021/9003
Home » Glossary of terms

Glossary of terms

glossary

Activity-based accounting = A form of cost accounting that focuses on the costs of performing specific functions (processes, activities, tasks, etc.) rather than on the costs of organizational units. ABC generates more accurate cost and performance information related to specific products and services than is available to managers through traditional cost accounting approaches.

Activity-based pricing  = Clients agree to pay a flat fee to cover the service provider’s fixed and variable costs — including hardware and software, labor, infrastructure and administration and maintenance. Activity-based costing is often used when establishing an offshore development center (ODC) or putting together a build-operate-transfer model.

Amendments = An aspect of the outsourcing contract’s Terms and Conditions. Specifies how any subsequent changes to the deliverables as requested by either party will be handled.

Application Management Services Framework (AMSF) = an approach to outsourcing management through a well-defined, custom-developed set of processes, policies, procedures, standards and templates.

AMSF embodies a number of specific methodologies fully equipped to deliver various engagement results. These methodologies include defined processes with appropriate tools and techniques such as standards, guidelines, templates, forms, checklists, etc. Each methodology derives value from quality-oriented activities at various stages and checkpoints throughout the life-cycle. These include planning, governance, verifications and validations, auditing and status reviews. The methodologies are always customized to fit the needs of the engagement.

ARD = Acquired Rights Directive. First introduced in Europe in 1977. The original Directive was intended to safeguard the rights of workers by ensuring that workers were entitled to continue working for the transferee employer on the same terms and conditions as those agreed with the transferor employer. Whenever a transfer is within the Directive, contracts of employment run with the undertaking; the transferee cannot take the business without the employees and must take those employees subject to existing employment rights and obligations. Further, a transfer cannot constitute grounds for dismissal, whether carried out by the transferor or transferee, unless there is an economic, technical or organizational reason entailing changes in the workforce. ARD has been modified through the years to address specific circumstances.

Avasant = leading management consulting firm providing sourcing advisory, technology  optimization, and globalization advisory services.

Back office functions = Those business processes such as finance & accounting, human resources, administration, procurement, payroll, legal accounting, benefits management, information technology, marketing, legal, logistics, payroll and procurement.

Backlash = The term used to describe the effect of public outcry that sometimes takes place when an organization announces its decision to outsource a function and transfer workers to the service provider taking over that function or lay them off.

Backsourcing = a term that more precisely describes the process of bringing jobs previously outsourced  back under the roof of the company to be performed internally.Backsourcing has been increasingly discussed as companies decide to cease outsourcing operations, whether because of the issues outsourcing agreements encounter, because of pressure to bring jobs back to their home country, or simply because it has stopped being efficient to outsource a given task outside of a company.

Balanced scorecard = A method for conceptualizing the strategic alignment between business goals and specific tactics. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results.

Basel II = Financial regulations and privacy regulations in Europe.

Benchmarking  = A study in which components of a company’s contracted services, such as price, service levels and terms & conditions are compared to those of peer companies. Frequently, an independent entity with experience in peer organizations is called in to perform the study. For example, to assess IT performance, a research firm or advisor may collect the client’s data and create reports to plot client performance against a selected reference group. This provides a somewhat objective assessment of the performance of the services. Benchmarking is a continuous process whereby an enterprise measures and compares all its functions, systems and practices against strong competitors, identifying quality gaps in the organization, and striving to achieve competitive advantage locally and globally.

Best Practice = A way or method of accomplishing a business function or process that is considered to be superior to all other known methods. A lesson learned from one area of a business that can be passed on to another area of the business or between businesses.

Best shore = A term used by some service providers to describe their strategy of having work done at the optimal location, whether domestically or offshore.

BOT = Build-Operate-Transfer. A firm contracts with an offshore partner to build a shared services or offshore development center and operate it for a fixed interim period. Organizations try this with the expectation that the offshore partner can initiate operations and reach operating stability much faster than it can with an in-house effort.

