Unlocking Shareholder Value: How to Set Up Back Office Operations Offshore
One of the drivers of economic value is correctly aligning an organization’s asset base with its operations. Increasingly, back-office outsourcing is proving to be a source of value creation for shareholders.
Back office outsourcing is an outsourcing strategy designed to reduce an organization’s expense load on office space, hiring and staff retention costs, and technology support.
The majority of back-office functions targeted for outsourcing include finance and accounting, payroll, human resources, recruitment, inventory management, logistics and IT. Typically, these outsourced functions are delivered via call centers with non-voice services.
Outsourcing back office services enable the organization to focus its resources on revenue generation and growth while tapping into a pool of expertise to deliver these support services.
Common Failings of Back Office Outsourcing
Delivering an effective outsourcing solution often involves skirting potential pitfalls. Inevitably there are some potential downsides to any outsourcing strategy, especially if you select a partner who isn’t 100 percent dedicated to delivering an agile, responsive outsourced service.
- Back office services inevitably involve working with sensitive information. In outsourcing these services, you are opening this to an outside company. You won’t have control over their information security practices, or how they are storing your data.
- Clarify your partner’s security policy and establish how they handle and dispose of sensitive information. Ask for certifications and don’t forget to interview client references. Above all else, the best way to counteract security concerns is to work with a company you can trust.
- BPO involves transferring important business processes to a third-party provider and relinquishing an element of control. While you manage your daily operations, you rely on your outsourcing provider for the smooth day-to-day running of support services.
- The best way to overcome the quality control issues is to look for a partner, not just a provider. Your outsourcing provider needs to include you in the process, work within your systems and maintain quality control as a key priority.
- Working with remote employees, even just a time zone or two away can prove frustrating. Factoring in significant time differences and different holidays that accompany outsourcing offshore inevitably results in frustrating interruptions to business.
- The upside is many BPOs provide services during U.S. office hours. Ensure your provider is flexible and can demonstrate a track record of managing potential interruptions on the fly.
- There are a few downsides to outsourcing, and with effort and a partner invested in your business, these can be overcome. Don’t allow the potential downsides of outsourcing to prevent your business from unlocking shareholder value and holding back growth. The key is finding an experienced provider who can mitigate these issues.
- Outsourcing usually involves collaborating with an offshore company to deliver your back-office support services. While this strategy can contain labor costs, it can also surface language and culture difficulties.
- If you opt for offshoring but are concerned about cultural and linguistic barriers, look for a partner with extensive international experience. Clarify the locations of their offshore sites. Some BPO countries such as the Philippines offer a similar Western culture with English language capabilities close to native speakers. Visiting the BPO’s overseas office, talking with management, and seeing the office in action, all for a better-informed outsourcing decision.
Have You Chosen the Right Outsourcing Partner?
Selecting the right outsourcing partner that matches your business needs and organizational culture can be one of the most challenging decisions organizations face today.
Back Office Pro enjoys deep expertise in partnering on outsourcing projects large and small. For more insights on our wealth of experience in selecting the right outsourcing partner for your business and its needs, visit us here
Here are some savvy tips on selecting the right offshore partner for your business:
Check Track Record
Clarify the experience your outsourcing partner has, the different industries they have supported, the different types of organizations they have as clients and the number of projects they have completed.
Ask for References
Before finalizing an outsourcing partnership, ask for your prospective offshore partner’s references. Clarify other clients experience with service quality timeliness and customer support experience.
Clarify Your Offshore Partner’s Business Objectives
Check if your business objectives and those of your outsourcing partner are aligned.
Check for Evidence of Financial Stability
Conduct your due diligence to ensure your outsourcing partner is financially secure. Research the outsourcing service provider’s directors and senior management team, together with their experience and their qualification.
Make certain you and your outsourcing partner are culturally compatible. Ensure your business partner understands your organization and your culture.
Post Development Support
Before finalizing an outsourcing agreement, establish if your partner will provide your organization with support services after the project is completed. Post-development support can assist in resolving any outstanding issues remaining after your project has been implemented.
