Which Is Better; Local Vs. Offshore Transcription
What Consists Of A Back Office Data Processing Team?
SMEs found an answer to their problems using back-office service solutions.
It is not easy to run a start-up business. That’s why many business owners are looking for alternatives to manage their expenses and talent efficiently through back-office service solutions.
According to a study, 20% of SMEs failed to achieve their goal during their first operating year. At the same time, only a third of the business survives after ten years of running.
Furthermore, the number of individuals planning to start a small business exceeds 7% in three years.
Meaning more and more businesses will fail to survive without proper guidance.
Without studying the outcome of other businesses, you won’t be able to succeed in your venture.
This article will discuss the top 4 challenges SMEs face and how outsourcing back-office functions can solve these issues.
Lack of Financial Access
The dollar volume of bank loans for SMEs declined by 20% since the recession in 2007.
Thus, it is riskier to provide loans to SMEs since the success rate is not that impressive. It is why start-up businesses are having trouble looking for loans for their capital.
In addition to that, these start-up businesses are only applying for a small amount of loans. 80% of SMEs apply for a loan not exceeding $500,000.
Many banks prefer to provide loans to big corporations. This is because the processing fee for loans of SMEs is just the same as a multi-million dollar corporation.
Of course, there are some alternatives, like community bank loans. They have three times faster approval for small business applications.
However, there are only a few local community banks to support millions of microloan applications.
That’s why outsourcing your back-office support will lessen the fund you need for business operations. Companies that outsource overseas can cut labor costs from 70% to 90% while maintaining quality customer service.
You don’t need to submit loan applications if your business has minimal running expenses. Saving cost is better than gambling for a bank loan that has higher interest for small businesses.
Fierce Competition
The current record shows that there are more than 31.7 million SMEs. I make up almost 99.9% of all US businesses.
This data shows how many businesses compete for one customer in every transaction. That’s why you need a better strategy to win them.
Ergo, you need to improve your market share to have better profit.
A business with a 10% market share or below has an expected return on investment (ROI) of about 9%. Meanwhile, there’s an expected ROI of 30% for businesses with more than 40% market share.
Outsourcing your back office function will boost your market share. BPO companies have different business models to run your business smoothly.
They have technologies to coordinate with all your suppliers and have a faster business process. 73% of businesses outsourcing see an improvement in their efficiency and effectiveness towards their operation.
Besides that, you can gain access to a broader range of customers when you outsource parts of your business. You no longer have to fight for a few prospects against your local competitors.
BPO companies can widen their marketing strategy and target international customers through 24/7 operations.
Lack of Knowledge About Information Technology
There is a significant number of businesses shifting to the online market. The estimated global sales for the eCommerce industry will be $6.542 trillion by 2023.
Moreover, in 2027, the projected growth of online companies will be up to 14.7%.
These trends indicate how information technology is essential in today’s business strategy. There are 12 million – 24 million eCommerce sites worldwide.
Despite this ton of websites operating, only 4% – 8% have an annual profit of $1,000. Meaning businesses are not doing a great job optimizing their online presence.
B2C Online Transaction
When your target business transaction is inclined more on the B2C side, you must know that 60% of millennials shop online. This means you have to design your product presentation to suit the taste of modern customers.
It is also worth noting that 93% of millennials have browsed different online deals using mobile devices. An indication that you should optimize your eCommerce website for smartphone users.
It is also better to have an application to conveniently access your product and services.
B2B Online Transaction
Approaching a B2B online transaction requires a different strategy. According to a study, 86% of B2B buyers are easily overwhelmed by a lot of content on a website.
Therefore, they tend to leave and look for other companies.
Below are some features B2B buyers want to see in an eCommerce site:
| Website Features | Percentage of B2B Buyers that want to see it |
| Customized Portal Content | 45% |
| ROI Calculator | 44% |
| Augmented Reality | 38% |
| Video Chat Messaging | 33% |
| Instant Messaging with Sales Reps | 22% |
It might be hard to keep up with many strategies, especially when starting your business.
Outsourcing back-office functions like IT support will help maximize your company’s potential.
Some BPO companies can also provide support if you want to develop a mobile application for your business. This will help your business, especially since more than 90% of Americans have mobile phones.
Insufficient Entrepreneurial Experience
SMEs begin outsourcing as early as 6th month in operation. This shows how start-up businesses consider offshoring as part of their early plans. They know the importance of having well-oiled back office operations.
All companies worldwide accumulate almost $480 billion of loss yearly due to ineffective back-office. Imagine how much you’re losing just by having insufficient support for your operation. Not to mention if your front office gains more than you lose in back-office support.
This is why 34% of companies prefer outsourcing the back office service. The constant innovation of BPO companies’ services allows SMEs to focus on their core tasks.
58% of SMEs outsource to increase the level of service quality. Meanwhile, 20% say they’re outsourcing to discover new opportunities for their business.
