GLOSSARY OF OUTSOURCING, THE MOST USED TERMS IN THE OUTSOURCING WORLD.
The article was originally published in L’Express L’Expansion and describes in detail the meaning of each term used in the outsourcing industry. These definitions can help you understand better the world of outsourcing.
« Outsourcing: This term literally means » to obtain (something) from outside. » It means that a service provider entrusts the implementation of a process previously performed in-house at the outsourcer’s premises. In France, it is called outsourcing while in Quebec, the term used is impartitioning. Against all odds, outsourcing differs from sub contracting which rather concerns the design or manufacture of a product. The reverse movement can also happen when a company rolls back to internalising operations, we use the term backsourcing.
BPO: The business process outsourcing (BPO) is to assign certain business processes of the company to a service provider. All or part of the accounting, finance or purchases can thus be outsourced, usually as part of a long-term contract. The first motivation for companies that use BPO is to cut costs, but the establishment of a BPO can also enable a business to become more efficient, to benefit from technological innovations that the service provider is able to set up, etc. The concept comes also to all parts of the company’s business. The ITO (Information Technology Outsourcing) refers to the outsourcing of IT activities and KPO (Knowledge Process Outsourcing) are activities that are related to knowledge, R & D and technology analysis.
Offshore: Offshore outsourcing means that the service is provided in a distant country. Asia or South America are good examples for a European company. However, if it takes place in the same country, we speak of onshore. As for nearshore outsourcing, it relates to the businesses in neighboring countries or close to that of the outsourcer. For French companies, the Maghreb or Eastern Europe are nearshore destinations.
SSC: Considered as an alternative, or the first step before outsourcing, the establishment of a shared service center (SSC) enables the pooling and centralizing support functions of several subsidiaries of the same group. The autonomous legal entity created internally supports all HR related-tasks, accounting or procurement, as a service provider, in order to optimize and harmonize them. This option thus relates mostly to large companies, deployed on several sites, and which may find interest in centralizing such services previously scattered.
Facility Management: Opting for facilities management is entrusted to an external service provider, the management support services (general services) of the company. The provider, a kind of trustee, supports the good management of the building. It can fill all the technical or service duties – is called Total FM – related to the building or take over any component. This is called multi-service when it deals with the reception or supply restoration and multi-technical work or for technical maintenance. «
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