Infrastructure and Technology
Visit your outsourcing partner’s workplace to establish if your outsourcing partner uses best-of-breed infrastructure and high-end technology. You need to understand if your offshore partner has the right infrastructure, processes, methodologies, and team to service your project.
Have You Set Up the Process Correctly?
One of the keys to delivering an effective back office outsourcing solution is to ensure it reflects both your business culture and strategic intent while being sufficiently agile to exploit opportunities as they emerge in the marketplace.
The most well-known approach to strategy and implementation as identified by the Wharton University of Pennsylvania is the classical approach. Most business schools site this example as a reminding approach to set processes to achieve the desired objectives.
The classical approaches key elements include analyzing and planning, disciplined implementation and finally following a clearly articulated plan. This approach is fine for predictable environments that are not shapeable but less effective in turbulent markets experiencing disruptive change.
An alternative approach to strategy is the adaptive approach. This approach is proving successful in highly unpredictable industries that are also not easily shapeable. Here, the competitive environment is highly volatile with continual changes in the underlying technology.
As this environment is not conducive to rigorous planning, a more biological approach is adopted. Essentially, creating variation, selecting what works, implementing then scaling it. Then, rinse and repeat the cycle once more.
How You Do Business (The Usual Approach vs. the Ideal Way)
Another way to view strategy creation is to consider emerging forms of thinking about how collaboration as a model leads to commercial success.
Constantly Reinvent Yourself
Learn from history don’t be governed by it.
Questions Can Be Overly Simple
Some questions impose a restricted framework on our thinking even before we start thinking about the answer. An expansive framework avoids conflict, breaks resistances and arrives at superior solutions.
Identity in Unity and In Diversity
A core challenge is engaging in dialogue while respecting differences. Dealing resolutely with complicated past issues and assuming a common future.
Think long-term About Legacy
Sustainability has a much broader meaning in the context of legacy. It is about sustainable relationships, sustainable finance, and sustained values. A sustainable future involves thinking longer-term.
Collaboration Is Key
Wins or losses are a narrow perspective. Instead, consider a mutual benefit. This is a different form of soft power. It involves creating and managing inter-dependency.
Ways to Fast-Track Business Growth
Everyone is looking for the magic formula to fast-tracking business growth. Scaling any business is difficult. It requires a major effort. Growth involves mastering marketing and sales, tax structures and corporate compliance and interacting daily with customers. Here are five key approaches to nurturing growth:
- Build a robust sales funnel
- Adopt a customer relationship management system, fast!
- Research your competition
- Create a sustainable customer loyalty program
- Identify a continual flow of new opportunities.
Quality Processes of Your Business
Over the previous decade, significant investments have been made in automating previously paper-intensive back-office operations. Significant progress has been achieved in shrinking the paper flow, but less effort has been devoted to ensuring back-office operations are “right-sized” and have the necessary skills to do the job on time. Even the best workflow automation system needs human oversight of the transaction process.
Best Practices to Stay on Track
- Regulatory compliance is benefiting from Artificial intelligence systems with the capability to process vast amounts of data, document searches or scanning financial transactions for signs of breaches. AI is screening for third-party risk, market manipulation, money laundering, and insider trading identifying fraud while underway as well as spotting suspicious activity patterns.
- Banks have upgraded many customer-facing, front-end operations with digital solutions. Online banking is driving consumer convenience while mobile payments are reducing the need for cash. However, financial back offices still retain thousands of people to process customer requests.
- Enjoy a single, integrated application performance monitoring tool for all your server and application monitoring needs be they end-user applications or infrastructure elements such as databases and data warehouses, application servers, middleware and messaging, web services, web servers, ERP packages, virtual systems and cloud resources.
- Today’s best of breed application performance monitoring software handles homegrown apps with custom scripts and can scale up to 50,000 applications through an Enterprise Edition.
Process training is key especially when you aim at a zero-defect delivery. Training new staff and regular training sessions for the existing team members open the scope for further refinement of the processes without fail.
Back Office Pro employs a state of the industry standard knowledge transfer model. Our client outsourcing data processing methodology includes:
Client Conference and Offer Submission
A preparatory conference, including involved parties, is held to clarify and confirm client objectives.
