A back office refers to a pool of job positions within a company which aren’t connected with direct communication with clients and customers, instead of it sustaining and managing other important business processes. Such processes and tasks include different administrative and supporting operations, such as accounting, supplying, and some others, depending on a company’s type and a sphere of activity.
A back office is a part of a company’s structure, with other parts being a front office (which is the personnel working directly with customers) and a middle office (typically existing in financial organizations and connected with risks management).
Back office as a term has appeared due to an early tradition of spatial division of workers, with those working with clients or customers taking the front part of a company’s building or an office space, literally facing the people who enter the facility. The employees responsible for other types of jobs were located in back offices or spaces, making them invisible for the clients and providing the name for this segment of an organization.
Back Office importance
Although the workload of back offices is still unseen by the customers, their work is vital for companies, as they enable essential processes that keep the business running. Business procedures performed by back office employees are performed in various spheres.
The most common of those spheres are the following:
- accounting and bookkeeping;
- supplying and logistics;
- human resource management;
- IT development and support.
The work done by the back office is what ensures that the front office employees can perform their part of the job. The back office is responsible for preparing the goods and services being presented to the clients by providing and distributing resources, controlling the production, checking if all the legal formalities are done. Although the back office is not connected with the customers, it doesn’t mean that no interpersonal communication is done in this segment. Back office employees are often required to communicate to various persons, from suppliers to business partners and service providers. Due to this fact, it’s important for such employees to be as skilled in business communication as the front office employees are.
A strong interaction between the back office and the front office is also critically important because of direct dependence of the business’s results on an efficiency and productivity of both of these company parts. A company’s representative as a part of the front office needs a quality good to present to potential customers, this person’s work should be properly organized and controlled, all the legislative requirements should be fulfilled, and the technical part of business should be properly operated. All the mentioned aspects are performed by the back office, which makes the front office work impossible without the support of the back office.
Another important part of the back office personnel is organizing and carrying out completely inner processes like payroll management or keeping the records.
Modern Back Office organizations
With the development of business and informational technologies, it became clear that it’s not actually necessary to keep back office staff at the same place where other parts of a company are situated. As it doesn’t affect the revenue and efficiency, there’s no need to place back office in the company’s headquarters. A popular practice nowadays is to divide back office and front office not just within a building, but into completely separate facilities. To reduce costs, companies often choose to locate back offices in areas with cheaper rent and lower utility prices. For large corporations, it’s possible to shift back offices to other cities, if a quality workforce is available there to the extent necessary.
Another way of cost reducing is outsourcing of some back office jobs. If it has no great impact on the production or servicing and provide significant profits, it might be reasonable for a business to delegate some of its non-core activities to third-party providers. Such a practice gives companies a possibility to focus on their key activities and also optimize some of their processes. There are still some risks and inconveniences involved with outsourcing, so a thorough study and preparation are required before actually outsourcing back office jobs.
One more method of organizing back office work is to arrange remote workplaces for the employees of that segment. It also aids in cost reducing by saving on rent, and in some cases compensating a worker for working from home is more profitable for a company than providing a separate working place in a company’s physical location. A practice of remote employing also allows attracting talented and experienced individuals from various locations.
Although there are many advantages of this business practice, it’s still important to remember of risks and difficulties associated with such type of work. One of the major issues concerns a higher workload for IT departments, as well as organizing the whole working cycle in general, so it’s usually recommended to ensure a smooth transition to this form of work to control all the sensitive aspects of back office functioning.