourcing company is a strong one as highlighted here.

The back office is the engine room that powers a business
The back office is the engine room that powers a business

The case for outsourcing

Staffing Costs
Firstly having more employees is a pain, pure and simple it’s not great, let’s face it with sick pay, holiday pay, pensions contributions, and NI payments it’s a nightmare and certainly not value for money, transferring the processes to an outsourcing company removes all those headaches, the outsourcing provider assumes all the headaches and costs of having staff making staff absence worries a thing of the past.

Fixed Cost Services
The ability to know what a service will cost for a financial year is attractive to many business owners coupled with the fact that outsourcing can actually cut costs for many businesses it is an attractive option when compared with the costs of having staff.

For most businesses their market is not about accounts, human resources, IT or any number of back office processes, to outsource payroll allows the company to focus on the core product of service. Having the whole back office outsourced including payroll and invoicing lets everyone on the staff concentrate on making the business more profitable.

Service Quality
This is an area of some disagreement amongst experts and business owners; my own view is that using a professional dedicated company provides a better quality of service than can be provided by in house teams. As the outsource service provider will be totally focused on that one task it seems logical to assume that they can provide a professional quality service. As mentioned some disagree, they believe that in house people know the quirks of the company and know the people involved in the company giving them a unique insight to providing back office support. Either way, this is a judgement call but it is unlikely to adversely affect quality.

Is Back office Outsourcing Good or Bad

Should smaller businesses consider back office outsourcing instead of employing new staff?

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The case against outsourcing

There are concerns that the outsourcing provider may not have your best practices level with regard to security of information, this is easily overcome by being particular and conducting your own due diligence in finding a provider.  Do not be tempted by ultra cheap prices from overseas if you are based in the UK and want your payroll outsourced it would be prudent to look for a UK payroll outsourcing company that will understand the local environment, laws and traditions.

The Qualifications
You may not always be aware of the quality of the staff employed by the outsourcing company, they may have a high turnover of staff and that may have a knock on effect on how efficiently they deal with your account.  Again being selective and choosing a local provider with robust systems in place should overcome this easily, a good system at your outsourcer will cancel out these concerns.

In Conclusion

There are huge benefits to be gained by taking the steps to outsource your back office processes, but like any crucial service it is extremely important to do your homework and choose a company carefully, they should be experts and recognised in their field and have a suitable Service Level Agreement for your organisation.  Remember your chosen outsource company will become your partner, you must be confident in their ability to provide you a service and their efficiency, loyalty and security.  If you do this you will have a long, successful and value for money Back Office.

Have I missed any pro's or Con's of outsourcing, Join the conversation here and let me know what you think especially from the point of view of helping smaller businesses approaching an outsourcing choice.

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Join the conversation... 2 comments

Matthew Bywater 3 years ago from Australia

I like your hub. If you want to more information about Back office outsourcing click more on

Alisa Addison 2 years ago

Thanks for sharing the post. Outsourcing back office services helps organizations to focus on core components of business, immediate access to services and technology, reduced costs and flexible resource management etc.

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