BPM = Business process management. The orchestration of the interactions between the people, applications, and technologies that comprise a business process and in concert create customer value.

BPO  = Business process outsourcing. The transfer of internal business processes, such as customer relationship management, finance & accounting, human resources and procurement, to an external service provider that improves these processes and administers these functions to an agreed service standard and, typically, at a reduced cost.

Build-Operate-Transfer model = A firm contracts with an offshore partner to build a shared services or offshore development center and operate it for a fixed interim period. Organizations try this with the expectation that the offshore partner can initiate operations and reach operating stability much faster than it can with an in-house effort.

Business benefit contracting = A contractual agreement that defines the service provider’s contribution to the client in terms of specific benefits to the business and defines the payment the client will make based upon the service provider’s ability to deliver those benefits. The goal is to match costs with benefits and to share the risks.

Business outcome achievement = Framework in which the provider doesn’t receive any payment unless specified business outcomes are achieved. High risk for the provider, medium risk for the client. Only appropriate for transformation deals.

Call centers = A batch of operators who handle phone calls. Computer telephony integration has enabled automated resolution of calls and more efficiencies in human calls.

Captive Centers  = Offshore companies set up by organizations to provide internal services and in some cases to sell those same services to clients. Often U.S. and European organizations set up captive centers for their outsourced work.

Competency center = Mechanism for implementing the functions of a sourcing management office. It provides centralized services in advising and coaching other divisions in the organization. It collects and disseminates best practices and recommends standards.

Chief sourcing officer = Executive level person who oversees sourcing governance elements in an organization. Typically, the CSO and his or her team is responsible for overseeing every sourcing decision made.

Cloud storage = a model of networked online storage  where data is stored in virtualized pools of storage which are generally hosted by third parties. Hosting  companies operate large data centers, and people who require their data to be hosted buy or lease storage capacity from them. The  data center operators, in the background,  visualize  the resources according to the requirements of the customer and expose them as storage pools, which the customers can themselves use to store files or data objects. Physically, the resource may span across multiple servers.The safety of the files depends upon the hosting websites

Confidentiality = An aspect of the outsourcing contract’s Terms and Conditions. Requires the parties to keep confidential, information they acquire with respect to each other.

Contact centre =  a facility used by companies to manage all client contact through a variety of mediums such as telephone, fax, letter, e-mail and increasingly, online live chat.

Distinct from  call centers , that purely handle telephone correspondence, contact centres have a variety of roles that combine to provide an all encompassing solution to client, and customer contact. Contact centres, along with call centres and communication centres all fall under a larger umbrella labelled as the contact centre management industry.

Continuous performance reporting = The ongoing responsibility of communication, monitoring and reporting of service level agreement metrics. You need to address how performance is monitored and reported; how targets are established; who is responsible for reporting; what the schedule is for client reviews; what the timeframe, content and format will be for standard reports; and when and how exceptions are to be reported.

Cost and value discovery = The ongoing effort to capture the full value and expenses of outsourcing, as it moves through its various phases. In other words, once the business case is made, it continues to be changed, refined and revised to reflect ongoing discovery.

Cost/benefit model = Quantifiable costs plus quantifiable benefits adjusted for the risks equals value. An attempt to quantify every benefit and cost for inclusion in the financial analysis, even the so-called intangible or “soft” costs and benefits. The reason it is important to quantify everything possible is this: If no financial value is assigned to an agreed cost or benefit, that impact contributes exactly nothing to the financial analysis.

Cost-benefit analysis = Process of weighing the total expected costs vs. the total expected benefits of one or more activities in order to choose the best or most profitable option.

Cost-plus pricing  = Also known as “open-book” pricing. In this model, the client pays the service provider for the actual cost of the service plus a markup or profit margin. Popular with offshore development center (ODC) or build-operate-transfer models. Frequently used as an interim contractual measure. Only appropriate for efficiency deals.

