Outsourcing Your Back Office Functions
12 Reasons for Change
Outsourcing your back office functions will pay off substantially in relatively short order. The potential to reduce overhead costs is great as the business eliminates salaries and employee benefits, as well as ancillary costs such as leasing of space, utilities, and computer and telecommunication related expenses.
Beyond the significant cost savings of outsourcing, the CEO is relieved from the sweat and pain of operating the business, which often means concentrating on administering and managing employees. With newly available capital from the cost savings and freed up time, the CEO can focus on expanding the core business.
According to Cheryl Frank, CEO of GO Global, a business process outsourcing (BPO) provider, "Companies that outsource their back office process will not only reduce expenses, but also create a more streamlined environment positioned for growth, adding millions in value and making them attractive to a third party for purchase."
The question is how do you know when it's time to make the change to business process outsourcing (BPO)? According to Frank, companies should consider outsourcing their back office functions when these circumstances exist:
1. When a company employs three to 50 back office workers
2. When your bottom line profit to gross revenues is less than you projected.
3. When a significant amount of a CEO or CFO's time is spent managing and administrating back office employees.
4. When your back office costs exceed 10% of revenues.
5. When the turnover rate of back office staff is more than 5% annually. Training costs can drain your bottom line!
6. When every time an employee leaves you spend too much time searching for qualified replacements.
7. When computer systems become obsolete and software outdated, it may be the right time for an upgrade and shift to an experienced outsourcing provider.
8. When the company is not growing, indicated by earnings of less than 10% annually.
9. When the company is lagging behind its peers, evidenced by a decrease in customers.
10. When you do not get timely month profit/loss statements and you are unable to manage your business effectively.
11. When the data you are getting just is not correct!
12. When the CEO and other top officers take frequent fishing trips and have contacted headhunters.
As a case in point, GO Global was asked to provide accounting services for United Management Company et al in Washington, DC. The CEO was no longer able to profitably manage the properties and was on the verge of putting them on the market. He decided to outsource the accounting and property management to GO Global. Within three months, one of the company's largest buildings was no longer in the red.
The transition period to outsource the accounting and administrative functions is usually about three to six months, but the savings after two years can exceed 60%. "GO Global transforms businesses by reducing costs and streamlining operations to such an extent that the company becomes very well positioned for long term growth," notes Frank.
"In the case of United Management, the CEO was spread thin both financially and time wise, managing the company's several properties. Since outsourcing, the business is now acquiring additional properties and entering into affiliated industries," says Frank. "In fact, banks have lined up to offer lines of credit to assist in the company's expansion plans. A good profit/loss statement is worth more than its weight in gold."
GO Global (www.goglobalbpo.com) has offices in Miami, FL and Bethesda, MD. At its nearshore data processing center in Guatemala, data is securely processed within a 24-hour period. Founded in 2006, GO Global is dedicated to providing all manner of back office servicing, from call centers to accounting, claims processing, and even highly complex financial services.
