Expanding your business and outsourcing talent is a challenging but exciting endeavor. Especially abroad, hiring back-office functions and business management such as accounting or human resources might be time-consuming. When businesses consider expanding their operations, they most often think about issues like products, competitors, business climate, political risks, investors, market intelligence, etc.

Sometimes, the less exciting tasks like accounting, taxes, payroll, or even Human Resources are sometimes overlooked. These activities often referred to as “Back Office,” may not be visible to customers, but they are crucial for the success of your expansion. This blog post will provide an overview of what Back Office services are, why they are especially relevant in the current business climate, and the benefits of outsourcing these tasks to an experienced Professional Employer Organization (PEO). Your business can thrive in any market with the right Back Office support.

In the video below, you can discover additional benefits of our back-office services.

What is Back Office and How Does It Impact Your Business?

The distinction between the back office and front office in a business is not a recent topic. The main difference is the direct contact with customers, which typically occurs in sales or customer service departments. The activities that make up the back office vary depending on the industry but often include financial and administrative tasks such as accounting, administration, and tax compliance. Accounting includes financial management, payroll, and inventory management, and should provide meaningful data to improve business operations. Administration includes tasks such as document management and report preparation. Tax compliance is crucial to avoid consequences and must be kept up-to-date with changes in legislation. Let’s agree on several concepts:

Accounting: Financial management organizes the data going into the different accounts (payable, receivable, etc.), payroll, and inventory management. In short, accounting should be able to provide meaningful data on how to best improve the company’s overall business operations.

Administration: This area can range from database management to enterprise content management. Setting up documents, invoices, contracts, and internal and external reports causes a lot of paperwork that needs to be handled with great precision.

Taxes: Not complying with the regional and national tax codes can have severe consequences for your business. This back office service is closely linked to local regulations and needs utmost attention and precision. Furthermore, tax regimes change quite rapidly, and keeping up with new legislation is crucial for a sustainable business expansion.

Maximizing the Benefits of Back Office Services: Tips and Strategies

  • Developing economies have lower labor costs compared to developed economies.
  • Since the pandemic, unemployment has risen dramatically in Latin American countries, creating talent acquisition opportunities for U.S. and European companies.
  • Countries such as Colombia, Mexico and Peru have young, English-speaking talent looking for opportunities.
  • Many mid-sized companies have decided to acquire remote talent in Latin America to reduce salary and equipment costs.

The restructuring and redesign of back office activities has attracted significant attention in recent years due to its potential as a business accelerator. This shift in perspective has also been accompanied by relevant changes in labor and economic conditions, with outsourcing of back office tasks becoming a global trend. Companies have outsourced these labor-intensive tasks to developing countries where wages are lower, labor is cheaper, but they still find qualified professional talent or technicians with advanced knowledge. Latin America is a prime example of how labor markets for back office services have become global and interconnected, with the advantages of hiring young, English-speaking talents from these regions.

The Covid-19 pandemic was undoubtedly one of the major reasons why back office business has increased, and small and medium-sized companies have started to outsource internationally. The approaching tax season in the United States and other Western countries has further increased the need for personnel in finance and accounting departments. However, almost three years into the pandemic, there has been an unexpected labor shortage in these economies, making it difficult for SMEs to recruit qualified personnel in the administrative services sector.  This has created opportunities for countries like Mexico, Colombia, and Peru, which have a surplus of qualified workers struggling to find employment.

Exploring advantages of Outsourcing Back Office Departments: Items to consider

The wage differences and disruptions in the global labor market explained in the paragraph above already increase the importance of back-office services considerably. Here is a list of some advantages that apply specifically to business expansion in Latin America.

Penalties: Tax violations or non-compliance with regulations can have costly consequences. Penalties and fines vary by country and may be higher for foreign companies than for domestic ones. PEOs have extensive local knowledge and are familiar with the tax codes and changes in detail.

Cost Management: Back office tasks involve a lot of paperwork and require a significant number of people to handle it. Outsourcing these tasks to a company specialized in back office services can save money and reduce your business’s headcount. This can help make your business more efficient and benefit your expansion into Latin American markets.

Talent: The shift to remote working in the past three years has made it easier to access talent pools, such as those in Latin America. This can also connect you with industry experts and increase collaboration efforts.

Conclusion

This blog post demonstrates that administrative tasks don’t have to be time-consuming and exhausting. Outsourcing these tasks to a trusted Professional Employer Organization (PEO) or local partner like Ongresso is an exciting opportunity to streamline your company’s operations and focus on generating profitability. A PEO with expertise in local laws and regulations can ensure smooth business processes and deal with the stress caused by labor market shortages, sanctions and unexpected changes in the global economy.

Ongresso is a reliable partner that offers customizable local back office services tailored to your specific needs. By outsourcing to Ongresso, you can free up time and resources to focus on expanding your business knowing that your back office is in good hands.

Other Blogs

  • 9 min read

    January 24, 2023

  • 8 min read

    January 23, 2023

  • 10 min read

    December 31, 2022

  • 8 min read

    November 19, 2022