Glossary

AI & Outsourcing Glossary

Practitioner definitions for the AI engineering, RAG, agent orchestration, outsourcing, and SaaS MVP terms used across the DevStudio AI knowledge base.

Each term is defined in 1-3 sentences with cross-links to the article that goes deeper. 62 terms in this edition; the glossary is reviewed quarterly and grows with the article corpus.

  • Agent

    An AI system that takes goal-directed actions across one or more tools to complete a task. Distinguished from a chatbot by the presence of tool-use, multi-step planning, and the ability to execute (not just describe) workflows.

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  • Multi-Agent System

    An architecture where multiple specialized AI agents coordinate to solve a task, often via a planner / worker / critic decomposition. Useful when tasks span multiple domains or require parallelism.

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  • Tool Use

    An agent's ability to call external tools (APIs, databases, search, code execution) as part of its reasoning. Modern agents typically have a declared tool surface with explicit auth scopes per tool.

  • Function Calling

    A model capability where the LLM emits a structured tool-call request rather than free-form text, enabling reliable downstream execution. Sometimes called structured output or tool calling.

  • Agent Orchestration

    The control-flow layer that decides which tool an agent calls, in what order, and how to recover from failure. Typically implemented as a state machine (LangGraph) or custom orchestrator.

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  • LangGraph

    A stateful, graph-based agent orchestration framework built on LangChain. The 2026 default for stateful, branching agent workflows because the state machine is auditable.

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  • AutoGen

    Microsoft's multi-agent conversation framework. Best fit for collaborative agent patterns; used less often for production systems where a state machine is easier to audit.

  • CrewAI

    A role-based multi-agent framework that emphasizes specialized agent personas. Lighter weight than LangGraph or AutoGen.

  • Reasoning Trace

    The intermediate steps an agent takes between receiving a task and emitting an answer, including tool calls and intermediate model outputs. Critical for observability and debugging.

  • Self-Reflection

    An agent pattern where the model reviews its own output before final emission, often with a critic prompt. Improves quality at the cost of latency and tokens.

  • RAG

    Retrieval-Augmented Generation. A pipeline where a query is matched against a document corpus, top-K relevant chunks are retrieved, and a language model generates an answer grounded in those chunks with explicit citations.

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  • Hybrid Retrieval

    A retrieval strategy that combines lexical search (BM25) with dense vector search and merges results via reciprocal rank fusion or weighted scoring. The 2026 production default for enterprise RAG.

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  • BM25

    A bag-of-words ranking function used in lexical search engines (Elasticsearch, OpenSearch). Catches exact-match keyword cases that pure vector retrieval misses.

  • Reranking

    A second-pass scoring step that re-orders top-K retrieval candidates using a more expensive cross-encoder model. Typically lifts retrieval precision 5-15 points.

  • Cross-Encoder

    A model that takes a query and a candidate document together and outputs a relevance score. Used in reranking; more accurate but slower than embedding-based retrieval.

  • Chunking

    The process of splitting source documents into retrieval-sized units before embedding. Strategy must vary by source type (legal by clause, code by function, support by message).

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  • Embedding

    A vector representation of text (or other content) that captures semantic similarity. Generated by an embedding model and stored in a vector index.

  • Embedding Drift

    The gradual loss of retrieval quality as a corpus expands or evolves while the embedding index remains static. Addressed by re-embedding or upgrading the embedding model.

  • Grounded Generation

    An answer-generation pattern where the LLM is prompted to cite specific source chunks for every factual claim. The basis of citation-correct RAG outputs.

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  • Citation Correctness

    An eval metric measuring whether the source a RAG answer cites for a claim actually contains that claim. Production threshold typically >=95%.

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  • Faithfulness

    An eval metric measuring whether all factual claims in a generated answer are supported by the retrieved context. Production threshold typically >=95%.

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  • Refusal Correctness

    An eval metric measuring whether the system correctly refused to answer when no relevant context was retrieved. Catches hallucination and over-confidence.

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  • Eval Set

    A labeled reference set of 200+ test cases (query, expected answer, expected tool calls, expected refusal flag) used to measure agent or RAG quality. Built in week 1.

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  • Eval Week 1

    DevStudio's commitment to ship the eval set before any production code merges, gating CI on the eval pass rate from day one.

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  • CI Gating

    A continuous-integration practice where the eval suite runs on every PR; merge is blocked if any metric drops below threshold. Prevents silent quality regressions.

  • Production Drift

    The gradual degradation of system quality in live traffic compared to the eval baseline. Detected by sampled live-quality and weekly eval re-runs.

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  • LLM-as-Judge

    An evaluation technique where a peer-tier or stronger LLM rates outputs against a rubric. Used for scalable scoring; calibrated against human ratings on 5-10% of samples.

  • Token Audit

    A 90-day cadence of re-evaluating model routing, caching, and prompt budget to keep AI unit economics predictable. Part of DevStudio's quarterly Token Audit commitment.

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  • Model Routing

    Routing different request types to different model tiers (frontier, strong, fast, open-source) based on cost-vs-quality tradeoffs measured against the eval set.

