Cost-Control Strategies Through Back-Office Outsourcing

Introduction

Cost management is a key aspect of any business; however, at times it can be difficult to see exactly where the costs are coming in.

Maybe you have taken on an extra member of staff and therefore require an extra license for your software. Or maybe your manager will be putting in extra hours to review reports. Or maybe someone is having to spend some of their time during the week fixing data entries or updating.

Although these costs may not seem like much, they can really add up. Many businesses will look at outsourcing some of their back-office functions.

Outsourcing some of your back-office functions will mean handing over specific admin and operations functions. This could include bookkeeping, payroll support, data entry, document processing, updating your CRM, creating reports, e-commerce support, and many other regular tasks.

However, the main reason for doing this is not to save on labor costs.

With a good outsourcing strategy in place, you will have looked at the overall costs involved with managing this process. This will include salary, training, software, hardware, time spent by your management, errors, and time spent on regular tasks.

By choosing to outsource wisely, you can ensure your business stays lean; however, it will still complete essential processes. Rather than looking at whether you can save money by outsourcing, you should be considering:

How can I increase the efficiency of this process without impacting quality and control?

This is where smart cost management comes in.

Understanding Back-Office Outsourcing

All businesses have tasks that take place behind the scenes.

These may not be seen by your customers however they are essential to your business.

• Updating financial records

• Verifying payroll details

• Cleaning up customer databases

• Processing Invoices

• Organising documents

• Creating reports

• Updating product information

• Are all examples of back office tasks.

Outsourcing back office tasks means that some of these tasks will be handed over to an external service provider.

According to Infosearch BPO, back office tasks consist of "internal business processes that do not directly interact with customers". Common examples include HR, accounting, finance and e-commerce support.

The key thing to note here is that you are not handing over control.

• You decide what needs doing

• You set the standards

• You get to review how they are performing.

They will just carry out the tasks that you have agreed. For example if you outsource transaction entry you can keep your financial planning in house.

If you run an e-commerce business you may outsource your product updates but keep pricing and merchandising decisions in house.

This means you can cut down on the busy work whilst retaining control of your strategy.

The Real Cost of In-House Resources

Many business owners take into consideration salaries.

Whilst this is a fair point to make, it doesn’t account for everything.

In order to employ an in-house resource, you will need to:

• Recruit the staff member

• Onboard the staff member

• Train the staff member

• Pay staff benefits

• Pay for software

• Pay for equipment

• Pay for office space

• Pay for IT support

• Invest in management

However, many businesses also forget about the cost of rework.

For example, imagine a scenario where your staff member inputs incorrect data for their customer.

Another member of staff notices this, and the manager verifies that they have corrected it. However, later on when looking through, the sales team notices that they have used incorrect data.

This means that multiple people have had their time wasted due to a single mistake. This could also occur with your bookkeeping, payroll, orders, or documents.

Vsynergize explains that businesses should consider the cost of onboarding, benefits, software, equipment, management, and other running costs as well (2026).

Opportunity Cost

If a senior member of staff is spending 6 hours a week on updating spreadsheets, over the course of a year this is over 300 hours.

This could have been spent on customers, planning, sales, or product development.

Read Our Full Blog:Outsourced Bookkeeping Services for Business | GoStravo

One of the key benefits of outsourcing is removing any unnecessary fixed costs.

Often you will have someone working for you full time at a fixed cost.

For example if you need 20 hours of bookkeeping support per week.

If you were to employ someone for this they may be paying for capacity that isn't being used.

However by outsourcing you can gain flexibility. You will pay for the required service/support. This would be ideal for jobs that are important but aren't needed full time.

This could include:

• Payroll

• Data Entry

• Website Updates

• CRM Maintenance

• Reporting

• Product Uploads

• Document Processing

By handing over payroll and data entry to Callnovo your team can move onto more valuable tasks.

Of course there are some roles you wouldn't want to outsource.

Roles which require in depth knowledge of the company.

Or strategic or customer focussed roles.

Overall we want to ensure we don't create any fixed costs for roles that can be efficiently handled by others.

Overall there will be a few steps to follow to get new staff:

• Job description.

• Advertising.

• Applying.

• Interview.

• References.

• Onboarding.

• Training.

