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front office vs back office

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Everything You Wanted to Know About front office vs back office

So what is the difference between front office vs back office? The front office is a business process involved in revenue driving and customer or client experience activities in a company. The back office is the backend business process that delivers quality products and services that meet clients’ requirements. The location of both business processes also differs between the front and back offices.

The front office tends to direct contact with the customers, mainly in the lobby, which is the first stop for customers visiting a business. Most back office operations are done behind the scenes, where most of the work that is more directly involved in running a business happens. Nadir Hirji (1) further states:

“Front- and back-office change activities don’t need to occur at the same time but understanding how each supports the business and coordinating efforts is essential for transforming into a truly digital organization.”

– Forbes

What Makes up the Front Office?

Most sales, marketing, and post-sales services are in the front office. The staff at the front office directly interacts with the clients by taking orders, processing them, and ensuring customer satisfaction with the services offered. The direct interaction with customers means that this is the branch of a business involved in generating revenues. The front office consists of administrative and clerical work, such as the reception of clients. Provision of advisory services to a company’s clients is the role of the front office. Employees at the front office should have good interpersonal skills, as their interaction with clients may have a lasting effect on the company.

Front Office Roles and Responsibilities

Front office roles include but are not limited to marketing, sales, public relations, customer services, and call center. Sales and marketing teams design promotional activities to sell a service or a product. To understand the customers’ needs, the front office, through various departments such as marketing, will carry out research campaigns.

They use brand enforcement and engagement to incorporate public relations. The front office receives feedback from clients, assists them when conducting business with the company, and offers technical support directly impacting its revenue stream. The front office is also involved in strategy development because it is directly involved with the consumers.

What is the Back Office all about?

According to Forbes (2),

“Anyone who has visited a hospital recently has been confronted by a gleaming array of technological marvels…state-of-the-art medical devices…the part that patients see.”

– Forbes 

The back office provides essential administrative functions to support the day-to-day running of a business, but it is not involved in revenue generation directly. There is no direct interaction between clients and employees in the back office, and it offers a seamless and efficient carrying out of business operations.

The back office includes compliance, human resources, accounting, operations management, and information technology departments. The back office is involved in recruiting new employees, designing and maintaining computer systems, maintaining databases for the seamless running of a company, and handling the company’s finances, making the back office essential in sustaining a business.

Being the growing world of IT and the increased costs for hiring a full-time developer, business owners are always looking for avenues to increase productivity while reducing overhead. This is where outsourcing may play a part. Yes, they’re pros and cons, but a new form of outsourcing is becoming increasing popular. To learn more about nearshore outsourcing and its importance, consider clicking: here

Back Office Roles and Responsibilities

The back office serves as the support framework for the front office. It is used in planning, monitoring, and improving business operations. Operating decisions, strategic meetings, and data gathering, all of which culminate in the end product the customer sees at the front office, occur in the back office. Finance, accounting, human resources, and information and technology systems are some of the core parts of the back office. The back office is the backbone of an organization.

The employees work behind the scenes to manage critical business processes so that the front office can attract new clients, creating new revenue streams for the business.

What is the Front Office?

The central administrative unit or office in any organization or business is called the front office. It is usually the first stop for customers visiting a company. The employees in the front office ask customers questions, thus getting more information from them and providing them with the assistance they are seeking. The front office is designed to facilitate customers transacting with the company.

The front office roles may vary depending on the industry, from reception to sales and marketing. The front office is the division of a business involved in the direct interaction or involvement with the clients. It is the revenue-generating unit of a company because they offer direct customer services.

A perfect example of this are customer service agents. Since this is usually the largest division in a company many U.S. businesses will outsource these roles to a firm from countries like India and the Philippines. Some of the biggest companies you know, and love will exercise this business model. We’ve put some of the biggest names together in a list to further explain the best examples of outsourcing. Click “list” to be redirected.

What is the Back Office?

The administration of a company happens in the back office, which is the unit involved in producing goods or services. There is no direct contact with clients in the back office. The function of the employees in this section is to assist the front office in ensuring a seamless business running. They help the front office to execute their roles. The employees run the day-to-day activities of a company.

They are recruiting new talents, database maintenance, production, designing and maintaining computer systems, and handling the business’s finances. Because there is no direct contact with the customers, less income is generated from the back office. The smooth running of the back office contributes to the success of a business. How the back office of a company is set depends on the industry.

Jobs in the back office include finance assistants, information technology specialists, human resources assistants, compliance officers, data analysts, risk analysts, and operations managers.

What is the Middle Office?

The middle office exists in huge businesses and organizations such as finance companies or investment banks. It provides the front office with such services as risk management and is also used to assist the front office in complex financial transactions. It is used in risk assessment, tracking, and calculating profits and losses. Evaluation of legal compliance with a company’s business transactions is done in the middle office. Forbes Mazaine points out that the space between the two, called the middle office, is where most business operations run and remains a tangle of custom applications… and manual processes (3).

Front Office vs. Back Office Infographics

Definition

front office- the front end of a business that interacts directly with clients.

Back office- this section of a company mainly handles administrative duties daily.

Customer Involvement

front office- is direct contact with existing and potential customers.