Crowdsourcing = a  process that involves outsourcing tasks to a distributed group of people. This process can occur both online and offline.Crowdsourcing is different from an ordinary outsourcing since it is a task or problem that is outsourced to an undefined public rather than a specific body.

Customer satisfaction benchmarking = A measurement of how users feel about the services being delivered to them. Frequently, the benchmarking or survey work is done by a third-party firm.

Dashboards = A mechanism to collect, track and communicate the results of various key services and to link these results to business outcomes.

Data center operations = Information technology work encompasses: computer operator training, disaster recovery/power backups, equipment leases, floor/space management, hardware and network operations, HVAC/Halon, job scheduling, monitoring mainframe/server performance, operations/end user support, security, server uptime, storage management/tape backup, trouble/help desk.

Direct foreign investment = The practice of opening up a plant, office or other operation in a foreign country and closing or not opening one domestically. A redeployment of capital in foreign lands.

Disaster recovery = Services that encompass getting the organization back to a running state when disaster — small or large — has struck. In the context of outsourcing, this includes security, backup, power management and data recovery. One aspect of disaster recovery that’s important in an outsourcing arrangement is whether the service provider has an alternative facility in the event of a disaster — and in how many hours or days a client will be able to recover.

Downsizing = A term that describes a reduction in staff headcount.

Dragnet clause = A contractual clause that provides that the service provider perform services and functions performed by in-house staff during the one-year period preceding the contract, even if they’re not described in the statement of work.

Economies of scale = A term used to describe the efficiencies a service provider or internal department can achieve through standardization, commodity negotiation and adherence to process management.

Efficiency sourcing deal = A sourcing relationship in which the focus is on efficiency of operations — primarily in the form of cost reduction or cost control. According to Gartner, these are the most prevalent type of sourcing engagement.

E-lancing, sometimes referred to as e-labour refers to the recent trend of commending and taking  freelancing work through so-called e-lancing websites. E-lancing websites are hubs where employers place tasks, which freelancers from around the world bid for. Additionally, some e-lancing websites act as intermediaries with regard to payments: they pay the freelancer directly after work is completed, and so sparing him or her the risk of non-payment

Employee self-service = Giving employees the ability to manage their personnel matters online, just as they manage bill paying and banking online. Typically, the organization installs software or licenses access to a portal.

Enterprise Resource Planning (ERP) = A business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing.

Exit plan = The plan developed for coping with the end of the contract — whether because the term is up or because termination clauses have been invoked. It’s best to assume you’ll be moving to a new service provider rather than simply renewing the contract. Think about what the organization will require to maintain service levels and to make a smooth transition to the next provider.

Farmshore sourcing = Comparable to rural sourcing. The placement of jobs in low-cost regions of the service recipient’s home country.

Feeny-Lacity-Willcocks model = A method for identifying service provider capabilities by examining competency in three critical areas: delivery, transformation and relationship, each of which overlaps the others. Delivery competency encompasses governance, leadership, program management, behavior management, domain expertise and business management. Relationship competency encompasses planning and contracting, organizational design, governance, leadership, program management and customer development. Transformation competency encompasses technology exploitation, process re-engineering, customer development, leadership, program management, sourcing and behavior management.

Fixed pricing = A model of pricing in which a project is undertaken by the service provider for a pre-agreed-upon price. One advantage is that it’s easy for the client to budget for the project. Two disadvantages are that the service provider may overestimate costs beforehand for possible unforeseen conditions or cut corners during the project to compensate for expenses that are higher than anticipated. The service provider will charge a premium for a fixed price relative to the risks involved. Appropriate for efficiency deals.

Duplication of services, which are often only discovered when an analysis across business units is performed by an outside entity. When an organization outsources a major function, such as IT or finance & accounting, the service provider squeezes costs out of the processes by uncovering and eliminating or consolidating redundant functions.

