25 Business Outsourcing Strategy Terms
In today’s global market, many companies are turning to outsourcing as a means to streamline their business operations and increase efficiency. However, for those who are new to the concept, understanding the various terms associated with outsourcing can be overwhelming.
- Business Process Outsourcing (BPO): Refers to the outsourcing of specific business processes such as payroll, human resources, accounting, etc. to third-party service providers.
- Knowledge Process Outsourcing (KPO): The outsourcing of knowledge-based business processes that require specialized skills and expertise.
- Information Technology Outsourcing (ITO): The outsourcing of IT services such as software development, maintenance, support, etc. to external service providers.
- Offshoring: The practice of outsourcing business processes to a foreign country.
- Nearshoring: Refers to the outsourcing of business processes to a neighboring or nearby country in order to reduce costs and improve communication.
- Reshoring: The opposite of offshoring, refers to bringing back outsourced business processes to the company’s home country.
- Captive or In-House Outsourcing: The creation of a subsidiary or dedicated department within the company to handle outsourced processes.
- Business Process Reengineering (BPR): The redesigning and restructuring of existing business processes in order to improve efficiency and effectiveness.
- Multi-Sourcing: The practice of outsourcing different business processes to multiple service providers.
- Joint Venture (JV): A partnership between two or more companies to jointly outsource a particular business process.
- Request for Proposal (RFP): A document sent to potential service providers outlining the company’s requirements and soliciting bids for an outsourced project.
- Service Level Agreement (SLA): A contract between the company and the service provider specifying the level of services to be provided, performance metrics, and consequences for not meeting them.
- Key Performance Indicators (KPIs): Specific measurable parameters used to evaluate the performance of an outsourced process or service provider.
- Transition Management: The process of smoothly transferring business processes from in-house to an outsourced service provider.
- Vendor Management: The management and oversight of relationships with multiple service providers.
- Business Continuity Planning (BCP): A plan to ensure that critical business processes continue in the event of a disruption or disaster.
- Change Management: The process of managing changes to existing business processes during outsourcing.
- Service Integration and Management (SIAM): The coordination and integration of services from multiple service providers to ensure seamless delivery.
- Total Cost of Ownership (TCO): The total costs associated with outsourcing a particular business process, including direct and indirect costs.
- Due Diligence: The process of thoroughly researching and evaluating potential service providers before entering into an outsourcing agreement.
- Intellectual Property Rights (IPR): The ownership of any intellectual property created or used during the outsourcing process.
- Service Delivery Model: The framework used to deliver outsourced services, such as onshore, offshore, or hybrid models.
- Business Transformation: The significant changes that occur in a company’s operations and structure as a result of outsourcing.
- Knowledge Transfer: The process of transferring knowledge and skills from the company to the service provider during outsourcing.
- Continuous Improvement: The ongoing process of identifying and implementing improvements in outsourced processes to increase efficiency and effectiveness.
After learning about 25 business outsourcing strategy terms, it’s clear that outsourcing has become a crucial part of running a successful business. From cost savings to increased efficiency, there are numerous benefits to outsourcing certain tasks or processes.