Most common outsourcing terms

Abandon Rate

The percentage of inbound phone calls made to a call center or service desk that are abandoned by the customer before speaking to an agent.

It is calculated as abandoned calls divided by total inbound calls (in percent).


Commonly known as, automatic call distributor (ACD), is a telephony device that answers and distributes incoming calls to a specific group of terminals or agents within an organization.

ACDs often use a voice menu to direct callers based on the customer’s selection, telephone number, selected incoming line to the system or time of day the call was processed.

Computer telephony integration (CTI) and computer-supported telecommunications applications (CSTA) are intermediate software that can produce advanced ACD systems.

Experts claim that “the invention of ACD technology made the concept of a call centre possible.


Average Handling Time, a call center metric for the average duration of one transaction, typically measured from the customer’s initiation of the call and including any hold time, talk time and related tasks that follow the transaction.

AHT is a prime factor when deciding call center staffing levels.

Attrition RateThe rate at which members of staff voluntarily leave the workforce over a given period of time. It is also known as ‘staff turnover’, or ‘staff churn’, although in the contact centre industry ‘churn’ tends to refer to the flow of customers rather than staff.

Average Waiting Time (AWT) – a.k.a. Average Speed of Answer (ASA) is the average time a call remains in the queue until an agent answers it.

This is sometimes called “Average Delay”, as this is the average wait callers experience. The metric is available for the global account, per ring group, and per number.

Aggregated Waiting Time stats, such as total or average Wait times for a ring group, agent, or phone number, will only include waiting time for calls that were ultimately handled. They will not include missed or abandoned calls.

B2BThe exchange of products, services, or information between businesses rather than between businesses and consumers.
B2CThe retailing aspect of e-commerce on the Internet. It is often contrasted to business-to-business (B2B) e-commerce.

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.

BPMBusiness process management. The orchestration of the interactions between the people, applications, and technologies that comprise a business process and in concert create customer value.
BPOBusiness Process Outsourcing is a subset of outsourcing that involves the contracting of the operations and responsibilities of a specific business process to a third-party service provider.
Call CenterA batch of operators who handle phone calls. Computer telephony integration has enabled automated resolution of calls and more efficiencies in human calls.
Captive CentersOffshore 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.
Contact Center

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.


Customer Relationship Management – A marketing and fulfillment system that usually includes a call center, databases, software, and marketing strategy.

Like Enterprise Resource Planning (ERP), CRM initiatives are complex and involve redesign of internal business processes and retraining. Successful contracting for CRM outsourcing requires attention to business as well as technology and legal issues

Data Center OperationsInformation 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.
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.


Enterprise Resource Planning – Software that integrates the various functions of an enterprise based on sharing of data in a common database that, when processed, generates relevant management information for purchasing departments, manufacturing, sales, delivery, and related internal processes (such as HR and accounting).

In principle, ERP software is capable of running the enterprise (and multiple enterprises) as an integrated operation.

Fixed PricingA 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.
FTEFull Time Equivalent – A full-time person is therefore counted as one FTE, while a part-time worker / student gets a score in proportion to the hours he or she works or studies. For example, a part-time worker employed for 20 hours a week where full-time work consists of 40 hours, is counted as 0.5 FTE.
Full ManagedA type of Operations Service Delivery Model wherein the Outsourcing Service Provider handles all aspects of the day-to-day operations and one person (or a team) coordinates with the client rather than each agent going directly to the client.
Hold Time

Refers to length of time that a caller waits in queue for the professionals of the call center to answer call, or the time a customer waits in the queue before his/her call gets answered by a live agent.

Hold time is the friction point between the customer and the call center agent.

IntranetA privately maintained computer network that can be accessed only by authorized persons.
IT OutsourcingIs the use of external service providers to effectively deliver IT-enabled business process, application service and infrastructure solutions for business outcomes.
ITOInformation 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.
IVRInteractive voice response, Automated phone systems that eliminate the need for a person on the other end of the line. In some situations, organizations discover that taking call center activities offshore means they can put humans back on the phone, since the cost of the labor is less expensive than the IVR systems they have been using.
KPIKey Performance Indicator, a measurable value that demonstrates how effectively a company is achieving key business objectives.