On top of this, outsourcing providers have experience assisting other companies with the same product or service as yours. They can apply what they’ve learned from other businesses to improve yours.
Most Outsourced Back Office Support Services For SMEs
Most SMEs do not know where to start or what function to outsource. So, here are some of the most commonly outsourced back-office support services:
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Data Entry
Data entry is an essential task for any small business. It allows them to determine what their customers want through data.
Analyzing this information enables 49% of businesses to create better service. Meanwhile, 16% stated that it improves how they implement key strategic initiatives.
As important as it is, SMEs only have a limited workforce to focus on this repetitive task. You have to enter data daily and might not be able to focus on business management tasks.
Therefore, outsourcing data entry services is a smart move for business owners. BPO companies can handle large amounts of data through their advanced software.
On top of that, they also have a system to analyze every data accurately. Thus, eliminating the possibility of any human error during data computation.
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Finance
Research shows that outsourcing your finance gives you a 36% chance to grow as a company.
An internal payroll system is a hassle as you must consider several hours, commission payments, etc.
However, outsourcing makes the work easier. There are a lot of Certified Public Accountants (CPAs) in BPO companies working on bookkeeping and other accounting tasks.
You no longer have to pay so much to get a professional account, as offshore BPO can handle it.
Besides that, it will be hard to influence third-party providers so you can avoid any fraudulent transactions in your financial department.
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Human Resource
81% of small business owners are personally managing their human resource department. Most don’t have the luxury of paying a human resource manager $75,000 annually.
Unfortunately, over 30% of these owners do not know if they’re doing it correctly. Not carefully handling HR matters will give your business a horrible attrition rate.
As a result, you need to spend more on hiring and training other people.
So, outsourcing your HR department gives you much flexibility in your workforce and financial aspects. You will gain 32% additional opportunities for your business by just offshoring human resource tasks.
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Marketing
Outsourcing your marketing process gives you tons of opportunities to introduce your product or service to other customers outside your local area. BPO companies can provide different platforms to support you in various lead sources.
One of the best things that could come from offshoring marketing campaigns is your access to call center services. You can do cold calling with your potential clients and interact with them on how to improve your service.
They can also provide you with agents to work on your B2B email communication. It is essential as 92% of internet users have their email accounts. Email is also the most preferred communication when dealing with other business owners since it is more formal.
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IT Support
Outsourcing your IT support improves how you operate your overall business process and not just the back office department. An efficient digital system gives you more time to plan your business strategy.
In addition to that, BPO companies also provide strict security protocols to protect your sensitive information. It ensures you and your customer that no information will leak outside the facility.
Some also have cloud-sharing for easy access to any data.
As a result, there’s a 31% improvement in the overall performance of your business. This is a significant number, especially for a start-up business.
India Vs. Philippines: What Do the Experts Say About Their Back Office IT Services?
Regarding IT services, India and the Philippines are the top 2 outsourcing destinations for all industries in the world. So which country can provide you with a top-of-the-notch IT service?
The Philippines’ BPO-IT industry is one of the fastest-growing industries.
According to many experts, the advantage of the Philippine IT-BPM industry is mainly because of the vital skills of the Philippine labor force.
Filipinos are the best agents in voice-based services, such as customer tech support. Not to mention the overwhelming number of IT graduates, with a 15% yearly increase.
The Philippines should be your top choice for outsourcing back-office IT services.
Meanwhile, India’s best advantage is the number of technologies they can innovate. This country’s number of BPO workers is so enormous that you won’t run out of IT support agents.
However, this sizable number is also their disadvantage. There are a lot of IT experts in India that choose to hack company servers instead of working for them. 46% of Indian firms are victims of cyber crimes.
In a recent event, one of the leading eCommerce portals in India reported a technical glitch in their system.
As a result, the portal exposed its vendors to its sellers. Thus, more than 400,000 sellers could download tax reports of other vendors on their websites.
So as an SME owner, you should weigh in which country you should entrust your back office support.
Where to Find Back Office Support Companies for SMEs in the Philippines?
If you are a small or medium business looking to outsource your back-office support, go to Magellan Solutions. We have over 17 years of experience providing services for SMEs from different industries.
Here are some back office services we offer:
- Data Management Services
- Staff Leasing Services
- Community Moderation Services
- Outsource Form Processing Service
We are an ISO-certified BPO company that strictly follows a high standard of service from recruitment to the onboarding process.
Besides that, we guarantee fortified protection for your data. Our tech support team has different security protocols to prevent online breaching.
Our Business Developers can help you set up your key performance indicators (KPI). KPIs will guide you and monitor the progress of your business with us.
We also offer guaranteed flexible pricing options based on several factors like service and number of agents you need. Magellan Solutions understands that start-up businesses have limited funds for outsourcing services.
Contact us today and get a free 60-minute business consultation. Please fill out the contact form below.
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