Back Office Operations.

• Author: Riddle, Dorothy

This article is the first in a two-part series about the growing opportunities to provide back office services to international firms, public-sector agencies and non-profit organizations. Adapted from ITC's new publication, Offshore Back Office Operations: Supplying Support Services to Global Markets, these articles are designed to raise awareness about the market opportunities for developing countries and share successful strategies and best practices.

Question: What could an insurance claims adjuster in Barbados, a medical transcriptionist in India, an e-commerce customer service representative in the Philippines, a telemarketer in Mauritius, and a call centre agent in Jamaica have in common?

Answer: Offshore back office operations

What began in the 1980s as a relatively modest attempt to save costs through off-shore data processing has matured into a way of doing business that offers significant opportunities for governments and service firms in developing and transitional economies.

As globalization and contracting out increase, new opportunities are emerging to take advantage of this continually expanding trend. An increasing number of developing and transition countries are becoming involved, with at least one or two already functioning back office operations. However, such operations may not be part of an overall development strategy and may, in fact, be unknown to government trade and investment officers. There is high potential to explore new prospects for economic development in this area.

What are "back office operations"?

Back office operations are the off-site delivery of a range of non-core service functions, including routine administration tasks, customer service and technical support. Offshore back office operations involve the ongoing use of an outsourcing base in another country.

Specific types of services

Providers of back office operations manage an activity or function on a turnkey basis for their clients. Any aspect of service operations that involves high-volume transactions is a candidate for back office delivery:

* Abstracting and indexing

* Call centres

* Data capture and processing

* Data warehousing

* Electronic publishing

* Legal transcription

* Litigation support

* Mailing list management

* Medical records management

* Medical transcription

* Remote secretarial services

* Technical writing

* Telemarketing

* Teleservices

Web site design and management

The range of administrative and customer support services provided through offshore back office operations is growing rapidly (by at least 15%-20% annually) as corporations in developed countries strive to reduce fixed overheads by contracting out routine functions. Given the information technology support available, any service that does not require face-to-face contact with customers can be provided in an offshore 'back office' because it is 'footloose' (not bound to a particular location).

Projections for rapid growth

On the basis of the Organisation for Economic Co-operation and Development (OECD) projections, including demand for Year 2000 computer code conversion, the global market for long-distance services, which could have been provided by developing countries was estimated at about US$ 438 billion in 1998, or at least 15% of non-OECD total exports. Similar estimates by the World Bank suggest that developing countries may be able to double their 1997 exports of commercial services, which were valued at US$ 398.8 billion. With the growth in exports of business support services from developing countries averaging 14.3 % annually between 1990 and 1997, back office revenues for 2002 are projected to be in the range of US$ 778 billion.

Why is it growing so fast?

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