Any business that wants to remain competitive and profitable in the modern economy needs efficient and affordable back office services.
Put simply, front office functions, like sales and service delivery, can not operate without effective back office support. And when the performance of these client facing, income generating roles suffers, company revenue can drop dramatically.
The challenge is, in the current economy of skyrocketing commercial real-estate costs, record inflation, worker shortages, and rising wages—back office services are becoming unaffordable in many countries.
But there is a solution: Back office service outsourcing.
By outsourcing back office services, businesses in countries with high labor and real estate costs can become more efficient, competitive, and profitable.
What Is Back Office?
The back office meaning originated from the layout early businesses used for their office design.
When most people attended in person to make transactions, office locations would be separated into a front portion of staff that dealt directly with clients, and a back section (the back office) that supported customer facing staff and overall business operations. The back office was generally not visible to customers.
While the layout and operations of companies have changed a lot since the phrase was first adopted, the term “back office” is still used to describe several important business operations in the modern commercial environment.
The Difference Between Front and Back Office
Even though business is now less reliant on customers attending physical locations, a big difference remains between front and back office operations.
Front office is the portion of a company that has the most direct contact with clients. Exact roles vary by industry. But they are usually positions like:
- Sales and customer service
- Technical experts who personally interact with customers.
Back office describes the roles that support front office staff to operate efficiently while keeping the background business process running smoothly. If you are wondering about what is back office work, it often involves:
- Information technology (IT)
- Billing and accounting
- Record keeping and maintenance
Front office typically generates most of a company’s revenue. But to be successful and efficient, front office staff needs the support of back office staff.
How the Back Office Works
Back office duties and responsibilities are often grouped into roles labeled as “Operations”. Overall, the back office keeps a business running smoothly by looking after things like order fulfillment, payment processing, regulatory compliance, resource management, security, and much more.
Without a well-functioning back office, even if front office staff can bring in customers, inefficient business processes would make profitability and customer retention challenging.
Different Types of Back-Office Solutions
While back-office solutions and priorities will vary by industry, there are many common functions that any business needs. We’ll cover several of these below.
All industries have several administrative functions that can be successfully outsourced to a back office solutions provider.
Payroll and HR
Human resources (or HR) professionals assist with recruiting, interviewing, and onboarding new staff. They also ensure that essential administrative functions like payroll, employee benefits, and employment contracts are handled properly. In many organizations, HR manages communication between the employer and employees, including managing disputes or conflicts.
Data Systems and IT
In today’s digital age, all businesses require robust information technology (IT) and data management systems. Staff working in these areas maintain websites and business software applications, oversee the collection and management of customer and business data, and help troubleshoot any technology related concerns throughout an organization.
Depending on need and preference, back office solutions providers can handle both technical and less specialized legal tasks. Often, businesses outsource legal tasks like document and contract creation or review, legal research, and transcribing documents.
Risk Management and Compliance
Compliance is a big concern for organizations operating in highly regulated industries. Back office staff ensure your business is complying with all relevant laws and regulations. Fraud detection services focus on areas like the misappropriation of company funds. While risk management is concerned with identifying and mitigating potential threats to business operations.
Supply Chain and Procurement
Most businesses need to purchase goods and services to support their operations. Back office solutions help to develop processes and procedures to streamline procurement. This is very important, as it can help to reduce costs and minimize operational delays due to product or service shortages.
Accounting and Financial Management
Every business needs general finance and accounting services. Bookkeeping, managing accounts payable, and reporting are examples of general functions. While medical billing, resource management, and financial analysis and modeling are more complicated functions.
Customer Support Processes
After the initial sale, many customer support functions are managed by back office services.
There is no better way to improve customer satisfaction and customer retention than delivering their order as soon as possible after it is placed. Developing an ongoing process for managing inventory, coordinating shipping, and tracking lost parcels are central roles in order fulfillment.
Providing customers with flexible, seamless, and affordable options for payment processing can support front-office staff to make sales. Optimizing transaction processing can help maintain cash flow and reduce costs associated with financial transactions.
Many aspects of business functions rely on the accurate collection of customer data into well-designed documents. This helps keep track of interactions with customers and can streamline personalized written communication before and after a sale.
By nurturing existing client relationships, companies can maximize customer retention and lifetime value. Back office staff can maintain contact with current clients to troubleshoot any problems that come up to maintain customer loyalty and trust.
Many businesses choose to outsource certain aspects of client communication and customer service to a back office services provider. A client services representative might answer client questions, renew contracts, and update customers on developments in the business, including new product or service offerings.
When there is a dispute between a customer and a company, a back office solutions provider can be a great approach because they can offer impartial mediation or arbitration. If needed, they can also be engaged by a company to pursue litigation or collections activities.
Once the sales and marketing team have done their job of obtaining a new customer, back office outsourcing services can help free them up to focus on more growth through handling customer onboarding. Customer onboarding involves welcoming a new client to the business, providing essential information, and helping with any initial tasks or queries.
Back-Office Functions for Specific Industries
Back-office definition can vary greatly for each industry. Here are a few examples of what is back office support for industry-specific solutions.
Insurance Claims and Underwriting
To maximize efficiency, most insurance agencies outsource tasks associated with the assessing and processing of claims. This might involve gathering paperwork, asking customers for necessary information, and checking the validity of the claim. Underwriting services can also be provided by back office solutions, to assess the risk level of offering coverage to certain businesses and individuals.
Finance and Mortgage Businesses
There is a lot of paperwork that needs to be completed to process and finalize a loan or mortgage. To reduce costs and increase efficiency, back office solutions can assist clients with filling out application forms, submitting required documents, and choosing from a company’s suite of lending products and services.
