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How to Outsource Various Back Office Operations?

EM Admin
Jun 6, 2023
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The global business process outsourcing market is likely to exceed $525 billion by 2030 as per Grandview Research. This is simply because of its types and benefits and cutting-edge solutions.

Outsourcing back office operations should be a strategic decision and require likewise approach for businesses looking to streamline their processes, reduce costs, and focus on core activities.

Here is a comprehensive guide on how to outsource back office operations effectively:

Process of Outsourcing Back Office Operations

Here are all points covered that you need to follow for hiring a third-party expert.

1. Assess Your Needs

Before seeking any assistance via outsourcing for your business, it’s necessary to know exactly what you need. These ideas can help you.

· First and foremost, identify the specific back office functions you want to outsource,
such as data entry, bookkeeping, payroll processing, customer support, etc.

· Then, evaluate the volume of work, difficulty involved, and required skill sets for each function that you want to outsource.

2. Define Goals and Expectations

Starting with anything needs a goal to set. So you need to follow these ideas for it:

· Set clear objectives and what you expect for outsourcing, such as cost savings, improved efficiency,
scalability or access to specialized expertise.

· Thereafter, define key performance indicators (KPIs) that will help you to measure the success of the outsourcing engagement.

3. Research and Find a Professional Provider

Finding a right professional can be challenging unless you ignore these steps:

· Conduct thorough research online and in your network to find potential outsourcing providers with expertise in your industry and the required services.

· Consider truth-revealing factors such as reputation, experience, client testimonials, financial stability, infrastructure, and security measures. These can help you in discovering the right professional.

· Once found, request proposals and conduct due diligence to assess that shortlisted provider’s capabilities, cultural compatibility, and ability to meet your specific needs.

4. Define Scope and Service Level Agreements (SLAs)

Scope and SLAs, both, are important to finalize things before handing over some crucial responsibilities to an external party.

· For this, you should clearly define the scope of work, including tasks, deliverables, timelines, and quality standards.

· Draft and develop SLAs that outline performance metrics, response times, escalation procedures, and penalties for non-compliance.

· Ensure that both parties have a mutual understanding of expectations before signing the agreement, and then, formally put the signature on that formal agreement to protect your interests.

5. Transition Planning

A Transition Plan is a document that outlines the prospective things you want to achieve in the next few years and what resources or assistance you are likely to need to handle things as independently as possible.

· In this case also, develop a detailed transition plan in collaboration with the outsourcing
provider.

· Highlight key stakeholders, establish communication channels, and define roles and responsibilities during the transition phase.

· Ensure that you have provided comprehensive documentation and training materials to facilitate knowledge transfer.

6. Data Security and Confidentiality

These two points are significant, especially when you deal digitally in data and technology.

· Establish robust data security measures via IT support to protect sensitive information. This can include secure data transmission, access controls, data backup, and compliance with relevant data protection regulations.

· Strictly execute non-disclosure agreements (NDAs) and ensure the outsourcing provider follows confidentiality protocols without compromising on any sensitive thing like data and network security.

7. Communication and Collaboration

Be it offshoring or outsourcing, without interaction and coordination, it’s challenging to achieve success in an outsourced project. Therefore, ensure to follow these points:

· Establish effective communication channels like Skype or any other one to maintain regular contact with the outsourcing provider.

· Schedule periodic meetings, video conferences, or calls to discuss progress, address issues or concerns, and provide feedback always. For it, you can run C-SAT surveys also.

· Promote a collaborative relationship by encouraging open communication, sharing best practices, and seeking continuous improvement.

8. Quality Assurance

Lacking quality can fade the motive of hiring a third party professional. It’s a must-have feature in this bond. You should follow the best practices to ensure quality:

· Implement quality control processes to monitor the accuracy and timeliness of the outsourced
work.

· Conduct regular audits, review samples of completed work, and provide feedback to ensure adherence to agreed-upon standards.

· Draft a quality checkup process to make the entire data error-free with efficiency.

9. Managing Cost & Budget

The idea of hiring a third party professional is actually based on saving money and obtaining upgraded solutions. Achieving it becomes like a walkover by following these suggestions:

· Decide the amount to hire a third party professional for backend procedures, considering the type of tasks, how difficult they are, the volume, kind of services, etc.

· Make pricing strategy crystal clear, which should include the cost of additional hours and services, customization, and the possibility of innovative tasks.

· Think of introducing pay-as-you-go idea.

· Decide and schedule reviewing your pricing details, analyze the cost & leverages that you expect from the outsourcing company.

10. Frequently Regulating and Measuring

Without tracking, you cannot find out lags. This is where monitoring and evaluation come into play. For this purpose, you should follow the best ways to better data quality or whatever you seek as a service:

· Establish mechanisms for ongoing monitoring and evaluation of the outsourcing
arrangement.

· Regularly assess the performance of the outsourcing provider against agreed-upon KPIs and seek
reports.

· Seek feedback from internal stakeholders and end-users to gauge satisfaction and identify areas
for improvement.

11. Flexibility and Scalability

These are some important points that need your attention if you’re likely to hire an outsourcing company to smartly grow with your back office. These points must be assessed beforehand:

· Choose an outsourcing partner that can scale their services based on your changing needs.

· Ensure the provider has the capacity to accommodate your growth or seasonal fluctuations
in workload.

· Maintain flexibility in the outsourcing arrangement, allowing for adjustments as your business requirements evolve.

12. Exit Strategy

You should start with the ending in mind if in case it’s required. These approaches will help you to get ready for an exit from the agreement:

· Define an exit strategy in case the outsourcing arrangement does not meet your expectations or if you decide to bring the operations back in-house.

· Include termination clauses and procedures for transitioning the work smoothly to an alternative provider or internal team.

Remember, every outsourcing engagement is unique, and it’s essential to tailor the approach based on your specific requirements and circumstances. Additionally, seek legal and financial advice to ensure compliance with applicable laws and regulations during the outsourcing process.