Gainsharing = The service provider has some form of incentive for constantly improving the business process. When the client benefits (through reduced expenses, greater revenues or improved efficiencies), so does the service provider.

Geopolitical risk management = Consideration of the risks inherent in sourcing services from a variety of locations around the globe. Processes in place to monitor potential threats to the delivery of the service, including monitoring elections, changes in executive and legislative power, labor union activities, internal politics and regulatory stances, as well international relations of those countries.

Global delivery model = Using personnel from all over the world to provide maximally efficient service delivery.

Global shared services model = Also known as captive centers or offshore insourcing, where the objective is to consolidate the scattered, autonomous internal service operations of a multinational organization into multiple service centers, serving a specific region of the world.

Hub and spoke model = An organization’s practice of having offshore operations of its own, as well as three or four partners with whom it collaborates. This mitigates the risk of having all services provided by a single service provider.

Hybrid delivery model = Combining onsite and offshore services to deliver results at a reduced cost. Also known as the dual-shore model.

Human capital assets = The availability and capabilities of the people required to deliver a given service.

Import quotas =Legislation that protects a given category of domestic product or service by imposing restrictions or levying taxes on them when they come from foreign sources.

Incentives = A reward provided to the service provider when service levels are exceeded or some other achievement is reached. These terms are laid out in the outsourcing contract.

Insourcing = A decision by an organization to retain functions internally rather than outsource. The decision is often made after the organization has performed independent benchmarking to determine that its costs and efficiencies are in line or better than those achieved by comparable organizations. The term is also used in cases where services are being brought back in house after a period of outsourcing them.

ITO  = Information technology outsourcing. The transfer of internal non-core IT processes, such as infrastructure, applications development and maintenance, end-user computing, help desk, network support and data center operations, to an external service provider that improves these processes and administers these functions to an agreed service standard and, typically, at a reduced cost.

Joint ventures = Also known as an alliance or partnership. A creation by two or more partners to leverage their unique capabilities to get to market and achieve change in a short time. Often the venture requires vertical or industry expertise and reach on the part of one partner and technical capabilities on the part of the other partner.

 

Key performance indicator = Financial or non-financial metrics used to reflect the critical success factors of an organization. KPIs should include delivery dates, quality measurements and financial measures. It is important to review the KPIs on a regular basis and have mechanisms in place to resolve performance issues when they’re not met.

Knowledge transfer = The task of bringing the service provider staff up to speed on internal procedures and processes. Part of the process is establishing what knowledge remains in-house and what should be transferred.

KPO – Knowledge Processing Outsourcing = Knowledge Processing Outsourcing (popularly known as a KPO) is the combination of Business Processing Outsourcing (BPO), Research Process Outsourcing (RPO) and Analysis Proves Outsourcing (APO). KPO business entities provide typical domain-based processes, advanced analytical skills and business expertise, rather than just process expertise.

Labor arbitrage = The financial benefit of buying a comparable service elsewhere to exploit the difference in pricing. In outsourcing, the term is often used to describe the savings an organization will enjoy when it hires work to be done in labor markets offshore, where salaries are less than they are domestically.

Labour brokering  = a form of outsourcing practiced in  South Africa  (and formerly practiced in Namibia , where it was known as labour hire) in which companies contract labour brokers to provide them with casual Labour . Labour brokers are different from recruitment agencies  in that labour brokers handle almost all aspects of the worker’s employment (including interviews, recruitment, HR, admin, payroll, transport, etc.), whereas recruitment agencies are only responsible for sourcing candidates for employment. In essence, rather than a company hiring a worker, it hires a labour broker who hires the worker in its stead.

Legal outsourcing, also known as legal process outsourcing (LPO) =  refers to the practice of a  law firm  or  corporation  obtaining legal support services from an outside law firm or legal support services company (LPO provider). When the LPO provider is based in another country the practice is called offshoring and involves the practice of outsourcing any activity except those where personal presence or contact is required e.g. appearances in court and face-to-face negotiations.

