The back office outsourcing market in the United States grew with an impressive CAGR of 7.6%. Banking, Finance, and Information Technology contribute over 40% to the back office market. With the technological advancements and organizations going hi-tech, industry experts were skeptical about the growth of the back-office market but with Fintech, e-commerce, and cloud-based product expansion, their fears have turned futile.
To enable quality customer experience and hassle-free engagement, enterprises are relying on the back office industry. The industry players are helping banks and other financial organizations with smooth onboarding, verification, and even debt management.
Outsourcing Back Office Operations: A Necessity or Sheer Helplessness?
80% of organizations see their relation with outsourcing companies through a positive spectrum. An impressive number of industry leaders view outsourcing as a pillar of success for bigger organizations. Outsourcing initially was leveraged to increase the pace of services provided by enterprises. Automobile organizations used outsourcing to improve the speed of assembly similarly banks used back-office services to reduce burn on core employee base.
Today outsourcing is no more an option but a necessity, it brings to table expertise skills, innovative opportunities, and features that can help organizations speed past their contemporaries.
Telecom, Fintech, and Cab aggregators are relying heavily on back-office service providers to speed up the process of customer onboarding, verification, and management. Be it KYC, AMC, or data protection, back-office service providers are proving to be beneficial.
What Are The Common Back Office Operation Trends?
The increased penetration of the Internet acquired eyeballs of hackers, which led to some of the most heinous data crimes. Billions of dollars were lost, millions of users were compromised and even children were put online because of compliance failure. After the mishap, organizations started building their in-house teams to support back-office operations but then it added to the overall cost and made services/products expensive.
Back office industry leaders decided to mend the reputation first by getting compliant and then by innovating. Today, outsourcing enterprises are PCI DSS, HIPPA, and ISO compliant are constantly upskilling to offer tailored support to all kinds of businesses.
Some Of The Latest Back Office Trends
Artificial Intelligence and Machine Learning: Fintech penetration has increased from 5% in 2016 to 65% in 2019. The industry has grown 200% over every two years. The biggest dilemma, Fintech start-ups faced was related to faster onboarding of customers.
Outsourcing organizations leveraged artificial intelligence to verify customers’ documents almost instantly and make their accounts ready to use, almost instantly. An AI-enabled system urges customers to upload their documents and click selfies. Once the documents and photographs are uploaded, the system matches the document with a government database and runs a scan on the photo and verifies it with the photo on the ID provided. All these steps take place within seconds, which helps customers start using their online banks almost instantly.
Machine Learning on the other hand identifies errors and attempts of attacks. Intelligence helps the system provide feedback to developers. Machine learning plays a crucial role in identifying patterns customers rely on to make their journey simpler and fun.
Tailored Outsourcing: One of the best ways to understand tailored outsourcing is to look at how e-commerce organizations have leveraged to the power of outsourcing to stop fraud by customers.
A good number of customers were ordering genuine products online and returning imitated products, which was leading to immense loss of funds to both sellers as well as marketplaces. Outsourcing agencies developed skillset, where they train their employees to identify whether the product being returned is genuine or not. The pickup guy relies on a set of provided guidelines to run a check at the time of pickup. This small change in training helps e-commerce players reduce loss by a substantial amount.
Technology Adoption: Robotic Process Automation is undoubtedly the most accurate example of increased penetration of technology in outsourcing. Technology adoption is helping mainstream organizations reduce the scope of error or attempts of internal sabotage. With increasing tech penetration, businesses are getting secure and fast.
Things To Consider Before Outsourcing Back Office Processes
In the past, organizations have suffered losses and experience data breaches just because they relied on a not-so-secure back officer service provider. Here’s a checklist that will help you identify and onboard a worthy partner
- Cost-Effective: Well! Back office operations came into existence because of their cost-effectiveness. These organizations have a pool of trained employees who take up your repetitive processes and complete them with their industry expertise.
- Compliant: If you are a healthcare organization then your back office service provider must furnish HIPAA compliance but if you are an e-commerce platform then PCI DSS is a necessity for your third-party service providers. All these compliances are required to ensure the protection of users’ detail.
- Up-scaling Ability: Fintech, E-commerce, and Logistics are among the fastest growing industries. Together these sectors are changing the way people buy things, pay for it, and receive the purchased goods. Most of these enterprises are running on seed funds and receive VC funds only after registering a substantial growth. To focus on core processes, these industries outsource processes and once they are funded by VCs, they expand and look to have bigger teams. Your outsourcing partner must be equipped with skills to instantly upgrade their workforce to suit your business scalability requirements.
- Customer-Centric: All the modern-day start-ups have successfully disrupted saturated sectors because they focused on customers. Be it e-commerce, cab, or hotel aggregators, all of them focused on helping customers have a memorable experience. Your back-office support team needs to be customer-centric too. When outsourcing customer support, social media management, or marketing, you need to ensure that your partners are focused on helping customers have a smooth ride.
