Outsourcing Your Back Office – The Pros and Cons

26 March 2024

Hannah Mollison - Sales Director

Hannah Mollison

Sales Director

Is outsourcing your back office a good idea, or does it compromise the business?

When you’re growing a recruitment agency there comes a time when your back office needs to become more robust. You have the option to hire more experienced staff to conduct the back office functions, or you can hire a specialist provider, like Workwell Outsourcing.

Hiring staff gives you in-house capability, of course, but there are downsides. Back office management requires a variety of skills, so it can be difficult to find individuals with all the skills and experience you need. That means hiring a team, which brings the challenge of cost and management, plus cover for holidays and absence.

What most agencies tend to do is hire a couple of administrators, often without relevant industry experience, and let them evolve into a back office function. This approach can work if these individuals have the right development.

Unfortunately what usually transpires is a back office that isn’t scalable or fit for purpose in the future, due to the lack of experience of the people developing the processes. Problems created by this approach tend to show up in debtor issues and ageing debt that affect working capital and, in particularly bad cases, in paying the temporary workers incorrectly leading to issues with HMRC.

Outsourcing your back office means you can buy the services you need, at the fee level that’s right for your business*, without the people management and headcount headaches.

If you’re in a growth stage, it makes sense to use outsourced back-office services so your business operates smoothly and compliantly, leaving you free to focus on winning new business and serving your clients well. The options here can be a back office that includes funding or one that doesn’t if you have a good handle on your working capital and financial management. Our established and enterprise-level customers would generally opt for the latter whilst younger businesses or start-ups would go for the funded back office option.

When talking to established recruitment businesses, we find there are a number of concerns when it comes to deciding whether to outsource or not. And each of these reasons centres around the fear that outsourcing may compromise the business in some way.

  • Quality: can an outsourced team be as good as in-house staff?
  • Security: how can data be properly managed?
  • Accuracy: Data transition can be an issue where it relies on manual entry
  • Loss of Control – the feeling that you control the service better if it is managed internally

When you have in-house staff, there can be a comfort factor in having someone in the office/available to answer queries straight away. However, this does not mean your business is robust – quite the opposite.

Relying on key individuals for your back office is a risk and means you haven’t standardised processes and procedures which are vital to an efficient, effective and reliable back office function – and to your ability to scale.

Most smaller customers come to us because they have been compromised by a staff member who leaves or the person is no longer able to cover the new complexities of their growing business. With a service provider like us, we manage everything based on service level agreements which means quality is an inbuilt metric of our service delivery, something difficult to achieve in-house in smaller businesses.

When we start to work with you, one of the first things we will do is go through your current working practices to develop standardised processes and procedures – this gives you control and consistency. Our specialist team has extensive experience in standardising complex processes – as long as we understand the nuances of your business, we can adopt good back office practices that fit with your unique operating style.

Security - how can data be properly managed

Data security is understandably a high priority, particularly in the recruitment industry where you’re gathering personal data and banking information, and holding it on file. You’re likely to have concerns about who has access to your data, how it is shared and whether the systems in which it resides are sufficiently robust.

We know how critical this area is for our clients, which is why our back-office support systems are encrypted at rest and in transport. We are Cyber Essentials certified meaning we have the appropriate (and beyond) level of firewall configurations, access controls, malware, and patching. However, security is a full-time job, with ever-changing threats, so our staff receive regular, independent, security awareness training from our security partners to help them mitigate, and understand, the types of risks we face. Our systems are subject to continual penetration testing to ensure we maintain the highest data and cyber security standards.

When it comes to who can access your data, we operate strict segregation of duties among different teams who handle your data. On top of that, we have stringent access controls to ensure our people can access only the information they need to do their jobs.

Management - how accurate will reports be?

Back office mistakes, especially with recruitment pay and bill, can be time-consuming, and leave you exposed to risk and damage to your reputation. Problems usually arise at the point of data entry, when there is scope for human error.

To guard against this, our approach is to ensure CRM to Middle Office integration for all our customers. This can be achieved by us working with you on your chosen CRM or by you adopting our purpose-built CRM (Centric Flow link) which is integrated with our timesheet pay & bill system (Evertime) which is, in turn, integrated with accounting packages like Xero. Integrated systems are a central tenet of our service and give our clients confidence in our ability to run their back office accurately and efficiently.

Workwell Outsourcing – the cost-effective solution

 

Back office support for recruiters

Back-office outsourcing is designed to free up your time so you can focus on growing your business. It’s also designed to be more cost-effective than hiring an in-house team. With Workwell Outsourcing, clients typically save 30% when compared to the cost of an in-house back office setup.

Outsourcing your back office to the right provider means you never lose control. If anything, this approach ensures your controls are more robust and your processes consistent and measured. The control around deliverables required is also maintained because it’s covered in the setup phase to ensure we capture all your needs and build them into the agreed SLA. Often we find a lot of the comfort processes that worry new clients are due to bad processes that need to be double-checked. Once these are improved, those processes become obsolete.

The other cause for concern is losing the ability to call on internal members of staff for ad-hoc work. Again this is usually only required as a result of poor process and can be worked out of the system. Where there is a true need for flexibility we support you in flexing timelines, providing more resources for pinch points. This scale and flexibility are more useful to your business as it controls your costs whilst scaling resources as needed.

In summary

Outsourcing your back office gives you significant benefits:

  • An experienced team to run your back office at a fraction of the cost of hiring your own staff; negates staffing challenges
  • Ready-made, water-tight contracts to protect your business
  • Cost management – everything you need to run your back office for one price and from one partner who gets to know your business
  • Cost reduction – typically in the region of 30% or more
  • Consistency in controls over your workers, protecting you from compliance headaches
  • Integrated systems and data flow so the information you need is accurate with no unnecessary or risky manual management of data
  • Full project management – hand over the set-up and management of your back office to us and focus on running your business
  • Consistency of service due to SLAs

 

Don’t put up with unnecessary headaches or costs in your back office – call us on 01943 883 263 to speak to one of our experts.

*We offer dynamic pricing that is tailored to the dynamic and maturity of your business. For smaller businesses or those facing tough market conditions, our variable fee approach means our service reflects the supply. For larger businesses, we offer fixed cost pricing so as you grow and scale the cost does not escalate.

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