Long-term capacity planning = Evaluating organizational needs for a given function or service, based on historic use, staff growth or reduction and business intentions. Five-year or 10-year planning was once viewed as crucial; now three-year planning is much more common, since organizations adapt so rapidly to changing business conditions.

Media process outsourcing (MPO) =  a subset of outsourcing, providing a range of services to media  and entertainment companies globally.Cost savings and availability of skilled manpower remain the prime drivers pushing the popularity of the industry.

With the mega media corporations witnessing a major media landscape change, the need for content distribution is at peak and requires multi-channel strategy for an effective and cost efficient supply, increasing the demand for high quality media process outsourcing. However the long term scope of the industry is not limited to a single process, but includes developing strategic means of achieving economies of scale and standardization across the industry.

MNC – Multinational corporations = Service providers with offices in many countries, which enable them to serve a global market of clients and tap the labor arbitrage available by offshoring certain types of work.

Multisourcing = A strategy that treats a given function — such as IT — as a portfolio of activities, some of which should be outsourced and others of which should be performed by internal staff. This approach moves away from the idea that all of a function should be viewed as a commodity, easily handed over to a service provider. Also known as “selective sourcing.”

Nearshore outsourcing = The transfer of business or IT processes to companies in a nearby country, often sharing a border with your own country.

Outsourcing to a firm whose main base of operation (delivery of service) is not far outside the country (nearby territory, accessible by short travel in the same or neighboring time zone) where the work is performed. Not far outside the country – to any EU country, for example, Romania, Bulgaria are considered near shore. In this segmentation, near shore outsourcing is geographically closer than offshore outsourcing and may involve a less significant time change and/or cultural differences.

Non-performance penalties = The fines incurred by service providers when they breach service levels. The idea of including penalties in a contract are typically there to gain service provider executive attention in the case of non-performance.

 

ODC = Offshore development center. An operation set up for a specific organization by a service provider, which dedicates assets and resources specifically to that single client, in exchange for guarantees of steady work.

Offshore outsourcing = A  global service delivery model to outsource to a firm whose main base of operation (delivery of service) is outside the country (accessible by long travel several time zones away) where the work is performed. Outside the country or overseas – to an EU country, for example, India, Israel and the Philippines are all considered offshore. In this segmentation, offshore outsourcing is usually the farthest geographically and may involve a significant time change and/or cultural differences.

Online outsourcing =  the business process of contracting third-party providers (often overseas) to supply products or services which are delivered and paid for via the internet

Onshore outsourcing = The process of engaging another company within your own country for BPO or ITO services. For the US, it means hiring a US-based company to provide services.

Outsourced Document Processing = a specialised area of  Business Process Outsourcing  involving the Outsourcing of Document Processing , to a third-party service provider  that is a specialist in that area.

 Outsourcing = The process of transferring the operation of business processes to an external service provider, which then becomes accountable for those services.

Ownership = An aspect of the outsourcing contract’s Terms and Conditions. Specifies when any change of title to products occurs. It also specifies intellectual property rights. “Intellectual property” is intangible and involves some degree of creative effort, such as software design. This clause protects both parties’ rights to retain control over their intellectual property, including the rights to their use, publication and copying.

Payment schedule = The payments as agreed upon between the client and service provider for the major milestones, including contract signature, installation and acceptance as set out in a Payment Schedule.

Payroll outsourcing = a business practice that involves contracting with a business service to handle all functions related to a company payroll. Using an outsourcing service makes it possible to manage the payroll process without the need to maintain a large payroll department. Payroll service providers manage such diverse functions as the calculation of wages and salary, withholding of taxes, the distribution of withheld funds to the proper government agencies, and the direct deposit of net pay into the bank accounts of employees.

Penalty clause = That part of an outsourcing contract that specifies the penalties imposed by the client on the service provider in the case where the client experiences service degradation.

