25 Business Outsourcing Strategy Terms

 25 Business Outsourcing Strategy Terms

 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.




  1. Business Process Outsourcing (BPO): Refers to the outsourcing of specific business processes such as payroll, human resources, accounting, etc. to third-party service providers.


  1. Knowledge Process Outsourcing (KPO): The outsourcing of knowledge-based business processes that require specialized skills and expertise.


  1. Information Technology Outsourcing (ITO): The outsourcing of IT services such as software development, maintenance, support, etc. to external service providers.


  1. Offshoring: The practice of outsourcing business processes to a foreign country.


  1. Nearshoring: Refers to the outsourcing of business processes to a neighboring or nearby country in order to reduce costs and improve communication.


  1. Reshoring: The opposite of offshoring, refers to bringing back outsourced business processes to the company’s home country.


  1. Captive or In-House Outsourcing: The creation of a subsidiary or dedicated department within the company to handle outsourced processes.


  1. Business Process Reengineering (BPR): The redesigning and restructuring of existing business processes in order to improve efficiency and effectiveness.


  1. Multi-Sourcing: The practice of outsourcing different business processes to multiple service providers.




  1. Joint Venture (JV): A partnership between two or more companies to jointly outsource a particular business process.


  1. Request for Proposal (RFP): A document sent to potential service providers outlining the company’s requirements and soliciting bids for an outsourced project.


  1. 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.


  1. Key Performance Indicators (KPIs): Specific measurable parameters used to evaluate the performance of an outsourced process or service provider.


  1. Transition Management: The process of smoothly transferring business processes from in-house to an outsourced service provider.


  1. Vendor Management: The management and oversight of relationships with multiple service providers.


  1. Business Continuity Planning (BCP): A plan to ensure that critical business processes continue in the event of a disruption or disaster.


  1. Change Management: The process of managing changes to existing business processes during outsourcing.


  1. Service Integration and Management (SIAM): The coordination and integration of services from multiple service providers to ensure seamless delivery.


  1. Total Cost of Ownership (TCO): The total costs associated with outsourcing a particular business process, including direct and indirect costs.


  1. Due Diligence: The process of thoroughly researching and evaluating potential service providers before entering into an outsourcing agreement.


  1. Intellectual Property Rights (IPR): The ownership of any intellectual property created or used during the outsourcing process.


  1. Service Delivery Model: The framework used to deliver outsourced services, such as onshore, offshore, or hybrid models.


  1. Business Transformation: The significant changes that occur in a company’s operations and structure as a result of outsourcing.


  1. Knowledge Transfer: The process of transferring knowledge and skills from the company to the service provider during outsourcing.



  1. 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.

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