80 Essential Jargon to Help You Understand BPO

The global business process outsourcing (BPO) market is thriving and is projected to reach $0.35 trillion this year. BPO has become a viable solution for optimizing operations, reducing costs, and growing businesses.

Understanding BPO’s various terminologies is crucial, whether or not you are new to outsourcing. Learning the lingo helps you navigate the complex industry.

This page offers a comprehensive list of outsourcing definitions. Learn 80 essential BPO jargon to help you understand the industry better.

BPO Glossary: 80 Terminologies You Should Know Before Outsourcing

Before we proceed, let us answer the question: What is BPO? It is the practice of contracting tasks to a third-party service provider. Companies hire BPO firms to take care of their business processes instead of handling them in-house. They do this to access expertise and technology, streamline processes, improve operations, and reduce operating costs.

As mentioned above, the global BPO market has seen rapid growth. Statista predicts it will increase from $0.35 trillion in 2023 to $0.44 trillion by 2028 at a 4.68% compound annual growth rate (CAGR). These figures suggest that more businesses will continue relying on outsourcing for its potential benefits.

However, prospective clients must also expect to encounter disadvantages to outsourcing. Exploring this industry with deep understanding and proper caution is vital to making informed decisions. You must have a firm grasp of the specialized language that defines the BPO landscape. Start by understanding the industry terminologies or outsourcing definitions below.

A

• Artificial intelligence (AI): AI is the simulation of human intelligence in machines, enabling them to perform tasks that typically require human intelligence. BPO companies leverage AI technologies such as robotic process automation (RPA) for task automation, machine learning (ML) for data analysis, and natural language processing (NLP) for customer service.
• Average handling time (AHT): AHT measures the average time an agent spends handling a customer interaction. This metric is the combined average of talk time, hold time, and after-call work (ACW). Tracking AHT is essential for evaluating agent performance and ensuring efficiency.

B

• Banking, financial services, and insurance (BFSI) BPO: This BPO segment entails outsourcing specific processes in the BFSI sector to specialized service providers. Common outsourced BFSI functions include customer service, billing and collections, and fraud analysis.
• Back office: This type of outsourcing includes administrative and support functions that do not directly interact with customers. It covers data entry, inventory management, and administrative tasks (human resources, payroll, and technical support).
• Blended calls: This call type combines inbound and outbound calls. BPO agents receive incoming calls for customer support and assistance. They also place outgoing calls for sales, lead generation, and market research.
• Bilingual agent: A bilingual agent is proficient in two languages and can effectively communicate with customers or clients in either language. BPO firms employ bilingual agents to support and assist customers with linguistic backgrounds.
• BPO agent: A BPO company employs these agents to handle customer service, sales, and technical support. BPO agents are crucial in delivering high-quality services, ensuring overall efficiency, and achieving customer satisfaction.
• BPO company: Also known as a service provider, a BPO company offers services to businesses seeking to delegate specific processes or tasks externally. 
• BPO market: The BPO market is a part of the outsourcing industry. It encompasses various services and sectors, each catering to different business needs and requirements.
• Business process outsourcing (BPO): This entails contracting out specific business functions or tasks to third-party service providers. This strategy allows companies to focus on core competencies while accessing specialized skills and resources from BPO partners at significant cost savings.

