Back office functions offer different businesses a convenient way to cut costs and to delegate some of their non-core tasks to business process outsourcing companies.
Small and medium-sized enterprises (SMEs) are said to benefit the most from different outsourcing activities due to their limited resources. Back office functions such as payroll processing, data management, and human resources services offer them access to specialized skills and expertise while giving their employees enough time to refocus on value-generating initiatives.
However, outsourcing back office functions should always be grounded on a structured approach — from planning to management. Without sufficient preparation and planning, outsourcing projects can fail and may even cause damages to a business’ bottom line.
In this article, I enumerated the key points every business owners like you should remember as you plan to outsource back office functions. I divided it into three categories: the planning, execution, and management stages.
Stage 1: Planning
It is easy to think of outsourcing services, especially when you observe daily silent grumbles from your staff due to piles of workload. The same goes when you have difficulty in making the ends meet due to the limited resources that you have.
However, getting into the actual planning stage is easier said than done. There’s a lot to consider, particularly when it is your first time to outsource services. Is outsourcing really the best solution? Will this work? How will my business benefit from this?
To help you get through this stage, here are some things that you need to do:
1. Discuss your outsourcing plans to your employees. Building and strengthening a business requires collaboration from everyone. It is particularly important when you are making a crucial decision where your business is at stake. Thus, it is important to involve your team when you are planning to outsource services. Gather insights from each one of them. Encourage them to express their opinions without holding back. At the same time, you should also state why you think your business needs to take this step in order for them to understand your decision and intentions.
2. Determine which tasks should be outsourced. Find out which among the regular tasks are considered as productivity-stealer but don’t bring much contribution in increasing the value of your business. You might also consider outsourcing tasks that require specialized expertise not readily available in-house. Most importantly, determine how outsourcing will affect your current work processes.
3. Consider the long-term gains of outsourcing. Outsourcing is not a spur of the moment decision that you take simply because you feel frustrated of the volume of work you are doing. More than anything else, you should think of the long-term effects of taking this step. You should also keep in mind that outsourcing is not only a mere cost-cutting tool but a partner that can assist your business in achieving success.
4. Explore the options carefully. Start small. Produce a comprehensive list of outsourcing companies that offers the service you are looking for. Evaluate each candidate based on their quality of service, outputs, experience, and range of services, track record, service cost, contract options, testimonials, and projects they have previously handled. When it is your first time to outsource, it is better if you will begin outsourcing minor tasks instead of jumping into major, core tasks. This way, you can minimize the risks and at the same time, find out if outsourcing works for you.
Stage 2: Execution
When handing some of your back office functions to a third party, there are some things that you need to remember to ensure a smooth transition in your business operations.
1. Employ a two-way transition plan. Creating a transition plan is crucial to the success of outsourcing. In this stage, you are going to handle over knowledge and work to another party. However, it needs to be a collaborative work between you and the BPO company that you have chosen. This way, both parties can discuss specific needs, identify areas that need focus and improvement, and the potential risks involved in the project.
2. Develop an effective governance process. This is to ensure that your standards and procedures are followed accordingly. Having an effective governance process guarantees that none of the work processes you have entrusted to a third party is compromised.
3. Produce a well-laid out plan in managing the commercial, legal, and financial risks of outsourcing. When outsourcing, you need to be prepared for the worst. This way, you can mitigate the risks your business can face. Determine what those risks are and create a plan that can counterattack it once any of it happens.
4. Whenever possible, deal with a single outsourcing company. If you will be outsourcing more than one back office function, it is better if you will work with a single BPO company. This method creates a more seamless experience. Dealing with a single partner allows you to oversee their performance easier. Look for a back office functions provider that has a breadth of expertise in all back office jobs that they offer.
Stage 3: Supervision
Back office outsourcing is an ongoing process. It doesn’t end just because you have transitioned successfully. To make outsourcing work for you and your partner, you should treat it as an ongoing relationship rather than a fleeting transaction.
1. Keep your communication lines open. Like any kind of relationship, communication is important to make sure that everything is going according to plan. Encourage your outsourcing partner to share if there’s a problem so both of you can find solutions before it gets worse.
2. Maintain positive relationship with outsourcing partner. Your outsourcing partner is your partner for growth. If you show them that working for you don’t only benefit you but also their organization, it will inspire them to provide you with better service.
3. Regularly monitor the performance of your outsourcing partner. Does your BPO partner meet all your standards? Are there any issues regarding their performance? How does it affect your in-house functions? What are its contributions to your business growth?
It is already a given that outsourcing is used by many businesses as a cost-cutting tool. However, you should not expect to see immediate hard cost savings. The results will show itself along with time.
The key points mentioned in this article are only some of the things that you need to remember when outsourcing. Depending on your needs and the sensitivity of back office functions that you are planning to delegate, you can also craft your own plan and considerations. Choose what is good for your business.