BPO Terminology: Organizing the Chaos
Learning the appropriate terminology is important in any undertaking. This section is a comprehensive glossary of terms used within BPO circles, each explained concisely.
Business Application Outsourcing
Company A (vendor) rents applications to Company B (user). Increasingly corporations are renting applications like enterprise resource planning, customer relationship management, messaging and collaboration, and e-business. The outsourcer provides the mission-critical enterprise application hosting and management. The goal is to relieve the corporation from day-to-day management and lower the total cost of ownership (TCO). The outsourcer hosts the software solution ensuring a preset level of performance and reliability. This is also termed application service provider (ASP) service.
Business Process Outsourcing
Business process outsourcing means examining the processes that compose the business and its functional units, and then working with focused service providers to both re-engineer and outsource these at the same time. BPO involves the full transfer of responsibility for functions such as transaction processing, policy servicing, claims management, HR, finance, and compliance to the outsourcing company. The outsourcing provider then administers these functions on their own systems to agreed service standards and at a guaranteed cost. Some of the BPO contracts call for performance-based payouts, tying vendor payments to business performance or overall cost savings.
Business Process Offshoring
Business process offshoring is the transfer of business tasks (medical transcription) or business processes (call centers) to a low-cost country like India or the Philippines. The interaction is conducted over telecom networks and the Internet. Offshoring typically include tasks like transaction or accounts processing, credit