C

• Call or contact center: A BPO call center, or contact center, is a centralized facility where agents interact with customers. Customer interactions usually happen via telephone, email, chat, or social media. These centers are instrumental in delivering prompt customer support.
• Call center agent: A call center agent handles incoming and outgoing customer calls in a call center environment. These agents are critical in providing customer support, resolving questions, and ensuring positive customer experiences.
• Chatbot: A chatbot is an AI-powered program designed to interact with users through text-based conversations. Chatbots are often used on websites and messaging platforms to automate customer support and respond instantly to frequently asked questions (FAQs).
• Client: In the BPO context, the client refers to the business or organization that outsources specific functions to a BPO service provider. The client remains responsible for defining the scope of work, setting performance expectations, and ensuring that the BPO partner delivers the desired outcomes.
• Compound annual growth rate (CAGR): CAGR measures an investment’s or business’s average annual growth over a specific period, considering the compounding effect. It assesses market growth, revenue, or other performance indicators over time.
• Computer telephony integration (CTI): As the name suggests, CTI integrates computers and telephones. This technology allows call center agents to access customer information and perform relevant tasks on their computer screens during calls. CTI enhances agent productivity and enables personalized customer interactions.
• Contact center as a service (CCaaS): CCaaS is a cloud-based, provider-hosted software for customer communication. This technology offers scalability, flexibility, and cost-effectiveness, making it an attractive option for companies seeking to modernize their contact center operations.
• Consumer needs: These needs include customers’ desires, preferences, and requirements. Understanding consumer needs is crucial for delivering customized solutions and exceptional customer experiences that align with their expectations.
• Customer experience (CX): CX encompasses all customer interactions and touchpoints with a business throughout the buyer’s journey. Delivering a positive customer experience is vital, as it can significantly impact customer satisfaction, loyalty, and overall business success. 
• Customer journey: The customer journey is a customer’s entire process, from initial contact with a business to purchase. BPO companies usually assess customer journeys to identify pain points, improve operations, and enhance customer satisfaction at every stage.
• Customer relationship management (CRM): This system is used by businesses to manage and analyze customer interactions throughout the lifecycle. CRM systems are often employed to ensure efficient handling of customer inquiries and maintain centralized customer data records.
• Customer satisfaction (CSAT): CSAT measures customer satisfaction with a product or service. This metric involves surveys to collect customer feedback, allowing businesses to gauge their performance and improve accordingly.
• Customer service: This function entails assisting customers by answering inquiries, processing requests, or resolving issues. The goal is to satisfy and make customers happy with the services received.
• Customer service representative (CSR): A CSR is responsible for handling customer inquiries, requests, and complaints on behalf of a business. CSR roles are often outsourced to a BPO company because specialized teams can deliver high-quality service and resolve customer issues promptly.

D

• Data analytics: This involves collecting, processing, and analyzing data to extract valuable insights and make informed business decisions. Data analytics significantly optimizes BPO operations, improves customer experiences, and identifies trends and opportunities.
• Data entry: Data entry is input into computer systems or databases. Data entry tasks are often outsourced to ensure accuracy and efficiency when handling large volumes of data.

E

• E-commerce BPO: This industry segment entails outsourcing tasks related to online retail operations, such as order processing, data entry, inventory management, and customer support. By partnering with BPO providers, e-commerce businesses can streamline processes and enhance their online presence.
• Email and chat support: As the name suggests, this service involves assisting customers through written communication channels. BPO agents proficient in written communication provide email and chat support to handle customer inquiries and address concerns promptly.

F

• Finance and accounting (F&A) services: F&A BPO services encompass bookkeeping, payroll processing, and tax preparation tasks. By outsourcing F&A functions, businesses can streamline financial processes and ensure regulatory compliance.
• First call resolution (FCR): FCR is the percentage of customer inquiries resolved during the first contact with a business. Achieving a high FCR rate is a key performance indicator, reflecting efficient issue resolution and customer satisfaction.
• Fixed price (FP) model: In the FP model, the service provider charges a predetermined, fixed fee for delivering specific services over a set period. This model offers cost predictability suitable for well-defined and stable projects.
• Foundation training: Foundation training is the initial training provided to new BPO agents to equip them with essential knowledge and skills for their roles. This training typically covers company policies, product or service information, and communication techniques.
• Front office: This refers to the customer-facing functions of a business, such as customer service, sales or telemarketing, and technical support. Front-office processes are outsourced to specialized service providers to enhance customer interactions.

H

• Healthcare BPO: Healthcare BPO involves outsourcing administrative and non-core healthcare tasks, such as medical billing, medical coding, and claims processing. Precedence Research reported a global healthcare BPO value of $334.15 billion in 2021, forecasted to reach nearly $755.76 billion by 2030 at a CAGR of 9.49%.
• Human resources (HR) BPO: HR outsourcing involves delegating HR functions, such as recruitment, payroll processing, and employee benefits administration, to external service providers. Businesses can access HR expertise, optimize processes, and reduce administrative burdens by outsourcing.
• Hybrid work setup: A hybrid work setup combines remote and on-site work. BPO companies often adopt hybrid work models to accommodate varying employee preferences and ensure uninterrupted service delivery.

