Back Office Outsourcing: What to Hand Off First

Somewhere between ten and fifty employees, the administrative load of a company starts growing faster than the company itself. Invoices need coding, payroll needs running, new hires need paperwork, and the monthly close slips from five days to ten. The people absorbing that work are usually founders, controllers, and operators whose time is worth far more than the tasks consuming it.

Back office outsourcing is the standard fix, and it has been for decades. When it goes wrong, it usually goes wrong in one of two ways: the company handed off judgment-heavy work that should have stayed in-house, or it handed off the right work with no documentation, no metrics, and no review rhythm. Both failures are avoidable, and both are sequencing problems more than vendor problems.

This guide covers what actually counts as back office work, which functions to move first and why, how a clean handoff runs, what a serious security review looks like, and what you should expect to pay. We build and run nearshore back-office teams for US, UK, and EU companies at LS Global, so this is written from the delivery side of the handoff, not the sales side.

What counts as back office work

The back office is everything your customers never see but your business cannot run without. In most companies it covers:

• Accounting and bookkeeping, from daily transaction recording through reconciliations and month-end close
• Accounts payable and receivable, including invoice processing, payment runs, billing, and collections follow-up
• Payroll, covering processing, deductions, and the filings and reports that go with it
• HR administration, meaning onboarding paperwork, employee records, benefits administration, and offboarding
• Recruiting coordination, the scheduling, screening logistics, and candidate communication behind every hire
• Data entry and document processing, wherever information has to move from documents into systems
• Reporting, the recurring management reports, dashboards, and reconciliation packs that leadership relies on

These functions share a profile. They recur on a schedule, they follow definable rules, and their output can be checked against a standard. That profile is exactly what makes them outsourceable. For the wider view of how outsourcing engagements are structured and priced, our business process outsourcing guide covers the models in depth. This article stays on the back office specifically: what moves, in what order, and how.

What to hand off first

The sequencing principle is simple. Move work that is rule-based, high-volume, and well documented (or easy to document) before work that depends on judgment and context. Errors in the first category are cheap and visible. Errors in the second are expensive and quiet. In practice, a sensible order looks like this:

1. Accounts payable processing and data entry. Invoice capture, coding, matching, and entry are high-volume tasks with clear rules. Mistakes surface quickly and reverse easily, which is why AP is the classic starting point.
2. Accounts receivable and billing administration. Invoice generation, payment application, and collections follow-up run on defined workflows, and consistency here directly improves cash flow.
3. Bookkeeping and reconciliations. Once the transactional layer is stable, daily bookkeeping and bank reconciliations move over as a natural extension of the same work.
4. Payroll and HR administration. These carry more sensitivity, so they move after the relationship has a track record, with access controls to match.
5. Close support and reporting. Month-end schedules, accrual preparation, and management reporting packs come last because they need the most context about your business.

What stays in-house: final payment approvals, sign-off on the close, hiring decisions, forecasting judgment, and anything touching strategy or banking relationships. You are outsourcing the production of the work, never the accountability for it. A useful test: if you can write down how a task is done and check the result against a rule, it can move. If the knowledge lives only in someone's head, document it first or keep it.

One distinction is worth settling before you commit. If what you really want is an extra person working inside your own workflow rather than a partner who owns a process end to end, that is a different engagement model. Our comparison of staff augmentation vs outsourcing walks through when each one fits.

How a good handoff actually works

Most back-office functions in growing companies have no written procedures, and that is not a blocker. It is the first deliverable. A good partner documents the process while taking it over: your person performs the task, the incoming team records each step, and you review the resulting procedure for accuracy. You end the transition with something most companies never had, a written operating manual for your own back office.

Next comes a shadowing period, typically two to four weeks. The new team watches first, then performs the work with every output reviewed, then takes ownership with spot checks. Rushing this stage is the most common self-inflicted wound in outsourcing, because the shadowing weeks are where the edge cases surface. A vendor who wants to skip them is telling you something.

Metrics start in week one, not month three. Agree on a handful of KPIs and SLAs before the first invoice moves: turnaround time, error rate, close-day targets, response time on queries. The point is not policing. It is that the question of whether the arrangement is working should be a number you look at, not a feeling you argue about.

Finally, hold a short weekly review for the first two or three months. Thirty minutes to walk the metrics, clear the open questions, and update the procedure document. As the numbers stabilize, taper to biweekly and then monthly. Teams that keep this rhythm rarely get surprised. Teams that skip it tend to discover problems during a quarter-end scramble.