Most Outsourced Back Office Operations
Earlier, organizations rarely outsourced processes owing to fear of compromising with data security. Today compliances have rendered all such challenges obsolete, organizations are now confident with outsourcing and it is helping them up-scale at an incomparable rate.
Commonly Outsourced Back-office Operations are
1. Partner Onboarding or Selection Enhancement
A hotel aggregator like OYO needs support with onboarding new hotels and resorts, whereas an e-commerce store like Noon.com requires support with selection enhancement. With back-office services, where employees equipped with incomparable research skills are working to identify potential partners and products that will go with your online store, it gets easier for both hotel aggregators and e-commerce players to onboard new players and add more products respectively.
Since the number of partners and products can run into thousands, it makes sense to have external players processing these requests from their workplaces located in affordable economic zones like India and the Philippines.
2. Customer Experience Management
84% of customers are not willing to engage with a business just after one bad experience. Not only that almost 50% of businesses have started redirecting their marketing funds toward customer experience innovation. In the age, where people are quite vocal on social media, and user-generated-content is a clear winner, organizations must offer quality pre and post-sale experience to customers.
Be it an e-commerce store or a restaurant chain business, everyone needs to work on their customer experience to retain their existing customers. Customers that feel valued are likely to tell their 5 friends whereas they will share their bad experience with 7 friends.
3. Catalog Management and Content Moderation
When creating a perfect e-commerce catalog, one needs to keep customers in mind. Since the end goal here is to convince customers to make a purchase, investing time, and effort in creating a perfect catalog will never go futile. Creating a perfect e-commerce catalog requires a clear understanding of customer’s needs and intent.
While it is exceedingly indispensable to create a catalog that educates customers but marketplaces need to ensure that they are functioning under the international guidelines. A better understanding of international and legal guidelines allows e-commerce organizations to function within the safety blanket. Apart from the guidelines, organizations need to see that they comply with the regulations developed by local associations and authorities.
An organization that has requisite skills, workforce, and an infrastructure that can support e-commerce players with quality catalog management services, e-commerce organizations can register impressive growth.
On the other hand, content moderation will help varied digital players ensure that User Generated Content is free of plagiarism, racist slur, or explicit content that is not suited for the audience.
4. Data Entry, Document Management, and Verification
Be it banks, IT organizations, E-commerce stores, or Fintech apps, all of them are overflowing with documentation work. A third-party with an established process and skilled workforce can step in and simplify the entire operation.
Be it data entry for banks, document management related to KYC for organizations like Uber, Amazon, Ali Pay, or verification for stock market apps like Groww, back-office services can work wonders. By leveraging AI-based interfaces, organizations can process millions of KYC and account opening requests within minutes.
5. Human Resource and Payroll Management
While a huge percentage of organizations are willing to back-office repetitive operations, some are just not comfortable with data sharing. Such organizations believe in building an in-house team and make them work from their dedicated seats.
For organizations that believe in having bigger teams, back office organizations can provide human resource and payroll management services, where outsourcing companies hire, train, and manage employees for bigger organizations. One such model is helping multiple Fortune 500 companies find and retain talented and skilled employees with great ease.
6. IT and Cyber Security
Be its stock market or industrial exhibition, everyone is focused on cybersecurity organizations because they are the next big thing. The average cost of data breach touched a $3.9 million mark in 2019 and it is expected to rise with every year.
Organizations are unable to protect themselves from hacks and breaches with the support of their internal teams because it is not properly skilled. Cybersecurity experts have come up with options like Managed Security Services provided through security operation centers that protect your data throughout the day and ensure proper protection.
Outsourcing data security and IT support to a proven player can help organizations focus on core processes and innovation without worrying about hacks or attempts of internal sabotage.
7. Marketing and Lead Generation
In an Internet laden world, where everything starts with a search and ends with a credit card transaction, it gets indispensable to have people looking for potential customers on the web.
Traditional organizations are having a tough time to tackle these changes and overhaul their entire setup to acquire new customers. Outsourcing lead generation and marketing seem to be a better way of going about it. Expert organizations rely on online tools to curate data and then manually reach out to every prospect with your collateral and bring your business in an enormous amount in exchange for a fixed price or on a commission basis.
During 2014-15, the outsourcing industry took a hit and everyone labeled it redundant. The outsourcing agency bounced back within 20 months and this time it was equipped with requisite tools and compliances to furnish an exceptional experience at executive as well as customer level.
The dynamics have changed, back-office organizations are innovating, leveraging the latest methodology to offer quality support. Going forward tailored outsourcing, technological adoption, and customer-centric approach of outsourcing players will help them gain momentum and cater to top enterprises from around the world.