Performance monitoring = A continual check of service levels to ensure they’re being met. One decision organizations must make in outsourcing is how tightly the monitoring must be. Too tight and transaction costs rise. Too loose and risk increases. Another decision: who should do it — client or service provider.

Personal Offshoring or Smallsourcing =   a business modell where individual consumers or small businesses (often sole proprietorships) directly outsource their work. It is a form of Offshoring.

PMO = Project management office. The group that handles the day-to-day management of offshore projects to ensure that processes are running smoothly. As part of the governance of an outsourcing engagement, the PMO may do weekly check-ins, review quarterly operations, do biannual site visits, handle SLA monitoring and document internal processes for further improvement.

Process mapping = Comprehensive understanding of how a business process is organized and executed. Essential to laying out an outsourcing or offshoring analysis.

Project management office = The group that handles the day-to-day management of offshore projects to ensure that processes are running smoothly. As part of the governance of an outsourcing engagement, the PMO may do weekly check-ins, review quarterly operations, do biannual site visits, handle SLA monitoring and document internal processes for further improvement.

Quality Assurance – Quality assurance (QA) is the activity(process, standards,techniques, etc) of providing evidence needed to establish confidence among all concerned, that quality-related activities are being performed effectively. All those planned or systematic actions necessary to provide adequate confidence that a product or service will satisfy given requirements for quality.For products, quality assurance is a part and consistent pair of quality management proving fact-based external confidence to customers and other stakeholders that a product meets needs, expectations, and other requirements. QA assures the existence and effectiveness of procedures that attempt to make sure – in advance – that the expected levels of quality will be reached.

Relationship management = The art and practice of developing solid communication between client and service provider as a form of customer support. This may also be a function within an internal group — to act as a liaison between users and implementers.

Return on investment model = A method for gaining visibility into the costs and value-creating propositions of an outsourcing or offshoring

Rural sourcing = Sending work to service providers in domestic locations where salaries and operating expenses are lower (such as the Midwest for the United States). Rural Sourcing is a high-value alternative to local, near, and offshore outsourcing.
In this model, development centers are created in rural communities near a major Universities.

Risk management = Assessing risk and developing strategies to mitigate it as much as possible, given business circumstances.

Selfsourcing =  the internal development and support of IT systems by knowledge workers  with minimal contribution from IT specialists. Knowledge workers develop and utilize their own IT systems, as opposed to contracting out the work in a process known as outsourcing. Knowledge workers are workers who are dependent upon information or who develop and utilize knowledge in the workplace.

Service outcome statements = Declarations that spell out the outcome expected in a transaction vs. how the transaction is to transpire. For example, a statement for accounts payable might consist of, “Process invoices within 120 hours of receipt.”

Service provider = An external vendor that provides services. For example, a service provider might provide services in areas such as human resources, information technology or finance & accounting.

Shared services  = The consolidation of service functions, such as accounting, benefits, HR, IT, marketing, legal, logistics, payroll and procurement, within an organization through the merging of separate activities into one function that crosses business units.

Shared services center = a center for shared services  in an organization – is the entity responsible for the execution and the handling of specific operational tasks, such as accounting , human resources , payroll, IT, legal, compliance, purchasing, security. The shared services center is often a spin-off of the corporate services  to separate all operational type of tasks from thecorporate headquarters , which has to focus on a leadership and corporate governance  type of role. As shared services centers are often cost centers, they are quite cost sensitive  also in terms of their headcount, labour costs and location selection criteria.

Smartsourcing = Influence the ability of service providers to achieve a significant increase in total innovative capacity. A set of strategies that focus on the conception and implementation of an optimal enterprise business process model that integrates all essential business processes to produce maximum value at the lowest possible cost for all stakeholders.

Sole supplier = An outsourcing model in which the client organization contracts with a single service provider to provide all of a given function, such as information technology outsourcing or human resources outsourcing.

