Why Do Modern Back Office Operations Require A Complete Revamp?

In the early days of back office services, the primary goal was to alleviate the burden of repetitive and time-consuming tasks from business users and productive employees. These services were envisioned as the backbone of administrative efficiency, handling everything from paper and document processing to claims and documentation. This allowed core employees and business users to focus on more strategic and value-added activities. However, the landscape of back office services has significantly shifted over the years, leading to a scenario where the original purpose seems to have been diluted.

The Original Vision of Back Office Services

When back office services first emerged in 1950s, primarily in the manufacturing sector, they were hailed as a revolutionary solution for businesses looking to streamline operations and reduce costs. The idea was simple: outsource non-core tasks to specialized firms that could handle them more efficiently. In 1980s, the term “Business Process Outsourcing” (BPO) started gaining traction as companies began outsourcing non-core business operations to improve efficiency and reduce costs.

This included a wide range of activities such as data entry, document processing, claims handling, and customer service. By doing so, companies could free up their internal resources to focus on innovation, strategy, and growth.

The benefits were clear. These services offered cost savings, improved efficiency, and access to specialized skills. They became an integral part of the business ecosystem, supporting various industries including finance, healthcare, and telecommunications. Business users and employees in these sectors could now dedicate their time to more productive tasks, driving the company forward.

The Shift in Back Office Functions

Fast forward to today, and the role of back office services has undergone a significant transformation. While they still handle a variety of tasks, there is a growing trend towards simplification and automation. Many back office services now focus on basic approval and rejection processes, often driven by automated systems and algorithms. This shift has led to a reduction in the complexity of tasks handled by these services, with a greater emphasis on speed and efficiency.

On the surface, this might seem like a positive development. Automation and simplification can lead to faster processing times and reduced costs. However, this shift has also resulted in a disconnect between the original vision of back office services and their current function. Instead of handling comprehensive document processing and claims management, many services are now limited to basic decision-making tasks.

The Impact on Productive Employees and Business Users

This evolution has had a significant impact on the employees who were supposed to benefit from the outsourcing model. Instead of being relieved of administrative burdens, many productive employees find themselves still dealing with complex claims and documentation processes to pre-evaluate and pre-processing them before sending to back office. The promise of back office services taking over these tasks has not been fully realized, leading to frustration and inefficiency.

One of the main reasons for this disconnect is the over-reliance on automation. While automation can handle simple tasks effectively, it often falls short when it comes to more complex processes that require human judgment and expertise. As a result, productive employees and business users are left to pick up the slack, dealing with issues that automated systems cannot resolve.

The Need for a Rethink

Back office services require a complete rethinking or transformation. To address the current issues, there is a need for a more balanced approach. While automation and simplification have their place, it is essential to recognize the value of human expertise in handling complex tasks. These services should not be reduced to mere button-clicking operations. Instead, they should be empowered to handle a broader range of activities, providing comprehensive support to productive employees.

The Role of Generative AI

Generative AI can play a significant role in this transformation. Advanced technologies such as artificial intelligence and machine learning can be used to enhance the capabilities of back office services, allowing them to handle more complex tasks with greater efficiency. Generative AI can assist in automating routine tasks while also providing insights and recommendations for more complex issues. This combination of technology and human expertise can lead to a more effective and efficient back office operation.

In nutshell: the evolution of back office services from comprehensive document processing to basic approval and rejection tasks highlights the need for a reassessment of their role in the business ecosystem. While automation and simplification have brought benefits, they have also led to a disconnect between the original vision of these services and their current function. To truly alleviate the burden on productive employees, back office services must be empowered to handle a broader range of tasks, combining technology with human expertise. By doing so, they can fulfill their original promise of supporting businesses and driving efficiency.