Outsourcing: a glossary of commonly used terms in the industry – 1

Outsourcing is more than a sector, it is a rich and constantly evolving universe. If your company plans to outsource one or more services, here is a glossary to master the most commonly used terms in outsourcing, from Application service provider (ASP) to Gain-sharing.

(Source: https://onlinelibrary.wiley.com/doi/pdf/10.1002/9781119201205.gloss – onlinelibrary.wiley.com)

Application service provider (ASP)

A company that provides individuals or businesses with remote access to applications and related services.

Backsourcing

Expiration or termination of an outsourcing agreement and the internal resumption of the outsourced function.

Baseline

Starting point to define your needs. As with any measure, the art of outsourcing is to define the relevant parameters.

Benchmarking

Method of comparing contract services to market services or other independent standards

Best of breed

Designates the best provider in its category of services. On the other hand, if a provider does not enjoy this reputation, it can be considered due to the superior integration of interoperable services and infrastructures. Therefore, when selecting a provider, the question is whether a leading provider is better than an integrated provider.

Best practices

These practices and procedures, followed regularly, reflect the relevance and experience of the companies. The collection, interpretation and assembly, as well as the redefinition and updating of best practices have historically been done by management consultants working in many industries and analysing lead wires.

Business-to-business (B2B)

The exchange of products, services or information between businesses rather than between businesses and consumers.

Business-to-consumer (B2C)

The retail aspect of e-commerce on the Internet. It is often opposed to business-to-business (B2B) e-commerce.

Business-to-employee (B2E)

Internal communications between employees and between departments enabling the former to achieve savings by reducing internal costs. B2E processes can be customised according to the business environment of the company.

Business process

A set of defined steps needed to achieve a business objective. Business objectives may include any business operation, including product design, marketing, sales, finance, accounting, manufacturing, logistics, supply chain management, customer relationship management, and other special business relationships.

Business process outsourcing (BPO)

The purchase of particular services that involve the continuous outsourcing of specific business processes. In some industries, design, manufacturing, inspection and logistics may be outsourced. More recently, BPO has integrated internal back-office functions such as internal audit, finance, invoicing, accounting and other operational support. Front-office BPO functions can include customer relationship management, sales, call centres, and fulfilment services, as is the case at ProContact.

Business process reengineering

Represents planned changes in how a business function is performed, such as information collection and reporting, manufacturing, finance, compliance, or administration.

Change control or change management

All structures, procedures and rules governing the adoption and implementation of changes in the commercial or financial relationship between the customer and the service provider.

Clawback

Provision in a contract that requires a party who has taken an advantage to return the advantage due to subsequent terms.

Common objects

Models of data representations exchanged between different software applications. These data are all categories that can be defined by category and associated metadata. For example, a common object may include a customer name, order number, or product (inventory management unit or SKU).

Competitive insourcing

Process in which internal employees can participate in tenders to compete with third-party bidders for a defined scope of work.

Consequential damages

Damages resulting from breach of contract that are measured by loss of revenue or loss of business opportunities.

Control without ownership

Result of well-planned arrangements in which the client obtains efficient use of its sources from the external service provider (otherwise known as magic).

Co-sourcing™

The term used by an external service provider to refer to its brand of outsourcing services. See also smart-sourcing; outsourcing

Customer relationship management (CRM)

Marketing and execution system that typically includes a call centre, databases, software, and marketing strategy. Like enterprise resource planning (ERP), CRM initiatives are complex and involve redesigning internal business processes and retraining. The success of a CRM outsourcing contract requires special attention to business, technological and legal issues.

End-to-end process

Completion of a business process from start to finish, including all intermediate steps of entering, processing, analysing, generating results, and in some cases implementing tasks specified by the logic (algorithm) that defines the business process.

Enforceability

Conditions under which the terms, conditions and obligations of the parties under an agreement will be adopted and confirmed by a court of competent jurisdiction.

Enterprise resource planning (ERP)

Software that integrates the various functions of a company based on data sharing into a common database that, once processed, generates relevant management information for purchasing services, manufacturing, sales, delivery and associated internal processes (such as HR and accounting). In principle, ERP software is able to manage the company (and several companies) as an integrated operation.

Exchanges

Exchanges use the internet to allow qualified and registered users to search for buyers or sellers of goods and services. Depending on the approach, buyers or sellers can specify prices or call for tenders. Transactions can be initiated and completed, and ongoing purchases can allow customers to benefit from volume discounts or special offers.

Extranet, extension of the intranet (see intranet)

Information solution for users outside the company. Extranets are used to provide access to information that can be used by suppliers, customers, banks and other financial institutions, and others needing access to a company’s data.

Facilities Management Solution

Solution by which the customer entrusts to an external provider the responsibility of the operations and software applications and the management of the associated instruments (hardware, software, application programming personnel, etc.), while maintaining the guardianship and general supervision of its information technologies. More broadly, facility management can be applied to other areas, such as maintaining, updating, or revising applications.

Fraud

An intentional deception, for an unfair advantage, that causes a loss or disadvantage to the party relying on the false or misleading statement. In contractual matters, fraud is the cause of an error in a material part of the contract.

Gain-sharing

Long-term risk and reward sharing technique. Euphemistically, gain sharing does not qualify as risk sharing, so care must be taken to identify what is being shared and why.

Part 2