Credit Card Processing
Every business needs to offer their customers credit card processing, but processing fees can add up. Also, any problems with credit card authorizations or processing can impact a business’s ability to make sales. Back office solutions can offer a greater range of credit card processing services than mainstream providers, often at lower costs and with greater reliability.
Field Servicing Capabilities
Many service based companies require field staff to attend to matters off-site from company locations. For example, internet service providers and utility companies must be able to respond quickly to service interruptions for commercial and residential customers. By utilizing back office solutions, a company can provide excellent customer service, without the big expense of additional in-house staff.
Example of Back-Office
Due to ongoing staff shortages, physician burnout, and increased competition in the sector, healthcare businesses are increasingly relying on back office roles to remain efficient and profitable.
To help understand what back office work means, here are 10 roles in the medical sector that can be outsourced to a back office service provider:
- Medical billing and coding
- Medical transcription services
- Revenue cycle management
- Claims adjustment and adjudication
- Virtual assistants for clinical staff
- Office administration
- Insurance eligibility verification
- Patient records management
- Document scanning and data entry
- IT support
With outsourced back office solutions, many healthcare businesses can free up valuable physician time to be redirected to revenue-generating activities. It can also improve staff satisfaction and well-being, by reducing the administrative burden on clinical employees.
Benefits of Outsourcing Back Office Services
While back office functions can be performed by in-house employees, the cost and time burden of managing a full complement of back office staff are not viable for most businesses. In the global market, outsourced back office solutions are an important tool for companies to remain competitive.
There’s no getting around the fact that back office services can be costly. Sure, a great back office team can help front office staff be more efficient and bring in more revenue. But if all that is spent on increased labor costs, a company’s profitability will start to suffer.
Smart businesses are now realizing that by leveraging technology, geo-arbitrage, and back office solutions outsourcing—they can have a full back office team at a fraction of the cost of employing staff locally.
The success of most businesses depends on front office staff having the ability to find new customers and grow the company’s client base. In addition, high-value technical staff within the company need to be free to engage in revenue generating activity, and not be caught up with administrative tasks and non-billable work.
When businesses outsource back office services, the productivity of front office teams can dramatically increase, because they are no longer occupied with non-income earning tasks.
Obtain Specialized Talent
Sometimes businesses need specialized talent that is not available in their location. Or if it is, because of scarce resources and competition, local talent is excessively costly. In this situation, outsourcing back office services can be a perfect solution.
Many tasks, such as software development, engineering, accounting, and graphic design can be sourced from anywhere in the world, at a fraction of the cost of local talent.
Challenges Of Outsourcing Back Office Services?
For outsourced back office services to work, the outsourced staff must be able to work effectively with the front office team.
The top challenges with outsourcing back office services are:
- Concerns around security and confidentiality
- Issues with quality
- Communication challenges
- A lack of collaboration
Fortunately, all of these problems can be overcome by choosing a high-quality outsourced back office solutions provider.
A good back-office service provider will have protocols in place for securely handling sensitive information, will employ fully-qualified staff to perform assigned tasks, uses a synchronous database, and can effectively communicate with staff at all levels of the organization.
Why Do Businesses Choose To Outsource Back Office Services?
There are many reasons businesses choose to outsource back office services, but most center around three main areas:
- Back office services can be complex. Tasks like financial analysis, payroll, IT, insurance, and compliance can entail complicated processes that if done wrong—can lead to disastrous consequences.
- Back office services are time consuming. Dealing with recruiting and interviewing, compliance related data entry, and managing customer accounts is very time consuming, which can divert valuable internal resources.
- Reduced ongoing employee liability. For a company to take on an internal employee is a big operational cost. Even after recruiting, there is training, onboarding, and performance management to worry about. With back office services outsourcing, businesses can get assistance only for the time they need, with no ongoing obligation to keep permanent employees.
How Much Do Back Office Outsourcing Services Cost?
There is no single price for back office outsourcing costs. The exact amount a company pays is determined by the services the business needs, the frequency and intensity of service, and what level of technical expertise is requested. The location of outsourced back office staff can also factor into the cost.
As a guide, outsourced back office roles and responsibilities generally cost between 30-50% of bringing local talent in-house.
Keep in mind, when you use outsourced back office solutions there is no additional cost to the business for:
- Staff benefits and training costs
- Office and parking space
- Hardware, IT, and computer equipment
- Training and supervising time
How Pharmbills Can Help
At Pharmbills, we can provide the full range of outsourced back office solutions, such as accounts management, data analysis and entry, customer service, HR, tech support, medical administration and billing, real estate management, bookkeeping, and more.
We have an efficient five-step process to ensure easy setup, collaboration and swift, long-lasting results:
- Sign on with Pharmbills
- Select your customized team
- Sync up IT infrastructure
- Integrate with your team
- Monitor performance
While the back office doesn’t generally interact directly with clients, a well-functioning back office supports many functions of a business that are essential for success.
The back office manages vital functions like HR, payroll, IT, procurement, administration, and data entry. It also helps free up and support valuable front office staff, so they can operate more effectively to bring in more customers and revenue.
The challenge is, however, back office services can be complicated and expensive.
Not all business owners are in the financial position to take on additional long-term staff. And even when they are, staff shortages mean that local talent with the necessary skills isn’t always available.
But there is a solution—outsourced back office solutions.
By leveraging technological advances and global variations in labor costs, businesses can outsource general and technical back office solutions for a fraction of the cost of hiring local employees.
In the current global market, the decreased costs and increased efficiency of back office services can help forward-thinking companies increase productivity and profitability, while staying one step ahead of the competition.