Outsourcing can be profitable and helpful. This is the primary reason this industry is growing. This option is often a great way to improve efficiency and core competencies at a minimal cost. This alternative is a great choice for the back office. It includes data entry, onboarding, human resource management, and performance analysis. Let’s see how this works.
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Outsourcing Back Office Services: Benefits
Outsourcing partners can provide a number of benefits. Here are some of the most noticeable and appreciated benefits:
1. Cost Savings
First, it is about saving money. Many entrepreneurs outsource back-office solutions in order to save money. The cost of hiring and training employees, as well as maintaining internal resources to perform data entry, analysis, management or transactions is calculated. All these things cost more than outsourcing. Deloitte found that 59% choose to outsource in order to save hundreds of dollar. Smart companies may choose to outsource their work to countries with lower labour costs, such as India or the Philippines.
2. Access to expertise
For expertise, you need to invest more money. You can expect accurate predictions only from a data analyst or qualified analyst, and not from a CEO or operator with little experience. Specialized skills are only available to a qualified person with practical experience. He is able to maintain and handle tasks with high standards. A survey by PwC found that 43% companies hire third-party companies or individuals to gain access to their expertise and skills that aren’t available internally. Outsourcing can offer a number of advantages, including access to expertise, particularly for small and medium-sized businesses (SMEs).
3. Scalability and flexibility
Scalability is closely linked to flexibility. Businesses can scale back-office operations up or down according to demand. This task doesn’t require businesses to hire or fire staff. It is especially beneficial for businesses that experience seasonal fluctuations and rapid growth. Deloitte conducted a survey and found that 57% of companies cited flexibility as a common reason for outsourcing. The agility of this type allows companies to respond quickly to changes in the market while maintaining efficiency.
4. Enhanced focus on core business activities
Outsourcing allows you to focus on strategic activities by allowing you to have more time. Consider the example of a business that outsources management to a data specialist company. It also redirected their efforts to developing a new marketing strategy or product because they had the time. The Deloitte Global Outsourcing Survey found that 49% companies outsource to save time for their core business.
5. Increased Productivity and Efficiency
By implementing the newest technologies and adopting best practices, you can improve your efficiency and productivity. McKinsey’s report confirms that companies can increase their efficiency by 10-30% by outsourcing. As a company’s efficiency increases, so does its productivity. Outsourcing specialized skills is the key to achieving more in less time for businesses and organizations.
6. Risk Mitigation
Your profitability can be affected by risks. It can also increase it, if you are prepared to deal with upcoming obstacles. Many well-known outsourcing companies follow strict risk management protocols that meet regulatory and compliance requirements. The outsourcing partner can also benefit from its geographically different location. This could have minimal disruptions. KPMG’s report indicates that 32% businesses hire virtual assistant companies to mitigate risks.
7. Access to Advanced Technology
To stay competitive, industries and organizations adopt the latest technologies and IT infrastructure. By delegating some responsibilities to these providers, you can enjoy the latest technology. They don’t have to invest much in them. This is pure savings. Gartner surveyed itself and found that 44% outsource in order to take advantage of advanced technology and tools. This is a great way to improve operational efficiency and competetiveness.
8. Improved Customer Service
Back-office jobs include all tasks that do not involve customers. This means you can handle back-end operations efficiently through this alternative. You would then have enough time to improve and revitalize front-office operations, and customer experience. Statista reported that 78% of businesses believe their customer service has improved because of outsourcing.
9. Compliance and Security
Outsourcers have specialized knowledge and certification. Certifications such as NASSCOM, for technology solutions, and ISO, for data and IT services and solutions qualify them to produce high-quality solutions. This means they are aware of the importance of sensitive data and know how to protect it. They follow them strictly. Another Deloitte survey shows that 38% outsource in order to comply with compliance and data protection laws. It can prevent hefty penalties and losses.
10. Focused Innovation
Innovation is more than just creating something new. It’s also about implementing that innovation successfully. It’s not as simple as it seems. Understanding the importance, many companies have outsourced their back-office operations, giving them more time to invest in innovation and development. They can also research and develop products that are in line with the customers’ needs. Accenture surveyed its own clients and found that 45% reported an increase in innovation due to outsourcing.
11. Reduction in Operational Costs
The cost of a project includes the investment made in infrastructure, resources, technology and equipment for back-office operations. This cost is minimized by outsourcing. All these inputs are rented out at minimal costs. Businesses can allocate resources more efficiently when they use this practice. According to the National Outsourcing Association, companies can cut their costs up to 30% by outsourcing.
12. Time Zone Advantage
Time zones can prove to be useful. Consider a situation where a Middle East-based company can accomplish its tasks in a single day with the help of a partner in Asia. It can be used to achieve faster turnaround times. McKinsey’s report has shown that time zone differences could increase operational efficiency by 20 percent.
Conclusion
It is beneficial to outsource back-office functions for many different reasons. It is beneficial to reduce the costs of a project and minimize risks. You can also invest valuable time in developing a growth and scalability strategy, while creating something that your clients want.