I

• Inbound calls: These are calls initiated by customers seeking assistance from a company. BPO agents receive and handle inbound calls to provide solutions, answer questions, and address customer concerns.
• Information technology outsourcing (ITO): ITO involves outsourcing IT-related tasks, such as IT support, software development, and network management, to specialized service providers. ITO helps businesses leverage technical expertise and modern technologies while reducing costs.
• Interactive voice response (IVR) system: IVR is an automated telephone system that interacts with callers through prerecorded voice prompts and touch-tone keypad responses. IVR systems route calls efficiently, collect customer information, and handle routine inquiries.
• Inventory management: Inventory management entails tracking a company’s goods or products, from material procurement to product shipping. This process is often outsourced to improve efficiency and reduce the complexities of supply chain management.
• IT support: This function involves providing technical assistance to end users. The tasks include addressing technical issues, troubleshooting problems, and ensuring the smooth operation of computer systems.

K

• Key performance indicator (KPI): KPIs are quantifiable metrics used to assess the performance and success of specific activities or processes. KPIs help measure and monitor agent efficiency, service quality, and customer satisfaction.
• Knowledge base center: A knowledge base center is a centralized information repository containing documents, guides, and resources related to products, services, and processes. These centers support agents in providing accurate and consistent information to customers.
• Knowledge process outsourcing (KPO): KPO involves outsourcing high-level, knowledge-intensive tasks that require specialized expertise, such as market research, data analysis, and consulting. KPO services add value to businesses by providing in-depth insights and strategic guidance.

L

• Lean Six Sigma: This methodology combines Lean principles (reducing waste) and Six Sigma (process improvement). BPO companies usually adopt Lean Six Sigma to optimize processes and deliver improved services. They typically provide agents with training.
• Legal process outsourcing (LPO): LPO involves outsourcing legal tasks and services, such as legal research, documentation, and contract review, to external providers. LPO offers cost savings and access to legal expertise, allowing law firms and departments to focus on core legal activities.

M

• Multichannel support: This type provides customer support through various communication channels like phone, email, chat, and social media. BPO companies offering multichannel support ensure customers can interact using their preferred methods.
• Multilingual agent: This agent is proficient in multiple languages and can communicate with customers in their preferred language. BPO companies usually employ multilingual agents to cater to diverse customer bases.

N

• Nearshore BPO: Nearshore BPO involves outsourcing business processes to service providers in neighboring countries. For example, an e-commerce business in the United States outsources its customer support to a service provider in Latin America.

O

• Offshore BPO: Offshore outsourcing refers to delegating business processes to service providers in distant countries or regions. For example, a multinational financial institution in the U.S. outsources its billing and collections to a call center in the Philippines.
• Offshoring: Moving operations to a foreign country to access expertise and reduce costs is what offshoring is. Unlike BPO, which only delegates processes or tasks to a third party, offshoring involves establishing an in-house center in a foreign country.
• Omnichannel solutions: Omnichannel solutions integrate various communication channels, ensuring a seamless customer experience across all touchpoints. They enable customers to switch channels while receiving consistent support and information.
• Onshore BPO: Onshore BPO refers to outsourcing business processes to service providers within the same country or region. For example, a clinic outsources laboratory work and imaging services to diagnostic service centers in the same country.
• Order fulfillment: Order fulfillment involves receiving customer requests, processing orders, and shipping products. Outsourcing this function streamlines logistics and ensures timely delivery.
• Outbound calls: These are calls initiated by a call center agent to reach customers or prospects. They are commonly used for telemarketing, lead generation, and sales campaigns.

P

• Payroll outsourcing: Payroll outsourcing involves delegating payroll processing and management tasks to third-party service providers. By outsourcing payroll functions, businesses can ensure accurate and timely payroll disbursements while complying with payroll regulations.
• Pricing model: Also called pricing structures, BPO pricing models refer to how a service provider charges for its services. Pricing models include fixed price (FP), time and materials (T&M), and staffing, each offering distinct advantages and costs.
• Product or process training: BPO training is usually provided to newly hired agents to educate them about a company’s products, services, or procedures. Comprehensive training equips agents with the knowledge required to deliver adequate customer support.