The security question, answered seriously

Handing payroll data, bank details, and employee records to an external team is a legitimate concern, and it deserves more than a reassuring sentence. Here is what a serious answer looks like.

First, access control built on least privilege. Every person on the outsourced team should hold the minimum access their task requires, inside your systems, under your permissions, revocable by you in minutes. Someone processing invoices needs entry access in your accounting platform. They do not need admin rights, payment release, or visibility into anything beyond their function.

Second, independent certification. ISO/IEC 27001 and SOC 2 are the two standards worth asking about, and LS Global holds both. They matter because they are audited: an external assessor verifies that security controls exist and actually operate, rather than taking policy documents on faith. A provider that cannot name its certifications has answered your question already.

Third, audit trails and segregation of duties. Every action in your systems should be logged and attributable to a named person, and the person who enters an invoice should never be the one who approves its payment. Keep payment release and final approvals in-house permanently. That rule costs you nothing and closes off most of the fraud scenarios people worry about.

What back office outsourcing costs

Start with what the work costs you now, fully loaded. In the US, benefits typically add 20 to 30 percent on top of salary, before you count equipment, recruiting fees, and the management time the role consumes. For finance and accounting roles, that puts the all-in monthly cost per full-time person somewhere between $5,600 and $12,000 in the US market, depending on seniority and location.

The same roles staffed through our nearshore hubs in Pristina, Kosovo and Skopje, North Macedonia typically run $2,900 to $6,400 all in per month, and that figure includes recruiting, payroll, compliance, equipment, and HR support, so there is no second invoice hiding behind the first. Across back-office functions broadly, all-in costs typically land 40 to 55 percent lower than the equivalent US hire. The exact number depends on the roles and seniority mix, and any provider quoting a precise saving before scoping your work is guessing. For a quick estimate against your own headcount plan, the talent calculator runs the comparison in a few minutes.

The compounding benefit: staff, run, automate

Here is the part most buyers miss when comparing providers on day-one price. A team that runs your process every day is in the best position to automate pieces of it, because it sees every exception and every repetitive step. That is the model we built LS Global around: staff the function, run it against service levels, then automate the slices that no longer need a human, such as invoice data capture, recurring report generation, and reconciliation matching.

Each automated piece removes hours from the engagement, so where the process allows it, cost per transaction tends to fall over time. Compare that with an internal back office, where the cost of headcount only moves in one direction. An outsourced function with automation behind it is the rare cost line that can shrink while volume grows.

If the administrative load is eating your calendar, resist the urge to move everything at once. Pick one function, usually accounts payable or bookkeeping, run the handoff with the structure described here, and expand once the numbers hold. Our outsourcing services page explains how we build and run these teams, and if you would rather talk through your specific stack and volumes first, reach out through our contact page. We will give you a straight read on what is movable now and what should wait.

Frequently asked questions

What is back office outsourcing?

Back office outsourcing means handing recurring administrative functions, such as accounting, bookkeeping, accounts payable and receivable, payroll, HR administration, data entry, and reporting, to an external team that runs them under agreed service levels. Customer-facing work stays with you, while the operational production behind it moves to a partner.

Which back office functions should I outsource first?

Start with rule-based, high-volume work such as accounts payable processing, data entry, and bookkeeping, where the rules are clear and mistakes are cheap to catch and reverse. Move to close support and reporting once the relationship has a track record. Keep final approvals, payment release, and strategic decisions in-house.

Is it safe to outsource accounting?

It is when the provider treats security as a discipline rather than a talking point. Look for ISO/IEC 27001 and SOC 2 certification, least-privilege access inside your own systems, full audit trails, and segregation of duties so the person entering invoices can never release payments. Keeping payment approval in-house adds a further layer of control.

How much does back office outsourcing cost?

For finance and accounting roles, an all-in monthly cost per full-time person typically runs $5,600 to $12,000 in the US market versus $2,900 to $6,400 through a nearshore partner like LS Global, with pricing that covers recruiting, payroll, compliance, equipment, and HR support. Across back-office functions, all-in savings typically land between 40 and 55 percent, depending on the roles and seniority involved.

Will I lose control of my processes if I outsource them?

Not if the handoff is structured properly. The work should run inside your systems under your permissions, with documented procedures, KPIs and SLAs from the first week, and a weekly review during the early months. Many companies end up with more visibility than they had before, because the process is finally written down and measured.