Even when employing great staff it may take a few weeks for them to fully understand what their job is. If they then leave you will have to go from the start again. Using an outsourced company can reduce the pressure. 

The company will handle their staffing. Whilst they will need to know your processes and what you require you won’t have to do any of the recruitment. This can help smaller companies with no large HR department. 

It can also help managers save time by having to spend less time interviewing for repetitive support roles. They can focus on their existing staff, customers and business objectives.

• More technology may be needed in back office roles.

• Accounting software will be needed for bookkeeping

• A separate system may be needed for Payroll.

• A database will be needed for CRM.

• Storage may be needed for Document Management.

New staff may need their own computer, secure login, communication software and software licences.

This can be expensive.

However, your outsourcing partner may have these systems in place.

“As many outsourcing providers will have the technology infrastructure and staff resources already in place to help with your back office activities.” (Infosearch BPO)

Technology Costs

Software can often be run on subscriptions for longer than necessary. Different teams could be using the same software.

It is recommended that you look into the cost of software being used for back office activities and to improve efficiency. (Wisemonk)

You should include both staff and systems.

Not everything should be outsourced. It’s best to look at those tasks that have a clear process.

Most repetitive tasks are a good place to start as they can be clearly documented and measure.

Bookkeeping

This will be an ongoing task. You’ll need to;

• Record transactions

• Reconcile accounts

• Update reports

• There is clear output.

Data Entry

This can be a lengthy task. You may need to;

• Update your customers

• Clean up spreadsheets

• Remove duplicates

• Manage your product database

This repetitive, volume based task is a great candidate for outsourcing according to vsynergize.

Payroll Support

This task will follow a set process. You’ll need to;

• Ensure timesheets are accurate

• Update employee data

• Prepare payment details

As this is a repetitive task on a set basis you can easily put processes in place.

Document Handling

Many businesses will handle;

• Invoices

• Forms

• Applications

• Contracts

• Reports

Which may need;

• Sorting

• Checking

• Entering into systems

• Digitising

E-Commerce Administration

Online stores will have administration to do in the background. This may include;

• Updating products

• Tracking orders

• Checking inventory details

• Processing returns.

As your sales increase this can become a huge time commitment. As a general rule start with tasks that are;

• Stable

• Repetitive

• Easy to describe

• Easy to review

There will be extra costs incurred by having a lower quality piece of work.

If information is incorrectly inputted, someone will need to review this. Someone will need to investigate issues with errors on the invoice. And if the report isn’t fully completed, someone may need to ask management for it.

This can take up time and incur costs.

However if you have an outsourced team dedicated to this, they can do this several times a day resulting in more consistency.

You can’t just assume you are going to get a better quality. You should have clear criteria for this. Some great metrics to track are:

• Error rate

• Turn around time

• First time accuracy

• Number of corrections

• Late deliveries

• Amount of work done

At Wisemonk we recommend looking at metrics like cost per transaction, cycle time and first time accuracy rather than just looking at the number of people you have. This will give you a much clearer insight.

For example if you have a slightly higher cost provider who provides accurate work you will save more money than a cheaper provider who constantly have corrections. Always ensure that you are measuring cost and quality.

Your business will almost never be running at a steady speed throughout the year.

It might be much busier when your online shop is busy such as over the holidays.

Or there might be more work around month end for the finance department.

Sometimes new clients come on board at short notice and put pressure on your growth.

One solution is to hire permanent staff.

However, there are ongoing costs to having permanent staff.

Maybe you could outsource your support.

If your business is busier you can scale up the support you require.

If your business gets slower you can scale back down.

ARDEM mentions scalability as one of the key reasons why businesses use back office support. By outsourcing you can have flexible capacity.

This can be really helpful to growing companies.

You might know your business is growing but might not know exactly what level of support you will need in 6 months time.

By outsourcing you can be flexible with your needs.

This can be beneficial when trying to plan your costs.

One of the simplest ways to save costs within a business is to save your employees time.

It is often that we put our skilled employees into doing repetitive administrative tasks.

A sales person could be wasting hours of their time updating records.

A manager could be looking at your invoices.

Within marketing you may have an employee spending time creating spreadsheets.

Your business owner could be spending half a day to get everything in order.

Whilst this has to be done,

You may not be using your skilled employees to their full potential.

When you have an experienced employee doing 5 hours of repetitive admin per week,

That can add up to around 260 hours of your year.

