TERMINOLOGIES

TERMINOLOGIES

Blended Pricing
A pricing model used in training outsourcing contracts where a blended combination of fixed and transactional financials is used. Fixed pricing is generally used for fixed set of operations activities and transaction pricing is used for content delivery.

Comprehensive Outsourcing
Outsourcing business model where all functional processes of the organization are assumed by the supply side company. In training, a comprehensive outsourcing deal usually involves the assumption of all administration, content management, and delivery services. Even in a comprehensive model, it is recommended that the buy side company always retain strategic responsibility of all services and ownership of intellectual property.

Divestiture
A divestiture involves the selling and acquisition of businesses or assets of a business. Divestiture is usually different from outsourcing because the intellectual property rights or asset ownership sometimes transfers from one business to another.

Gainsharing
Financial strategy used to provide incentive for outsourcing suppliers to help reduce internal costs to the buy side company. Involves a prorated share of the incurred savings to be reimbursed to the supply company. For example, if the supplier implements a change in process that saves the buyer ongoing costs, a portion of the savings is allocated to the supplier as part of compensation. The formula for calculating gainsharing reimbursements frequently involves taking the projected savings over time and discounting them back to a present value and then reimbursing the supplier a percentage of that value.

Master Services Agreement
Overriding contractual agreement between an outsourcing buyer and supplier. Defines high level contractual terms such as leadership resources, payment schedule, grievance procedures, resource requirements, etc.

Fixed Pricing
A pricing model where a guaranteed amount of money is paid for a pre-defined set of activities on a regular basis; e.g. monthly, quarterly, etc.


Letter of Intent
A document declaring the buy side company’s intention to purchase services from a supplier contingent upon specific conditions being met. This document is usually given as a gesture of good faith prior to service level negotiations. Sometimes called an MOU, or memorandum of understanding.


Offshoring
An outsourcing strategy which involves the transfer of responsibility of a business process to either an internal group or outsourcing company in another continental region. Primary reasons for offshoring activities is to gain access to talent and resources, reduce the costs of labor or raw materials, streamline distribution, or to strategically meet government’s nationalization laws and policies.

Out-tasking
An outsourcing business model where the services being performed by a third party company are project based; meaning the terms of the activity are very definable around parameters of delivery and do not generally include the assumption or responsibility of all processes related to a particular function. This is the most traditional approach to outsourcing. Examples are the purchase of an instructor-led course session, contracting with a company to develop an e-learning course, or licensing of an LMS system. Out-taking usually involves more simplified contracting documents and lower risks.

RFI -Request for Information
A document prepared by the buy side company to solicit proposals from qualified supply companies. The RFP typically defines the scope of work requested and the requirements for suppliers’ proposals as well as evaluation criteria. Resulting proposals usually present the supplier’s capabilities and relevant project history, response to specific scope of work requirements, pricing information, implementation plans and solution models on how to meet business needs.

RFQ – Request for Quote
A document prepared by the buy side company to solicit a specific pricing quotation from the supplier. Generally, requested quotation information is per unit pricing, extended pricing, and pricing conditions. Primarily used for project based or out-tasking related services.

Selective Outsourcing
An outsourcing business model where the services being performed by a third party company include all of one or more functional processes within a business unit, but not every functional process within the business. An example is when a buy side company selects a service provider to manage all of the administrative processes for the learning function but retains content and delivery responsibilities.

SLA - Service Level Agreement
A contractual document that defines the service level criteria that the supply side company must meet and resulting penalties if the service levels are not met. This contract is usually a sub-document of a master services agreement. SLA’s define metrics associated with services such as response times, frequency of activities, quality levels of services, etc.

Training Outsourcing
Training outsourcing is a strategic business strategy for leveraging the training capabilities of external business partner(s). The capabilities involve processes within training administration, portfolio management, and content delivery. Training outsourcing is considered one sector of the Business Process Outsourcing (BPO) industry. The others being information technology (IT), human resources (HR), and financial management (FIN).

Transaction Pricing
A pricing model used in training outsourcing contracts to reflect rates for variable activity. Usually used for pricing of course delivery, number of registrations, number of evaluations, etc.