SMEs outsourcing more back end roles

Rental Costs

According to a recent Straits Times / Business Times article, more SMEs are outsourcing back end roles to combat higher business costs and labour shortages. While this is primarily a cost reduction tactic to save on office rentals which in Singapore average anywhere for $4 in fringe areas to $12 per square foot in prime locations in buildings. Offices in less desirable locations that charge lower rentals, but are distant from public transport connections or are located in older run down buildings, find it even more harder to attract and retain good talent.

A number of new Hot desking and co working spaces have sprung up to address the needs of startups who are looking for a lower monthly cost per seat arrangement to manage their office space requirements. A recent trend is that these outsourced service providers often sign up for co-working spaces themselves and service the SME clients from one of the many locations the co-working spaces offer across Singapore to be near to their clients.

Prior to the pandemic, Singapore attracted migrant labour from Malaysia and nearby countries but with residential rental increases it is harder for lower paid back office support employees to make ends meet. Outsourcing allows SMEs to reduce their costs while the work can be performed from a cost effective location.

Outsourcing – not a new phenomenon

While outsourcing is not a new phenomenon, it has traditionally been more prevalent in the Information Technology or IT industry. Software Development outsourcing to lower cost countries like Eastern Europe, India, Philippines and other Asian countries flourished due to the abundance of skilled English educated resources. Now, however, more back office functions are hopping on to the outsourcing bandwagon.

Ezee Pte Ltd. also provides outsourcing services including CFO on Demand services. The article touches on this aspect albeit briefly. SMEs need access to expertise in various fields but cannot afford a full time individual either due to lack of budgets, size of the business and various other factors. However, having access to a seasoned finance professional, that has many years of experience not only in the small business or startup environment but also in the MNC environment has much to offer to an SME in terms of value add. Ezee’s outsourcing model works on a resource being available on a part-time basis, at hourly rates and the SME can customise the time spent by the consultant based on their internal needs.

Making Outsourcing successful

While the outsourcing trend is certainly growing, SMEs must also realise that internal resources cannot be reduced totally. The outsourced company needs someone internally in the company to liaise with, share information as well as communicate with on a regular basis. SMEs that fail to manage this critical aspect often fail to realise the benefits of outsourcing.

Technology investment

SME’s often cut corners when it comes to technology spend. With the plethora of SAAS softwares available in the market today, a lot of work is heavily technology reliant. Cloud storage services, software user licences are some of the incremental costs SMEs need to incur to ensure the outsourced service provider can work efficiently and seamlessly. SMEs also often fail to see the value in using additional technology modules available with their core systems either out of the box or via API integrations because they follow old time tested manual processes and recreate those processes in the workflow which is redundant. By leveraging on available technology, and being open to exploring new and modern methods of collaboration and process flows, the SMEs can benefit from automation, process efficiency and lower costs.

The savings realised from lower rental costs more than pay for the incremental technology costs which are now spread out as a fractional cost over a longer period via monthly subscriptions. This greatly reduces immediate capital expenditure while providing cash flow benefits immediately.

Ezee Pte. Ltd – provides Accounting, Corporate Tax, Corporate Secretarial and CFO on Demand services. To learn more about how outsourcing can help your business reach out to us at or find out more at