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The Back Office: What it does and where it is going
The back office is a department that must be dynamic.
Well, there is obviously more than this.
The term comes from the simple fact that in the past, customers who had contact with company representatives were in the “front” of the building.
Those responsible for administrative tasks were hidden away in the backrooms.
Obviously, this is just a metaphor. So if you are thinking of joining this sector, do not worry; you won’t be working in a dark area at the back of the company.
Responsibilities and function of the back office
The staff in this department are responsible for carrying out the basic administrative tasks that allow a company to function well and allow other departments to carry out their tasks successfully.
It is important, therefore, that the department is efficient as well as dynamic.
As an example, let us look at how a typical financial company is set up.
There are three parts:
• the front office (sales, marketing, and customer support)
• the middle office (risk management)
• and the back office (administrative and support services).
The company’s back office includes functions such as settlements, clearances, record maintenance, regulatory compliance, accounting, and IT services.
Outsourcing the back office
According to India Briefing, many large companies headquartered in the USA and Europe have been transferring their back office operations to specialized companies in Asia. This trend has been increasing because of Brexit and the COVID-19 pandemic.
By concentrating administrative functions in one place companies are finding that they can save operating costs and improve logistics.
While there are companies specializing in the organising outsourcing of administrative services in Asian countries, many companies also simply set up their own back offices in these countries without external help.
India has been the preferred destination for back office in recent decades. According to NASSCOM, in 2017 the IT-Business Process Outsourcing industry revenue in India was some US$ 154 billion.
India has been able to attract so many clients because of the country’s:
• lower costs
• high-skilled labour
• positive impact on the operational costs of the contracting company
• widespread use of English.
India also has an intangible advantage; its cultural variety and diverse pluralism. This, according to India Briefing, allows employees of outsourcing companies to analyse situations in new ways to the benefit of the home company.
These are some of the reasons Deloitte, Facebook, Microsoft, Nokia, Sony, Pepsi Co, Amazon, Citibank, and Google – to name just a few – have established back offices across India.
In my next article, I will more closely at outsourcing, and its advantages and disadvantages for companies.