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  • Prompt Budget

    An explicit cap on system-prompt and per-request token usage, monitored against actual production usage. Prevents prompt-rot and silent cost growth.

  • Semantic Caching

    A caching layer that returns cached responses for queries semantically similar to past queries, reducing token cost for FAQ-shaped traffic.

  • Unit Cost Ceiling

    The maximum acceptable cost per resolved query or generated artifact. Set in scoping; instrumented in production from day one.

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  • Observability for AI

    Instrumentation that captures latency, cost, and quality drift per AI surface. Tools include LangSmith, Phoenix (Arize), Datadog APM with OpenTelemetry.

  • Paid Scoping

    DevStudio's 1-2 week, $700-$2,800 fixed-price feasibility engagement that produces a written go/no-go, 50-item readiness checklist, eval plan, and cost model. About one in four scopings recommends not building.

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  • RFP

    Request For Proposal. A structured document used to solicit bids from outsourcing vendors. Effective AI RFPs run 12 sections covering business outcome, eval requirements, and walk-away criteria.

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  • Body Shop

    An outsourcing model where vendors bill hourly for engineer time without committing to engineering discipline (no eval, no acceptance criteria, no code ownership). Avoid for AI work.

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  • Senior Offshore

    An outsourcing model where ex-FAANG/BAT engineering leadership delivers production-grade work at 3-4x the per-dollar engineering depth of onshore senior at parity quality.

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  • Build-and-Train Hybrid

    An engagement pattern where a vendor builds v1 while the in-house team learns alongside, then takes ownership at production. Combines vendor speed with in-house ownership.

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  • Operate-with-You

    A post-launch retainer model where the vendor maintains the production system on a monthly cost-and-scope basis while the customer's team operates day-to-day.

  • Source-Code Ownership

    A contract clause confirming the customer owns all source code, infrastructure-as-code, eval set, and runbook delivered. The single most important outsourcing-contract item for AI projects.

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  • Acceptance Criteria

    Numeric and behavioral conditions that define when a delivery increment is 'done'. Per-increment criteria are part of every DevStudio engagement.

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  • Architecture Decision Record

    A short written document capturing one load-bearing technical choice with the trade-offs and the reason it was chosen. Onboarding artifact and ongoing reference.

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  • Onboarding Checklist

    A 30-item shared checklist run on day 1 of every engagement covering access provisioning, code-base orientation, decision contracts, eval expectations, and escalation paths.

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  • Walk-Away Criteria

    Pre-agreed conditions under which the customer (or vendor) ends the engagement mid-flight. Documented in the RFP and contract before kickoff.

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  • 6-Month QA Window

    DevStudio's commitment to a six-month warranty period for production fixes after handover, included in every project rate.

  • MVP

    Minimum Viable Product. A focused product release that ships the smallest functional surface able to validate the riskiest assumption in the business plan.

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  • Pre-Verified Modules

    Battle-tested third-party services (Auth0/Clerk for auth, Stripe for billing, Resend for email) used to compress MVP build time. The 80% of an MVP that is not your moat.

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  • Multi-Tenancy

    An architectural pattern where one product instance serves multiple customer organizations with workspace-level data isolation. Decision is hard to reverse; pick deliberately at MVP stage.

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  • Vertical Slice

    An end-to-end thin path through the product (sign-up to first valuable action) used as an early proof point. Built before sideways feature breadth in MVP.

  • PII

    Personally Identifiable Information. Subject to data-residency, redaction, and audit requirements that affect AI architecture choices.

  • Data Residency

    The legal requirement that data physically remain in a specific geographic jurisdiction. Affects cloud region selection and vendor model choice.

  • HIPAA

    U.S. Health Insurance Portability and Accountability Act. Imposes strict data handling requirements on AI systems that process U.S. healthcare data.

  • SOC 2

    A widely-used compliance framework for SaaS vendors covering security, availability, confidentiality, and processing integrity. Common buyer requirement at mid-market.

  • Prompt Injection

    An attack where adversarial inputs cause the LLM to deviate from its instructions. Mitigated by input scanning, output validation, and least-privilege tool scopes.

  • PII Redaction

    An ingestion-pipeline step that removes personal identifiers from documents before embedding, preventing PII from entering the retrieval index.

  • Onshore

    An outsourcing model where engineers are in the same country as the buyer. Premium rate, zero time-zone friction, smallest legal-IP setup.

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  • Nearshore

    An outsourcing model where engineers are in a country within 3-4 hours of the buyer's time zone. Latin America to US, Eastern Europe to EU.

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  • Offshore

    An outsourcing model where engineers are 8-12+ hours offset from the buyer. East Asia, South Asia. Async-first delivery is the operating model.

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  • EEAT

    Experience, Expertise, Authoritativeness, Trustworthiness. Google's content quality rubric. Improved by named authors with Person Schema, citation discipline, and verifiable expertise.

  • Content Cluster

    A group of topically-related articles cross-linked into a topical authority surface, often anchored by a pillar page. Strong cluster: 5+ articles plus internal links plus a pillar.

  • Pillar Page

    A long-form, authoritative page that aggregates a topical cluster into a single SEO surface, with explicit ItemList Schema and internal links to every cluster article.