Outsourcing has its own vocabulary, and providers do not always use it consistently. This glossary defines the terms that matter when you are evaluating a business process outsourcing partner — clearly, and without jargon. Where a term maps to something we do, we have linked to the relevant page.
Business Process Outsourcing (BPO)
Business process outsourcing (BPO) is the practice of contracting a specific business function — such as customer support, back-office processing, or finance administration — to an external provider that delivers it under an agreement.
BPO lets a business hand a whole process to a specialist team, reducing cost and freeing internal staff, while keeping ownership of the outcome through service-level agreements and reporting.
Back Office
The back office is the set of internal, non-customer-facing functions that keep a business running — such as data entry, document processing, reconciliation, and administration.
Front Office
The front office is the set of customer-facing functions — such as sales, customer support, and call-centre operations — that interact directly with a business's customers.
Offshore Outsourcing
Offshore outsourcing is delegating work to a provider in a distant country, usually for significant cost savings and access to a large talent pool.
Nearshore Outsourcing
Nearshore outsourcing is delegating work to a provider in a nearby country, typically in a similar timezone, balancing cost savings with easier collaboration.
Onshore Outsourcing
Onshore outsourcing is delegating work to a provider within the same country, prioritising proximity, language, and regulatory alignment over cost.
Service Level Agreement (SLA)
A service level agreement (SLA) is the part of an outsourcing contract that defines the measurable standards a provider must meet, how performance is reported, and what happens if targets are missed.
Full-Time Equivalent (FTE)
A full-time equivalent (FTE) is a pricing and staffing unit representing one dedicated full-time worker. FTE-based pricing charges a fixed monthly fee per dedicated agent.
Key Performance Indicator (KPI)
A key performance indicator (KPI) is a measurable value that shows how effectively a process is performing against its goals — for example, first-contact resolution or processing accuracy.
First-Contact Resolution (FCR)
First-contact resolution (FCR) is the percentage of customer issues resolved in a single interaction, without the customer needing to follow up — a core measure of support quality.
Average Handling Time (AHT)
Average handling time (AHT) is the average duration of a customer interaction, including talk time and any related work — a key efficiency metric in call centres.
Recruitment Process Outsourcing (RPO)
Recruitment process outsourcing (RPO) is delegating all or part of the hiring process — sourcing, screening coordination, and scheduling — to an external provider, while hiring decisions remain with the employer.
Knowledge Process Outsourcing (KPO)
Knowledge process outsourcing (KPO) is outsourcing higher-value, knowledge-intensive work — such as research, analysis, or legal and financial process work — that requires specialist expertise, not just process execution.
Finance & Accounting Outsourcing (F&A)
Finance and accounting outsourcing (F&A) is delegating finance functions — bookkeeping, accounts payable/receivable, reconciliation, and reporting — to an external team, while the business retains ownership of its ledgers and financial decisions.
Legal Process Outsourcing (LPO)
Legal process outsourcing (LPO) is delegating legal support work — such as document review, legal research, and contract administration — to an external team under strict confidentiality.
First Notification of Loss (FNOL)
First notification of loss (FNOL) is the first report a policyholder makes to an insurer when an incident occurs — the starting point of the claims process.
Fully-Loaded Cost
Fully-loaded cost is the total cost of employing someone — salary plus employer taxes, benefits, recruitment, management, software, and workspace — used for a fair comparison against outsourcing.
Human-in-the-Loop
Human-in-the-loop is a delivery model where AI tools handle routine steps while trained people review output, handle exceptions, and remain accountable for the result.
Data Processing Agreement (DPA)
A data processing agreement (DPA) is a contract that governs how a provider handles personal data on a client's behalf, setting out security, confidentiality, and GDPR obligations.
Resource Augmentation
Resource (or staff) augmentation is adding external skilled professionals to work within a client's existing team on a flexible basis, rather than outsourcing a whole process.