Back office- there is no direct involvement or interaction with clients.

Strategy

Front office- it is involved in strategy development in a business.

Back office- is involved in human resources roles and management of compliance.

Responsibility

Front office- is responsible for offering sales, marketing, and after-sales services to clients in a business.

Back office- it is responsible for daily running or administration operations that ensure the smooth running of a business.

Remuneration

Front office- the staff are highly paid as they are responsible for revenue generation in a business.

Back office- the salaries are generally lower depending on the nature of their work in the organization.

Main function

Front office- the primary role is to increase demands and sales in a business.

Back office- it is involved in the production or manufacturing of goods or services.

Interactions

Front office- they sell and interact with customers of a business.

Back office- provides technical support in management, finance, IT, warehousing, etc., without interacting with clients.

Area of focus

Front office- mainly involved in generating and increasing revenues in a business.

Back office- the central area of focus is reducing costs.

Front office vs. back office vs. middle office

The front office is considered the revenue-generating arm of a business. Thus their employees earn a higher salary than the back-office staff. The front office is responsible for offering customers sales, marketing, and after-sales services. The back office is involved in daily administrative duties and the seamless functioning of a business.

The middle office ensures that transactions are in line with contracts. It may exist to offer IT services such as software management. Employees in the central office may perform the role of capturing and monitoring market data.

What is the Salary difference Between the Front Office & the Back Office? Is one better than the other?

The salaries vary depending on the staff’s roles in front and back offices. The wages also depend on either unit of operation’s impact on a business. The front office is regarded as a company’s revenue-generating unit, making it have the most significant impact on a business. Therefore, the employees in the front office earn a higher salary than those in the back office.

The back office is the support system of the front office, and its role is not directly involved in revenue generation. The staff, therefore, earn a lower salary than those in the front office. The wages in the front office are consequently better than in the back office.

Being that front office staff comes at a higher cost, this is primarily the reason why companies chose to outsource, to reduce overhead.  Interestingly enough, they’re other valid reasons why a business may want to pursue this hiring model. Click: “outsource work” to learn more.

Front Office & Back Office: What is the Difference?

The back and front offices must work together for business operations to run smoothly and make profits. However, they both play different roles in the running of an organization. The two units also earn different salaries depending on their organizational roles. The front office is endowed with the part of interacting with the organization’s clients.

They will interact with them in various stages, from reception, sales, and marketing to aftersales services. The front office is therefore involved in finding and maintaining the clients of a business.  The front office thus generates revenue for a company. On the other hand, the back office is mainly involved in administrative duties in an organization.

The back office does not interact with the company’s clients but ensures a seamless business operation. The back office includes warehousing, human resources, information technology, accounting, etc.

    .Net Developers Frequently Asked Questions About front office vs back office

    What’s the difference Between the front office and the back office?

    By definition, the front office is where direct interaction with clients occurs. In the back office, its prominent roles are administrative. The back office doesn’t interact with the customers at any point. The front office is also responsible for developing strategies in a company which are then passed on to the back office. The back office provides human resources management, such as acquiring new talents for a business and compliance.

    What is a front office role?

    The core role of the front office is to find means to increase demand and sales. It is the face of a company interacting with its customers. The main focus area of the front office is to generate and grow a business’s revenue.

    What is the role of the back office?

    The role of the back office is to provide for the behind-the-scenes activities such as warehousing, accounting, finance, and management of IT systems. The back office aims to reduce the cost of a business and is involved in producing a company’s products or services.

    Being that back office team members have the responsivities of reducing business costs, they are often staffed via outsourcing firms. For example, software development is a very in demand skill that comes at a high salary. However, at Sonatafy we understand the power of outsourcing, and specialize in the nearshore software development model.

    Essentially our goal is to prove you with top talent at a reduced rate, from a country that boarders the U.S. This eliminates issues like time zones, language barriers, and cultural differences. To learn more about how Sonatafy can provide you with nearshore software development, click on the blue text.

    Final Remarks

    It is essential to agree that, for a business to grow and make profits while still ensuring its operations run seamlessly, the front and back offices must work concurrently. Integration of technology in workplaces has seen the involvement of back office staff work together with front office staff to generate revenue for a company. The use of technology has seen more client interaction leading to more revenue generation. Ultimately, the front and back offices need to co-exist to increase productivity for a business or company in the long run.

    References:

    1. Front- and back-office change activities don’t need to occur at the same time but understanding how each supports the business and coordinating efforts is essential for transforming into a truly digital organization. – Forbes Quote
      https://www.forbes.com/sites/forbestechcouncil/2021/04/28/return-on-experience-how-to-align-front-and-back-office-transformation/?sh=3c3727b378ca
    2. Anyone who has visited a hospital recently has been confronted by a gleaming array of technological marvels…state-of-the-art medical devices…the part that patients see.– Forbes Quote
      https://www.forbes.com/sites/insights-intelai/2019/02/11/the-back-office-revolution/?sh=2c77e0eb2072
    3. Return On Experience: How To Align Front And Back Office Transformation– Forbes
      https://www.forbes.com/sites/forbestechcouncil/2021/04/28/return-on-experience-how-to-align-front-and-back-office-transformation/?sh=3c3727b378ca
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