Resource and Operational Planning Quotation
BOP’s pricing model includes a proactive plan for providing the right resource mix, a clear implementation process and careful consideration of the client’s budget.
BOP’S data processing staff implement standard training initiatives focusing on best practices and applications.
On-Site Directives and Personal Conversion
Facilitate an orderly and efficient transition for outsourced data processing personnel; BOP employs an education-based approach to onsite training that encourages the team member participation.
Back office implementation process is illustrated in the diagram below:
BPO’s implementation methodology also incorporates extensive trials and mock-ups of the outsourced service solution.
What KPIs Are Set
As part of BPO’s implementation strategy, key KPIs are set and agreed upon for a long-term engagement.
How KPIs Are Set for Long-Term Engagement
With workforce productivity currently, top of mind in every company, the absence of consistent, simple measures of back-office efficiency remains a mystery. Most business unit leaders continue to evaluate their staff using personal metrics rather than rigorous Key Performance Indicators.
Before businesses can drive systemic productivity in their back offices, they need to understand how to measure performance
Here are five KPIs, which will provide granular insights into the performance of back-office departments:
How much time are your back-office team spending and are they working on the right task at the right time? A solid rating for this KPI is 84 percent.
BOP’s pricing model includes a proactive plan for providing the right resource mix, a clear implementation process and careful consideration of the client’s budget.
Case Reopen Rate
If growing demand creates a backlog, how often existing cases are reopened is a solid productivity indicator. This KPI will help identify the types of cases requiring additional processing, together with which employees need additional training.
Case Completion Rate
If your back-office teams are lagging, your customer satisfaction score can decline. Track the percentage of cases completed each day, correctly and on time. These numbers can then be compared to your backlog and indicate if changes are needed.
Case Quality Score
Maintaining customer satisfaction is a key goal. Monitor individual customer cases for quality purposes and score them against a standard for customer satisfaction.
Are your KPIs in place? Or are you still relying on rudimentary metrics that don’t provide an accurate insight into the experience of your typical customer that contributes the majority of your organization’s revenue?
Effective KPIs For Content Marketing
Now your business has identified its objectives and timeframes for its back-office outsourcing project; you are in a position to break down your KPIs into different categories.
This enables you to compare different channels to assess where you’re experiencing the highest growth rates.
Content marketing is a key factor in marketing in today’s digital environment. Compelling content allows customers to feel in control of their purchase decisions. It’s a critical element in your customer’s journey, irrespective of industry.
Back office operations require computers, printers, lifts, electricity, and paper which all contributes to their carbon footprint. A single business process outsourcing company can service back-office operations for multiple companies from one location greatly reducing carbon emissions. Otherwise, each company has to support their processes at their own locations burning more resources. Simply review your back-office electricity bill and consider how much carbon your office is unknowingly emitting.
Outsourcing selected back-office operations can make a valuable contribution to your organization’s corporate strategy. To manage your time and resources more efficiently when outsourcing your back-office operations, it is important to have clear goals and select the right vendor. Here are ten tips that will help you deliver through enhanced quality reporting:
Clarify your outsourcing goals
Demand vendor offer holistic solutions
Assess vendor infrastructure
Review vendor regulatory compliance
Evaluate Service Level Agreements
What customer support does the vendor provide?
Does the vendor prioritize transparent communications?
Does the vendor offer customized back office solutions?
Mandate routine quality reports
Conduct audits and continually measure ROI
Partnering with The Right Vendor Drives Business Success
A successful back office outsourcing project is dependent on many factors for success including the vendor’s overall expertise, their infrastructure and their skill in providing a holistic solution.
However, much also depends on a business’s ability to screen potential outsourcing vendors to select an efficient vendor and instituting transparent communications between client and vendor.
Businesses need to juggle myriad objectives simultaneously to be successful. This involves adding shareholder value by optimizing financial performance; ensuring regulatory compliance and tracking the rapidly evolving needs of customers. A productive back office plays a pivotal role in ensuring an organization’s ability to deliver these outcomes.
Measuring Back Office Processes
Why It Is Important to Measure Back Office Operations
Streamlined, efficient back office operation provides the backbone for the organization.
Core back-office functions include managing HR, payroll, finance and accounting, I.T, data entry, and administration.