Knowledge Process Outsourcing is the outsourcing of core information-related business activities which are competitively important or form an integral part of a company’s value chain.

KPO requires advanced analytical and technical skills as well as a high degree of specialist expertise.

LPOLegal Process Outsourcing 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).
ODCOffshore 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.
ODPOutsourced 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.
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 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.

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

PBXPrivate Branch Exchange, a telephone exchange or switching system that serves a private organization and performs concentration of central office lines or trunks and provides intercommunication between a large number of telephone stations in the organization.
Personal Offshoring or SmallsourcingA business modell where individual consumers or small businesses (often sole proprietorships) directly outsource their work. It is a form of Offshoring.

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.

QAQuality Assurance, is a way of preventing mistakes or defects in manufactured products or services rendered and avoiding problems when delivering solutions or services to customers; which ISO 9000 defines as “part of quality management focused on providing confidence that quality requirements will be fulfilled”.
RFIRequest for information. The process of collecting written information about the capabilities of service providers. Typically, it’s structured in a way that will allow for comparison among providers.

Request for proposal. A description of work to be done that is used to solicit bids from potential service providers.

An RFP usually includes a description of the organization and its plans, details about the service under consideration for outsourcing and specific requirements expected of the service provider.

There’s a deadline attached to it to ensure that interested service providers respond in a timely manner. The structure of the document is intended to aid in comparison of responses across providers.


Software as a service.

A model of delivering software through a network rather than as a stand-alone application on the computer. The activities behind the software — including data management — are handled from another location.

ScorecardA statistical record used to measure achievement or progress toward a particular goal or KPI.
Service Accountability

The extent to which the client will hold a service provider responsible for meeting designated service levels. Experts recommend specifying 100% service accountability in contracts, though this can have multiple tiers.

For example, a client may specify that a service provider process 90% of all requests within three days.

What needs to be added is an additional specification that addresses the remaining 10% — for example, that those be processed within five days.

Service Level Report

The reports provided by the service provider to the client, specifying how performance measured against service level requirements.

Clients should make sure that reports provide useful detail — service level agreed upon, service performance for the current period, exception reporting for missed measures, and trend analysis of the performance from previous reporting periods.


Service level Agreement. The document or part of a more complex contract/agreement that spells out the characteristics of the service required by the organization.

The purpose of the SLA is to ensure that the proper elements and commitment are in place to provide optimal services for the business function.

SoftphoneA software program for making telephone calls over the Internet using a general purpose computer, rather than using dedicated hardware
Staff augmentationContract workers brought in by an organization to supplement efforts of the internal staff in order to contain costs and handle overflow work.
Statement of Work / SOW

The document provided by the service provider to a prospective client spelling out the work to be undertaken and agreed pricing.

Details might include the scope of work, where it is to be performed, when deliverables are due, what standards are to be followed, how the results will be evaluated and other requirements.

SWOT Analysis

A scan of the internal and external environment is an important part of the strategic planning process.

Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). The SWOT analysis provides information that is helpful in matching the firm’s resources and a capability to the competitive environment in which it operates.

As such, it is instrumental in strategy formulation and selection.

Transactional PricingAlso known as “unit pricing.” The client pays the service provider a flat fee per unit of work (order taken, application processed, sales call made).
Transition MethodologyThe process of migrating knowledge, systems, and operating capabilities between an outsourcing environment to an in-house staff.
Universal Queue or UQA 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.
VoIPShort for Voice over Internet Protocol. Voice over Internet Protocol is a category of hardware and software that enables people to use the Internet as the transmission medium for telephone calls by sending voice data in packets using IP rather than by traditional circuit transmissions of the PSTN.
VPNVirtual Private Network – A network established using telephone lines and/or the Internet to transmit digital information between defined receiving and transmitting stations, such as telephones, computers, and data routing equipment.
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.


Waiting time (WT) is the time a call remains in the queue and ringing until an agent answers it.

If the customer is sent to the waiting queue multiple times as a result of no answers or transfers, the waiting time for the call will be the total time spent in the waiting queue across all instances. Time spent in IVR / Voice Prompts is not considered.