Q

• Quality assurance (QA): QA involves monitoring and evaluating the quality of customer interactions and agent services. QA ensures compliance with company standards, identifies areas for improvement, and maintains service excellence.
• Quality assurance management: QA management oversees the QA process, analyzes data, and implements improvements to enhance service quality. BPO companies prioritize QA management to consistently deliver high-quality services.

R

• Remote work: Remote work allows employees to work outside a traditional office, often from home. According to Owl Labs, the number of employees opting for remote work increased by 24%, while those choosing on-site work decreased by 24%. Meanwhile, professionals’ preference for hybrid setups increased by 16%.
• Robotic process automation (RPA): RPA involves robots that can automate routine and repetitive tasks. This technology streamlines processes, reduces errors, and increases efficiency. Automation in the BPO industry is prevalent.

S

• Sales or telemarketing: Sales or telemarketing involves contacting potential customers to promote a brand and sell its products or services. BPO companies offer sales or telemarketing services to boost their client’s revenue and customer base.
• Service-level agreement (SLA): The SLA is a formal agreement between a client and a BPO provider that defines specific services, performance standards, and expected outcomes. SLAs ensure transparency and accountability in the outsourcing relationship.
• Social media management: Social media management involves monitoring, responding to, and engaging with customers through social media channels. BPO companies provide social media management services to maintain a positive brand image and manage online interactions.
• Soft skill training: This training seeks to develop soft skills, such as communication, negotiation, and interpersonal skills. It ensures agents can effectively engage with customers and handle sensitive situations with empathy.
• Standard operating procedure (SOP): The SOP is a documented guide outlining the step-by-step procedures for a specific process or task. It ensures consistency and uniformity in service delivery and helps new agents quickly adapt to their roles.
• Staffing model: This model involves contracting a BPO workforce to handle processes for a particular period. However, it covers more than just the staff. It also determines the payment for infrastructure, technology, and resources used.

T

• Technical support: Technical support in a call center assists and solves technology-related issues and inquiries. BPO companies offer technical support services to businesses and consumers, resolving IT-related problems efficiently.
• Technical support representative (TSR): A technical support representative is an agent specializing in resolving technical issues and offering guidance on technology-related matters. TSRs play a vital role in delivering excellent technical support to customers.
• Team lead (TL): A team lead is a supervisor overseeing several team members. They are responsible for managing and guiding a team of agents. TLs provide support, address agent concerns, and ensure team performance meets client expectations.
• Time and materials (T&M) model: The T&M model in BPO involves charging clients based on the time and resources spent on delivering services. This flexible model is suitable for projects with evolving requirements and scope.

U

• Unified communications as a service (UCaaS): UCaaS is a cloud-based communication platform that integrates various communication channels, such as voice, video, chat, and email. UCaaS enhances collaboration and enables efficient communication between agents and clients.

V

• Virtual assistant: A virtual assistant is an administrative assistant providing support to clients from a remote location. BPO companies offer virtual assistant services to help businesses manage administrative tasks efficiently.

W

• Work from home (WFH): WFH allows employees to use technology remotely. BPO companies often adopt WFH arrangements to accommodate changing work dynamics and enhance employee satisfaction. Over 90% of employees enjoy the WFH setup, with flexibility cited as the most significant benefit.
• Workforce management: Workforce management involves forecasting, scheduling, and managing the workforce to ensure optimal staffing levels and efficient operations. BPO companies utilize workforce management to optimize agent utilization and service delivery.

The Bottom Line

Understanding the BPO industry is vital to maximizing benefits and minimizing risks. Start by familiarizing yourself with the essential industry jargon. Consider our comprehensive list of outsourcing definitions outlined above. These terminologies will help you make smart decisions while navigating the outsourcing industry.

Ready to outsource? Unity Communications has what it takes to optimize your operations and scale your business. Let’s connect today and start with understanding BPO terminologies!