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Outsourcing and hiring glossary

Vendors use these terms as if everyone agrees on what they mean. Each entry below gives the definition, what it actually costs, and the case where it is the wrong answer.

Business Process Outsourcing

BPO

Business process outsourcing is delegating an entire business function, such as customer support or accounts payable, to an external provider.

Dedicated team model

The dedicated team model provides a full external team, usually with its own lead, working continuously on one client’s product.

Employer of Record

EOR

An employer of record is a third party that legally employs someone on your behalf in a country or state where you have no legal entity.

Global Delivery Model

GDM

The global delivery model splits work across onshore, nearshore, and offshore locations to balance cost, coverage, and proximity to the business.

Managed Services Provider

MSP

A managed services provider operates and maintains part of your IT estate under an ongoing contract with agreed service levels.

Nearshoring

Nearshoring means hiring in nearby countries with substantial time-zone overlap rather than distant low-cost regions.

Offshore Development Center

ODC

An offshore development center is a dedicated team in another country working exclusively for one client, usually hosted and administered by a local partner.

Offshoring

Offshoring means moving work to a distant country, usually for a significant labor cost difference.

Professional Employer Organization

PEO

A professional employer organization co-employs your staff, taking on payroll, benefits administration, and HR compliance while you direct the work.

Recruiting as a Service

RaaS

Recruiting as a service provides sourcing and screening on a subscription rather than a per-placement commission.

Recruitment Process Outsourcing

RPO

Recruitment process outsourcing hands part or all of your hiring process to an external provider, who works as an extension of your talent function.

Shared Services Center

SSC

A shared services center consolidates internal functions such as IT, finance, or HR into a single internal unit serving the whole organization.

Software development outsourcing

SDO

Software development outsourcing is delegating some or all of a software build to an external company rather than employees.

Staff augmentation

Staff aug

Staff augmentation means adding external engineers to your existing team, working under your management and inside your process.

Time and materials

T&M

A time and materials contract bills for hours actually worked rather than for a fixed scope at a fixed price.

Virtual Offshore Development Center

VODC

A virtual offshore development center is a dedicated offshore team assembled and run remotely, without a shared physical office.

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