Glossary of terms

This glossary is intended to assist you in getting a general understanding of commonly used terms and concepts when dealing with outsourcing and outsourcing governance. We welcome your contribution to further improve and expand the glossary.

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
There are currently 29 names in this directory beginning with the letter B.
Back sourcing
The expiration or termination of an outsourcing arrangement and the recapture in-house of the outsourced function

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

Balanced Score Card (BSC)
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

Base Operating Costs
The ongoing costs of operating once steady-state has been achieved

Basel II / Basel III
Financial regulations and privacy regulations in Europe

A snapshot of the state of inputs/outputs frozen at a point in time for a particular process.  A baseline should be recorded to establish a starting point to measure the changes achieved with any process improvement

Baseline Cost / Pricing
A scheduled periodic fee for a minimum set of services

Baseline period
The period during which a client's current services are documented. These results become the yardstick that determines what services the service provider is obligated to provide to the client. Typically, the service provider will charge a premium for services above and beyond the baseline — unless otherwise negotiated

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 of breed
Denotes the service provider that is best in its class of services. In contrast, a service provider might not be best of breed but, by reason of superior integration of interoperating services and infrastructures, might provide more valuable services. In selection of a vendor, therefore, the question of whether a best of breed vendor is better than an integrated vendor depends on the customer’s actual needs and history as well as on the degree to which the best of breed vendor partners with others in related or complementary fields

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

Best in class. A philosophy of outsourcing to service providers that have proven their expertise in a specific area

Banking, financial services, and insurance

Business Intelligence and Data Warehousing

Billing audit
Regular scrutiny of the bills presented by the service provider to its client. The client should examine potential overbilling (which could be a sign of service level expectations, scope of work or related pricing provisions in the contract)

Body shop
A company that provides temporary workers on a contract basis

Bring Your Own Device   
Bring your own device (BYOD)—also called bring your own technology (BYOT), bring your own phone (BYOP), and bring your own PC (BYOPC)—refers to the policy of permitting employees to bring personally owned mobile devices (laptops, tablets, and smart phones) to their workplace, and to use those devices to access privileged company information and applications.The phenomenon is commonly referred to as IT consumerization.

Build Operate Transfer (BOT)
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 Continuity
Ensuring key or business critical process stay in operation following a failure or incident to the operational environment. Such events are typically disasters, major operation failures or force majeure events

Business objectives
A specific result that an organization aims to achieve through an outsourcing contract. In general, objectives are more specific and easier to measure than deal intents. Objectives are basic tools that underlie all contracted and governance activities. They serve as the basis for creating policy and evaluating performance. Hence, they are a starting point to identifying meaningful KPIs. Business objectives are usually evaluated by senior management / stakeholders.
Typical business objectives why companies outsource are:
• Savings      (reduce operational costs; reduce headcount, improve fixed/variable cost ratio, free up capital)
• Quality       (improve quality of service, more flexibility and innovation, access to skills and capabilities)
• Control      (reduce risk, maintain business continuity, improve financial control, improve regulatory compliance)
• Focus         (focus on core business, reduce management attention)

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

Business process
A sequence of defined steps necessary to achieve a business objective. Business objectives can 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 transfer of ownership of some or all business processes to independent service providers (third-party)

Business process reengineering
Represents planned changes in the manner of conducting a business function, such as information collection and reporting, manufacturing, finance, compliance, or administration

Business-to-business (B2B)
The exchange of products, services, or information between businesses rather than between businesses and consumers

Business-to-consumer (B2C)
The retailing aspect of e-commerce on the Internet. It is often contrasted to business-to-business (B2B) e-commerce

Business-to-employee (B2E)
Internal communications among employees and among different departments provides valuable savings to employees by cutting the cost of printing policy manuals, production manuals, retirement plans, statements of account, and other internal processes. B2E processes may be customized to the enterprise’s unique business environment (such as a combination of compliance manuals in a highly regulated industry)