Effective back-office operations contribute to the company’s productivity and cost-effectiveness
An effective back office delivers reliable customer service
A back office manages the security of data and information and streamlines data operations helping to improve business process efficiency and tracking resources allocation efficiencies and identifying opportunities for improvement
Back office operations support line units in strategizing on ways to optimize the organization’s resources.
There is always a flow of data, information and advice from the back office to the front office to support revenue driving initiatives and sales operations.
How to Measure
Forecasting and Scheduling
Forecasting and scheduling can be enhanced and streamlined by continually reviewing and updating inputs. Continually assess the inputs into your forecast for accuracy and relevance.
Periodically, review your underlying assumptions and algorithms to help ensure they still align with the changing needs of your business.
Understand what the outputs are telling you. Identify the financial impacts of your KPIs and how to communicate the impact of changes on these to your key stakeholders.
Continually analyze incoming events and trends on a rolling basis. Are more steps being automated, speeding up handling and processing times?
You should be able to analyze the day-to-day reports and mark special events in your forecasting model. This approach provides context to anomalies as they appear enabling your business to be better prepared for similar instances in the future.
Organizations have long been focused on driving the efficiency and continual performance of their customer-facing operations. Until recent years, a major barrier to achieving more effective back-office performance management has been the prevalence of multiple, disparate information systems that generate operational insights into key efficiency and customer satisfaction areas.
However, new solutions enable organizations to unify business-critical processes and surface the information needed for performance analysis and informed decision-making.
Corrective Action and Continuous Improvement
Conventional wisdom says, if you identify the best players, implement the clearest strategy, measure continuously and monitor key milestones, your team will win and win big. This philosophy should be equally applicable to creating a world-class IT organization.
However, picking top IT talent is proving increasingly difficult as the needs of the marketplace become more fluid and decision-making becomes increasingly compressed.
This is especially so in high demand, highly mobile workforce. One answer may be “Strategic Staff Augmentation.” This is a dynamic, innovative IT workforce strategy designed to align senior level IT staging with an enterprise’s strategic intent.
Strategic staff augmentation adds the added effectiveness and flexibility of an on-demand advanced IT skills workforce to a department’s in-house staff. As mission-critical IT projects prove too sensitive to outsource, strategic staff augmentation is a viable alternative to “total solutions” vendors.
Enterprises that enjoy preferential access to critical professional resource skill sets will possess a decisive competitive advantage.
Creates “learning clips” from recorded interactions and facilitating online training. This significantly reduces instances of downtime, improving both learning outcomes and individual and team productivity.
Successful lesson management provides staff with access and complete training all from their desks. This drives productivity while minimizing staff downtime and disruption to daily workloads.
KPI scorecards measure individual staff performance against predefined KPIs. Organizations are adopting KPIs to evaluate their success at delivering on targets across the enterprise.
Selecting the right KPIs for your organization depends on your industry and the business unit you are tracking. Each department will employ different KPIs to measure success based on their unit’s business goals and targets.
Once the organization has chosen a set of KPIs, these should be tracked via a real-time reporting tool using dashboard software, to provide the entire organization with transparent insights into each business unit’s performance.
Maximizing Outsourcing Benefits Via Continuous Process Measurement, Process Evaluation, and Timely Interventions
Outsourcing has evolved into a proven, well-established business model. Small companies now routinely outsource functions such as payroll processing, accounting, and distribution to close capability gaps. Major enterprises adopt outsourcing to manage costs.
There is now a highly capable outsourcing industry serving a diverse client base across a spectrum of outsourcing pain points.
However, few businesses thoroughly understand all the benefits of outsourcing. Not all functions benefit from being outsourced and are better being kept in-house. Smart outsourcing, however, delivers a host of long-term benefits including:
Control capital costs
Reduce labor expenses
Rapid project deployment
Focus on your core business
Level the playing field
Back Office Pro as an Ultimate Outsourcing Destination
Being in the industry for over a decade, Back Office Pro has an experienced team with subject matter experts to deal with complex outsourcing projects. BOP is a one-stop destination for outsourcing requirements with ISO standard quality processes, information privacy, and provides 100 percent commitment to delivery timelines.
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