Outsourcing Glossary

Core Competencies: The unique internal skills and knowledge sets that define an organization's competitive advantage as seen by its customers. Usually limited in number and embodied in a product/service rather than the product/service itself.

E-Sourcing: Internet-based outsourcing that takes advantage of the emerging application service provider (ASP) delivery model. This solution offers the business process delivered through the internet

Gainsharing: A contract structure where both the customer and provider share financially in the value created through the relationship. One example is when a service provider receives a share of the savings it generates for its client.

Outsourcing: A long-term, results-oriented relationship with an external service provider for activities traditionally performed within the company. Outsourcing usually applies to a complete business process. It implies a degree of managerial control and risk on the part of the provider.

Performance-Based Pricing: Contractual pricing mechanisms that link compensation to meeting specific performance objectives.

Strategic Outsourcing: Outsourcing to achieve better return on investment and accelerated growth. Strategic outsourcing is approached as a redirection of the organization's resources toward its highest value creating activities ?its core competencies.

Tactical Outsourcing: Outsourcing to achieve operational efficiencies. Tactical outsourcing is approached as a competition between existing internal operations and outside service providers.

Transformational Outsourcing: Outsourcing to take advantage of innovation and new business models. Transformational outsourcing is approached as a way to reposition the organization for competitive advantage.