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Outsourcing and BPO glossary

Plain-language definitions of the terms that come up when you evaluate, contract and run an outsourced team: contact center metrics, delivery models, contract documents and data protection.

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What do the most common outsourcing terms mean?

Outsourcing vocabulary falls into four groups: delivery models (dedicated, shared, nearshore, offshore), contact center metrics (AHT, FCR, CSAT, service level, shrinkage), contract documents (SOW, SLA, DPA, Standard Contractual Clauses) and operations (calibration, escalation, ramp-up, workforce management). This glossary defines 40 of them in plain language.

Terms defined: 40
Delivery models: Dedicated, shared, onshore, nearshore, offshore
Key metrics: AHT, FCR, CSAT, NPS, service level, occupancy
Contract terms: SOW, SLA, DPA, SCCs, employer of record

Abandonment rate: The share of callers or chat users who leave the queue before reaching an agent. It rises quickly when staffing does not match demand. Learn more
Attrition: The rate at which employees leave a team over a period, usually expressed per year. High attrition means constant recruiting and retraining and less consistent service. Learn more
Average handling time (AHT): The average time an agent spends on one contact, including talk or chat time, hold time and the follow-up work afterwards. Useful for staffing; harmful when pushed down as a target on its own. Learn more

Back office: Internal processes that customers do not see directly, such as data entry, order processing, finance administration and document handling. Learn more
Business process outsourcing (BPO): Contracting an external company to run a defined business process, such as customer support, back-office work or technical support, on your behalf. Learn more

Calibration: A regular session where quality reviewers, team leads and often the client score the same conversations and agree on the right score, so everyone applies the standard the same way.
Contact center: A team that handles customer contacts across channels such as phone, email, chat and messaging. A call center focuses on phone calls. Learn more
Customer satisfaction score (CSAT): A survey measure of how satisfied customers were with a specific interaction, usually asked straight after the contact on a short rating scale. Learn more

Data processing agreement (DPA): A contract required by the GDPR when one company processes personal data on behalf of another. It sets out what data is processed, for what purpose and with which safeguards. Learn more
Dedicated team: Full-time people who work only on one client's account, employed and managed by the provider. The opposite of a shared model. Learn more

Employer of record (EOR): A company that legally employs people on another company's behalf, handling contracts, payroll and compliance, while the client directs the work day to day. Learn more
Escalation: Passing a case to someone with more authority or expertise, such as a senior agent, specialist team or the client's own staff, according to agreed rules.

First contact resolution (FCR): The share of customer issues resolved in the first contact, without the customer needing to come back. One of the strongest indicators of service quality and cost. Learn more
Front office: Customer-facing work, such as sales, customer service and technical support, as opposed to back-office processes.
Full-time equivalent (FTE): A unit equal to one full-time person's working hours. Teams and prices are often expressed in FTEs.

Helpdesk: A team or tool that receives and tracks requests for help, from customers or from a company's own employees, usually as tickets. Learn more

Impact sourcing: A hiring practice in which providers deliberately create jobs for people who usually face barriers to good employment, while meeting normal service standards. Learn more
Inbound: Contacts started by the customer, such as incoming calls, chats and emails.
Interactive voice response (IVR): An automated phone menu that greets callers, collects information and routes calls to the right queue, or answers simple questions itself.

Key performance indicator (KPI): A measurable target used to judge performance, such as response time, first contact resolution or customer satisfaction. Learn more
Knowledge base: The collection of articles, procedures and approved answers that agents and customers use. Its quality limits the quality of the service.

Nearshore outsourcing: Outsourcing to a nearby country in a similar time zone, such as a European company working with a team in the Western Balkans. Learn more
Net Promoter Score (NPS): A loyalty measure based on how likely customers are to recommend a company. It reflects the whole relationship, not only support. Learn more

Occupancy: The share of logged-in time agents spend actually handling contacts. Too low wastes cost; too high leads to burnout and slower service. Learn more
Offshore outsourcing: Outsourcing to a distant country, often in a very different time zone, usually chosen mainly for cost. Learn more
Omnichannel support: Support across several channels, such as phone, email, chat and social messaging, with one shared customer history, so customers do not have to repeat themselves. Learn more
Onshore outsourcing: Outsourcing to a provider in the same country as the client. Learn more
Outbound: Contacts started by the company, such as sales calls, appointment setting, follow-ups and renewals.

Quality assurance (QA): Reviewing samples of real work against a scorecard, coaching people on the results and fixing the causes of errors. Learn more

Ramp-up: The period after go-live in which a new team or agent builds up to full productivity and target quality.

Schedule adherence: How closely agents follow their planned schedule, including breaks, so that queues are covered as forecast.
Service level: The share of contacts answered within a target time, for example 80% of calls answered within 20 seconds. Used to plan staffing. Learn more
Service level agreement (SLA): The contract terms that define the service levels a provider commits to, how they are measured and what happens if they are missed. Learn more
Shared model: An outsourcing model in which agents split their time across several clients, often priced per contact or per minute.
Shrinkage: The share of paid time when agents are not available to handle contacts, because of breaks, training, meetings, holidays or absence. Staffing plans must allow for it. Learn more
Standard Contractual Clauses (SCCs): Contract terms approved by the European Commission that protect personal data transferred from the EU to countries without an adequacy decision. Learn more
Statement of work (SOW): A contract document that describes a specific service: scope, team, hours, KPIs, pricing and responsibilities.

Tier 1 and Tier 2 support: Levels of support. Tier 1 handles common questions and documented fixes; Tier 2 handles more complex technical cases; further tiers usually sit with engineering.
Transition: Moving work from an in-house team or another provider to a new team, including documentation, training, parallel running and handover.

Workforce management (WFM): Forecasting contact volume, planning schedules and tracking adherence so that the right number of people are available at the right times.

How the terms fit together

Definitions are easier to remember when you see how they relate. Here is the short version.

How do the staffing metrics relate to each other?

Workforce management starts with a forecast of contacts and their average handling time. That gives the hours of work needed. Shrinkage adds the time people are paid but unavailable, and the service level target decides how much spare capacity is needed to answer quickly. Occupancy and schedule adherence then show whether the plan worked in practice.

Which metrics describe quality rather than speed?

First contact resolution: did the customer need to come back?
Quality score: did the work meet the scorecard in calibrated reviews?
CSAT: how did the customer feel about the interaction?
Escalation and reopen rates: was the problem really solved?

Which contract documents does an outsourcing engagement need?

Outsourcing contract documents
Document	What it settles
Master service agreement	The legal relationship as a whole
Statement of work	Scope, team, hours, KPIs and price for one service
Service level agreement	Committed service levels and remedies
Data processing agreement	How personal data is processed and protected
Standard Contractual Clauses	Safeguards for transfers outside the EU or UK where needed

Glossary: common questions

What is the difference between BPO and outsourcing?

Outsourcing is the general practice of contracting work to an external company. Business process outsourcing is outsourcing of a business process, such as customer support or back-office work, as opposed to manufacturing or IT infrastructure.

What is the difference between nearshore and offshore outsourcing?

Nearshore means a nearby country in a similar time zone; offshore means a distant country, often with a large time difference. For European companies, Kosovo is a nearshore location; for US companies, it is usually considered offshore with good morning overlap.

Which contact center metrics matter most?

A balanced set: a speed measure such as response time or service level, an outcome measure such as first contact resolution, a quality score from reviewed work and customer feedback such as CSAT. Any one of them alone gives a distorted picture.

Have a question the glossary does not answer?

Ask us directly. We are happy to explain how any of this applies to your team.