Plain-English definitions of outsourcing, BPO, managed services, contracts, SLAs, compliance, pricing and professional-services terms.
Published August 27, 2026 by the Service Tech Reviews Editorial Team
Business-services buying can become confusing quickly because providers, procurement teams, lawyers and operators often use the same words in different ways. This glossary explains common outsourcing, professional-services, contracting, pricing, compliance and performance terms in plain English. Definitions are written for buyers comparing service providers rather than for legal interpretation; contract language should always be reviewed in the context of the actual agreement.
Hiring an external company to perform a business function, workflow or set of tasks that could otherwise be handled internally. Outsourcing may cover customer support, finance operations, IT, legal support, recruiting, data work, marketing operations and many other functions.
Outsourcing a recurring business process such as customer service, back-office processing, finance operations, trust and safety or technical support. BPO relationships are usually measured through defined service levels and operating metrics.
Outsourcing work that relies heavily on specialized judgment or domain expertise, such as research, analytics, legal support, financial analysis or technical knowledge work.
A delivery model in which a provider takes ongoing responsibility for operating a defined function or technology environment, often including staffing, processes, tools, reporting and continuous improvement.
Adding external workers to an internal team while the buyer retains day-to-day management responsibility. This differs from managed services, where the provider usually owns more of the operating process and outcomes.
A group of people assigned primarily or exclusively to one customer account. Dedicated teams may offer stronger continuity and account knowledge, but buyers should confirm what “dedicated” means contractually.
A staffing model in which personnel serve multiple customers. Shared models can improve utilization and reduce cost, but may offer less continuity than a dedicated model.
Onshore means work is delivered within the buyer’s home country. Nearshore generally means delivery from a nearby country or time zone. Offshore generally means delivery from a more distant country, often selected for talent availability, language coverage or cost structure.
The tasks, responsibilities, deliverables, exclusions and boundaries of an engagement. Clear scope helps prevent disputes about what is included in the agreed price.
A contract document that describes the specific services, deliverables, milestones, timelines, pricing and responsibilities for an engagement.
A framework contract that establishes the general legal and commercial terms governing work between two parties. Individual projects are often added through separate SOWs.
A structured procurement document asking vendors to propose a solution, delivery model, timeline and price against defined requirements.
An earlier-stage procurement document used to learn about vendor capabilities or market options before issuing a formal RFP.
An agreement governing how confidential information may be used, shared and protected.
A contract governing how one party processes personal data on behalf of another, including security, subprocessors, retention and privacy obligations.
A contractual obligation under which one party agrees to cover specified losses, claims or liabilities incurred by another party. The exact scope depends on the contract.
A contract clause that limits the types or amount of damages one party may owe the other. Buyers should review caps, exclusions and carve-outs carefully.
A standardized measure of staffing capacity roughly equivalent to one full-time worker. FTE pricing may include only labor or may bundle management and support functions, so buyers should verify inclusions.
Billing based on time spent delivering the work, sometimes combined with pass-through expenses or role-based rates.
A set price for a defined scope or deliverable. Fixed fees provide cost predictability when scope is stable, but change requests may create additional charges.
A recurring fee that reserves access to a provider or a specified amount of service capacity over a period.
Compensation tied partly or entirely to a defined outcome. The permitted structure depends on the service category and applicable rules, so buyers should confirm the exact trigger and exclusions.
The full economic cost of a service relationship, including headline fees plus onboarding, management, software, travel, transition, change requests, internal oversight and exit costs.
A documented performance commitment covering measurable service standards such as response time, resolution time, availability or processing accuracy.
A metric used to track performance. KPIs may include quality scores, throughput, response times, utilization, cost per transaction or customer satisfaction.
The processes used to check whether work meets defined quality standards. Buyers should understand sampling methods, reviewer independence, calibration and how errors are corrected.
A defined process for moving an issue to a higher level of expertise or authority when it cannot be resolved through the normal workflow.
The elapsed time from when an issue or request is opened until it is resolved. Definitions may vary, especially when time spent waiting on the customer is excluded.
The share of available working time spent on billable or productive work. High utilization can improve economics but may reduce flexibility if teams have no spare capacity.
Customer Satisfaction (CSAT) measures satisfaction with a specific interaction or experience. Net Promoter Score (NPS) measures willingness to recommend. They are different metrics and should not be treated as interchangeable.
An attestation framework commonly used to evaluate controls relevant to security and related trust-service criteria. A SOC 2 report is not the same as a government certification and its scope matters.
An international standard for information-security management systems. Certification indicates that an organization’s management system has been audited against the standard, but buyers should still review scope and applicability.
The European Union’s General Data Protection Regulation, which governs processing of personal data in covered circumstances and establishes rights and obligations for controllers and processors.
A U.S. law and regulatory framework covering protected health information in specified healthcare contexts. A provider is not automatically “HIPAA compliant” for every workflow simply because it serves healthcare customers.
Ask vendors to define important terms in writing before comparing proposals. Two providers may both advertise “dedicated teams,” “24/7 support” or “SLA-backed delivery” while meaning materially different things. Normalize scope, inclusions, performance definitions, contract terms and compliance evidence before comparing price.
For a broader evaluation framework, use the site’s How We Review methodology and About Service Tech Reviews page alongside this glossary.
Editorial Note
This guide is produced by the ServicesTechReview editorial team. No provider has paid for inclusion or placement.