What is Back Office BPO (Business Process Outsourcing)?
Back Office BPO is an example of a clever shortcut where a company passes certain assignments or tasks - let's say payment processing - on to a service provider. It's a sub-category of Business Process Outsourcing, focusing on back-office functions completed on the company's behalf that don't include customer contact; such as data-entry, accounting, finance, or IT support. All are examples of the functions that aren't glamorous, but help keep the wheels turning for an organization day-to-day. Organizations from telecoms to healthcare, real estate, and government offices, rely on Back Office BPO to fill a gap and build the capacity of the organization.
Back Office Business Process Outsourcing
Let’s take a look at the key offerings that Back Office BPO has to offer:
Data Management and Administration
That takes the back-end administration and makes it easy—whether you want to code in manual data entry, form processing, or claims processing. With a strong emphasis on ethics and data security, it creates the groundwork for front-end groups to and support audacious, big thinking strategies.
IT Support
That shifts non-customer facing IT functions to professionals handling any software issues, keeping hardware running, securing networks, or developing backup and recovery strategies. IT experts use ticketing systems and run all the non-customer facing IT work through Level 1 or 2 escalation levels to streamline and manage the process in a way that ensures success and minimal disruption.
Finance and Accounts
That puts all finance and accounting responsibilities in the hands of professionals who manage technology and ensure compliance, produce financial reports, maintain accounts payables and receivables, budgets, forecasts, and audits. You will not find a better combination of accuracy and support.
Advantages of Back Office BPO
The outsourcing company, and service provider win win either way, onshore or offshore based on their objectives and areas of expertise.
To The Company
With Back Office BPO, in-house costs are beaten through savings on wages, infrastructure and equipment. Savings onshore range between 20% and 25%, whereas savings offshore could be realized of 40% to 60% based on localization and tasks. Then, there is access to quality talent, improved accuracy, the ability to scale during high volume or growth periods, minimal compliance and process complexities, and disaster recovery backup - this is just pure bonus!
To The Service Provider
On-time deliveries improve the service provider's reputation, and create multi-year contracts generating dependable income. Options for flexibility lead the service provider to F&A or HR - increasing service level offerings and return on assets. Building trust creates loyalty and client referrals, and offshore service providers benefit from currency advantages and international market reach. Onshore service providers separate themselves based on time, accuracy and duties performed in compliance with regulations.
Revenue generation model in Back Office BPO
Back Office BPO produces money for both sides. Here is their profit model:
Company
Companies convert savings to wins, generating savings of 30% to 35% for onshore workforce costs and 50% to 60% for offshore workforce costs, as well as 65%-70% on IT and infrastructure savings, by location and complexity. There are no hiring and training costs for a provider because the provider is now in charge. Leadership can now work on strategy and push productivity up 15% to 25%.
service provider
Savings for the service provider become profit through service fees or recurring costs. Revenue will become savings we pay to cover payroll, technology, training, and company assets. Some of the costs are fixed, and other costs are spread over each process, allowing for variable payment to follow a SLA’s, usually some fixed per-seat price or hourly performance based rate. The value of the relationship with the client helps, having good relationships with clients unlocks the ability for referrals and cross selling; it helps them improve their global brand might.
Human Capital Inputs
Making Back Office BPO successful needs the right team on both sides. Here is who is involved:
Company
A team is required for the company-service provider relationship. After reviewing some marketing materials, experienced staff will manage all third party contracts. Another small team will field any questions submitted daily. Further, part of the accounts team, or perhaps the whole accounts team will manage all invoices. The relationship can grow if kept growing by segment leads, senior staff, or other relevant stakeholders.
Service Provider
Similarly, the staffing will depend on the tasks and objectives. If they were to manage data collection or data management, then the following roles would be required: data entry operators, team leads, quality analyst, operations manager, and HR and administrator support if deemed necessary. Each segment may have department heads, staff and volunteers that can manage teams, or spend time getting to know clients, and a combination of managing internal resources to achieve desired deliverables.
Take Away
To sum it all up, Back Office BPO represents a true value creation value proposition, where skilled and talented people are employed to reconstruct economies at home and abroad.