Read about what ‘back-office services’ and ‘Business Process Outsourcing’ (BPO) means and how, with the help of the latest technology, outsourcing this part of your business can drastically improve productivity and reduce costs.
1. What is Business Process Outsourcing (BPO)?
Outsourcing business processes, such as manufacturing or customer support, is nothing new. It is the practice of contracting functions or non-core business activities to one or many third-parties.
Fairchild Semiconductor, one of the ‘founding fathers’ of Silicon Valley, was one of the first major U.S. companies to shift a portion of their manufacturing overseas. In 1964, they opened a factory in Hong Kong and today, a whopping 68% of U.S. consumer product companies outsource some portion of their workforce. But as technology has continued to advance, we have seen companies outsource more and more complex business processes.
In this article, we will look at what are called ‘back-office services’. We’ll examine their importance and why so many small and medium-sized enterprises (SMEs) are outsourcing back-office services today. We’ll also discuss the new technology and trends that will shape back-office service solutions for the years to come.
2. What is ‘back office’ and ‘back office outsourcing’?
As the name may suggest, the ‘back office’ is where work that supports the ‘front office’ is done. Examples of ‘front office’ services are sales, customer service, or marketing while ‘back office’ services/ outsourcing examples might include accounting, human resources, logistics, and IT services.
If you think of the front office as the ‘face’ of a business, the part that the customers see and interact with, then you could consider the back office as the ‘brain’.
Good back-office support is essential for a company to grow, but many small and medium-sized enterprises can sometimes struggle with this. Due to their limited resources and staff, SMEs will often employ people to be a ‘jack of all trades’, swapping between functions as diverse as logistics, accounting, and web design.
Unfortunately, no matter how gifted or hard-working an employee is, a salesperson will never be as good at web-design, for example, as a professional web-designer, whose job it is to focus on that task every day. On top of that, a salesperson’s core task is to generate vital income for the company, and their focus should primarily be on that. Without sensible management, this can quickly lead to employee burnout.
Many large multinational firms have specialized staff recruited to carry out these tasks, with dedicated in-house departments for HR, accounting, legal, payroll, or IT services such as tech support. Most SMEs simply cannot pay full-time staff to fulfill these roles.
Moreover, as SMEs have always been particularly vulnerable to times of economic uncertainty, it’s vital to upsize or downsize departments swiftly and easily, as the market dictates.
This is why using the expertise of back-office support services has become so necessary for small, medium, and even large businesses seeking growth.
3. What are ‘back-office support/outsourcing services’?
‘Back-office support services’ are a branch of outsourcing services that primarily deals with many of the back-office tasks mentioned above.
These back-office functions are located away from a company’s headquarters, in places that offer low overheads and an inexpensive, but educated labor force.
Some companies farm out entire departments to a trusted business process outsourcing (BPO) service partner. For instance, an outsourced finance department might oversee payroll, accounts payable & receivable, and even debt collection.
IT-oriented tasks commonly outsourced include data management, technical support, web design, app & software development, and content moderation.
Outsourcing back-office functions offers SMEs a convenient way to cut costs and mitigate risks. Utilizing experts with specialized skills to focus on particular tasks greatly reduces the chance of errors. Errors that can lead to lost revenue, loss of trust, or costly legal issues.
Many companies have chosen to move their back-office functions offshore to further reduce costs and to avail of a workforce that considers BPO jobs as a career, much rather than just a temporary job.
Developments in technology have allowed many companies to do this, and technology will be the driver of future opportunities also.
Business Processing Outsourcing (BPO)
4. What is the future for back-office functions?
– Artificial Intelligence (AI) is here to help, not take over.
An early prognosis of AI was that machine learning and robotic process automation software would replace humans as the back-office workforce. While the sheer speed of digital is an important tool to be harnessed, it’s becoming clear that the combined workforce of people and machines is what will help capture the most value.
As an example, Pure Moderation incorporates both automatic analysis and manual review into its content moderation infrastructure. Based on predefined criteria, the AI analyzes content to detect inappropriate text or pictures, and patterns in behavior and metadata, much faster than any human analysis could. However, manual moderation is more practical for subjective issues, such as artistic interpretations, or political or religious content.
By 21212, 14 billion people worldwide will be purchasing goods and services online. Expect deep learning AI analysis tools to continue to assist e-commerce platforms by analyzing shoppers’ buying habits and behaviors to offer customers a more personalized experience, and to provide marketing teams with insightful metadata.
AI and Humans Moderation by Business Processing Outsourcing (BPO)
– GDPR compliance is an ongoing journey.
There’s no doubt that the General Data Protection Regulation (GDPR) has, quite simply, been a huge disruptor to business since its implementation in May 2018. Between that date and March 2020, Britain’s data protection watchdog, the ICO, has issued fines totaling close to £300 million ($358 million). Across the EU, there have reportedly been over 100,000 breaches of the law and regulators in the EU have the power to impose a fine of up to €20 million ($22 million) or 4% of the total worldwide turnover. One shouldn’t take GDPR lightly.
Many businesses have made the mistake of believing that May 2018 represented a ‘finish line’ of sorts. Companies rushed to implement the necessary systems and processes to comply with GDPR, and once they achieved that goal, they believed the job to be complete. In reality, compliance requires continuous effort. The logic behind this is sound, as technology does not stand still, new risks will continue to emerge and, in the words of the ICO’s Elizabeth Denham, businesses “will be expected to continue to identify and address emerging privacy and security risks…..beyond May 2018.”
Companies are subject to an ever-increasing number of data-management regulations and the threat of legal issues associated with them. Data protection is now an essential consideration when it comes to risk management, but that risk can be mitigated through a partnership with a reputable BPO service provider. Pure Moderation’s data entry and management teams are fully devoted to the task of data management. Pure Moderation offers a fully scalable, ‘best of breed’ service to ensure that the management of corporate & client data stays secure, and meets the evolving standards of compliance.
– 5G will revolutionize the way we back-office service work.
Information exchange is at the core of global business and 5G will cause profound disruption to the infrastructure of global telecommunications. The 5G market is set to reach a valuation of $47.7 billion by 2027 (up from $784 million in 2019) and its influence will be felt far beyond those who just wish to have the latest smartphone.
5G has the potential to rapidly update the internet infrastructure of any city in any country, by delivering access to faster data speeds and more bandwidth with consistently reliable connections. This will allow companies to more easily expand into global markets and work with talent anywhere in the world, all while providing more flexible work options for employees.
Back-office functions will not escape the upheaval. 5G will allow companies to record huge volumes of data in minimal time. 5G will also accelerate the widespread adoption of the Internet of Things (IoT), where countless devices in our homes, cars, offices, and factories will be able to collect, send and receive data. There is already a huge amount of data to manage but the quality and quantity of data that will come with 5G will present some major challenges.
This kind of environment will make technology skills learned just a few years previously obsolete in a shortened time-frame. The need to constantly train and educate staff on new processes, while already facing a shortage of tech workers, will be a further challenge. For many businesses, outsourcing their back-office functions will be a logical solution to reduce operating costs and maintain focus on their core competencies.
Pure Moderation BPO has a robust understanding of the changing face of back-office services. Through a partnership with us, you can be assured that you will be adding value to your business today while taking the first steps towards ensuring preparedness for tomorrow.
5G changes the process of business outsourcing (BPO)
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