Sourcing advisory = the use of third-party (external entity) advise during the sourcing process. As such, it may refer to advise sought during outsourcing ,offshoring or global sourcing . Advisors can be independent consultants or management consulting firms.

Strategic sourcing =an institutional procurement  process that continuously improves and re-evaluates the purchasing activities of a company. In a production environment, it is often considered one component of supply chain management. Strategic sourcing techniques are also applied to nontraditional areas such as services or capital.

Supply chain management = Managing the movement of goods from raw materials to the finished product delivered to customers. Supply chain management aims to reduce operating costs, lead times, and inventory and increase the speed of delivery, product availability and customer satisfaction.

Technical support or tech support =to a range of services by which enterprises provide assistance to users of technology products such as mobile phones, televisions,  computers, software products or other electronic or mechanical goods.

Total cost strategy = Integrating global sourcing into the overall business strategy to obtain a low-cost advantage.

Transactional pricing = Also known as “unit pricing.” The client pays the service provider a flat fee per unit of work (order taken, application processed, sales call made).

Transformational outsourcing  = The process of effecting continuous strategic change and tying the results of the outsourcing initiative to strategic business outcomes. It is a collaborative, risk- and gain-sharing relationship among the organization and its service providers to drive enterprise transformation and achieve significant business process improvements.

Transition management = The detailed, desk-level knowledge transfer and documentation of all relevant tasks, technologies, workflows and functions.

Transition Methodology =the process of migrating knowledge, systems, and operating capabilities between an outsourcing environment to an in-house staff.

Transitional outsourcing = Outsourcing that involves the migration from one platform or mode of operation to another. It consists of three phases: management of the legacy system; transition to the new platform or system; and stabilization and management of the new platform.

Universal queue or UQ = a relatively advanced concept in contact center design whereby multiple communications channels (such as telephone, fax and email) are integrated into a single ‘universal queue’ to standardize processing and handling.

Unrepatriated earnings = A US policy set during the establishment of the corporate tax structure in the early 1900s, in which earnings of an overseas subsidiary is claimed to be invested overseas, thereby reducing the parent company’s US tax liability on those earnings.

Value audit = The process in which an organization investigates whether the cost reductions and/or revenue enhancements suggested in an outsourcing business case have actually been captured.

Value-added outsourcing = An aspect of strategic sourcing or multisourcing, in which some functional area is turned over to a service provider. The presumption is that the service provider can add value to the activity that wouldn’t be cost-effective if provided by internal staff.

Vested Outsourcing (also known as “Vested”) = a hybrid  business model  in which both parties (company and the service provider) in an outsourcing  or business relationship focus on shared values and goals to create an arrangement that is mutually beneficial to each.

Waiver = An aspect of the outsourcing contract’s Terms and Conditions. Allows the parties to retain any rights under the agreement that they may not elect to enforce in the first instance.

Warranties = An aspect of the outsourcing contract’s Terms and Conditions. Specifies what either party is required to warrant with respect to the agreement. This can include: quality of services; personnel; fitness for purpose; performance against specification; conformance to standards; warranty maintenance period and service levels.

Website Management Outsourcing (WMO) = the contracting of the management of a website and entire online environment to a third-party service provider. A variant of Business Process Outsourcing BPO, WMO is an outsourcing service typically offered to Sme’s  and in particular, Medium-Sized Enterprises, that don’t have a specific internal web team or web-marketing team.

Zero Defects = “Zero Defects” is a notional quality standard developed by Phil Crosby. Although applicable to any type of enterprise, it has been primarily adopted within industry supply chains wherever large volumes of components are being purchased (common items such as nuts and bolts are good examples).

The principles of the methodology are four-fold:

1. Quality is conformance to requirements.
2. Defect prevention is preferable to quality inspection and correction.
3. Zero Defects is the quality standard.
4. Quality is measured in monetary terms – the Price of Nonconformance (PONC)

 

 

 

 

Menu