Whilst you are paying for this time,

The main issue is what are they not doing?

They could have been focusing on:

• Customer relations

• Sales

• Planning

• Product development

• Managing their team

• Growth projects

By outsourcing your repetitive support tasks, Infosearch BPO can help you to focus on your core activities.

This can create huge value to your business by increasing productivity.

Read Our Related Blog—

How Small Businesses Can Cut Costs Through Outsourcing

5 Signs Your Business Needs Outsourced Bookkeeping

Outsourced Bookkeeping Services for Business | GoStravo

Choose the correct processes to outsource.

Look to see:

• Repetitive

• Documentable

• Long

• Rule based

• Measurable

• Regular

• Not an area of competitive advantage

As a starting point, it is always best to look at processes that are repetitive, resource intensive and/or easy to standardise.

Risks

Some processes will have confidential information within them and some will require expert decision making. These could be areas you want more control of.

A great way to do this is to outsource tasks but retain control of important decision making. 

For example:

• Outsource data entry but keep customer strategy in house

• Outsource preparing bookkeeping but keep financial planning in house

• Outsource updating products but keep pricing in house

• This can help to lighten the workload whilst maintaining control.

• Measuring your cost savings correctly

You should never just compare the cost of outsourcing with your salary. Instead calculate your total internal costs which could be:

• Salary

• Benefits

• Recruiting

• Training

• Software

• Hardware

• Office costs

• Management

• IT support

• Fixing errors

Then calculate your total cost of outsourcing including:

• Costs to provider

• Time to move over

• Internal management

• Quality control

• Communication

• Extra Software

Now you have the two totals you can properly compare. A basic formula is:

Potential savings = Total Internal Costs – Total Outsourcing Costs

However this isn’t the only thing you should look at. You should also look at:

• Time Saved

• Cost Per Transaction

• Turnaround Time

• Error Rate

• Productivity

• Quality of Output

Sometimes a solution that saves you a little more may actually give you more value for money as it will save you more time from your employees or produce more accurate work.

While outsourcing can help save you money, it can be easy to lose this if you’re not careful.

• Choosing the cheapest option

• While cheaper is very tempting,

• The quality will be poor leading to reworks which is costing you money.

• Look at the overall value of the outsourcing.

Even if your internal process is confusing, this doesn’t mean that it will improve by outsourcing. Before moving processes, make sure that:

Your workflow is fixed.

You have documented what each step is.

Not taking data security into consideration.

Some back office processes may contain sensitive customer, staff or financial data. Before sharing any important data ask providers about:

• Access control.

• Data handling.

• Not being specific.

• Don’t just say ‘can you sort out our admin’ instead:

• Be specific about what needs doing.

• Set deadlines.

• Set quality standards.

• Have clear reporting.

• Too much too soon.

By moving multiple processes at once you might get confused. Start with 1 or 2 areas to outsource. Once you’ve seen the outcomes you can start adding more processes gradually. This will make it easier to spot any issues.

Carefully approached, back office outsourcing can be used as an effective cost saving strategy.

Whilst it may not always provide you with the best cost savings by lowering your hourly rates,

You will get value from getting your business running more efficiently.

Lowering the cost of having staff on salary.

Saving on hiring and training costs.

Reducing the amount of technology/infrastructure you need in house.

Saving your skilled staff time on repetitive tasks.

However, you should not outsource everything!

To start with look at processes that are clear and easy to quantify.

Look at repetitive tasks.

Look at admin tasks that are taking up too much time.

Work out what the overall cost is of doing these tasks internally.

Compare this with the cost of having external support.

Most importantly, look at the quality of the work being done.

If you are paying low prices but having to constantly correct errors then you are not really saving money. A good quality service should save you time.

• Monitor accuracy.

• Turnaround times.

• Time saved.

• Staff productivity.

These figures will tell you if you are actually saving money by outsourcing.

But do keep your strategic decisions in-house.

Your internal team should be responsible for the direction of your business, big financial decisions, customer relationships and brand. You should outsource the supporting processes.

When done correctly, back office outsourcing will give your business increased flexibility.

• Help you manage your costs.

• Keep your teams focused.

• And make your structure scalable.

Overall, intelligent cost management isn’t about saving as much money as possible.