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Back office outsourcing can save companies money by outsourcing responsibilities such as payroll and human resources. However, there are also downsides, such as the elimination of higher-paying jobs and inconvenience for employees. Companies must carefully consider the value and reputation of outsourcing services and ensure that they maintain their standards.
Back office outsourcing is becoming a common choice for many companies. In this process some or all of the back office responsibilities such as managing payroll, managing health savings accounts, creating billing, managing human resources, and/or filling out a variety of health technology jobs information and data entry, are outsourced, rather than being handled in-house by employees. This can often result in savings for a company that may be paying a little less for the service than it would have cost to retain employees both in terms of salary and things like health insurance contributions. The amount saved tends to depend on how much is being charged and where the business is outsourcing; businesses sent to cheaper foreign countries may be cheaper but that’s not always the preference.
There are a number of companies that specialize in providing back office outsourcing services to employers. They may have one or more of the jobs listed above, and some specialize in areas such as payroll or information technology. As with hiring employees, companies need to think carefully about the value of each back office outsourcing service and determine based on sensitivity, reputation, price, and other factors which ones are likely to do the best job. There must be considerable trust because the company is handing over control, and therefore part of its reputation, to another entity. It is vital to ensure that the works are carried out to the company’s standards and continue to reflect the reputation that the company has established.
Much can be said about the financial benefits of this form of outsourcing. Reducing or eliminating departments can save money and not just employee compensation. Such choices, depending on their scope, could allow companies to operate outside of smaller structures. They can save money on things like electricity and heat, hire people to supervise back office employees, and there may be other savings. For example, hiring a payroll service likely means not printing checks, a cost that adds up when there are many checks to print.
Of course there are also downfalls and criticisms of this practice. Back office outsourcing can eliminate higher paying jobs, while the companies that offer it can step in and offer lower paying jobs to people. Some industries, such as information technology, are typically sent to another country, which leaves a number of skilled workers unable to find work in their own country. While many people admit the need to outsource some work, this has led to a less welcoming job market in different parts of the world.
Another issue in the back office outsourcing critique concerns the convenience or inconvenience that some forms of outsourcing present to the average employee. Employees may need to interact with a variety of non-corporate agencies on matters such as health insurance, health savings accounts, and salaries. Sometimes companies need to maintain representatives still employed in skeleton crew back offices so that the employee has assistance in dealing with companies handling various aspects of employment. Creating these jobs is actually considered wise because a hallmark of successful outsourcing is that the parent company vets the services being offered, making sure they maintain the quality that is most representative of the company’s values.
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