Outsourcing

The gamble of outsourcing - as demonstrated at an outsourcing summit in London in 2009

Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally.[1][2]

It often involves the contracting of a business process (e.g., payroll processing, claims processing), operational, and/or non-core functions, such as manufacturing, facility management, call center support). The term "outsourcing" came from "outside resourcing" and dates back to at least 1981.[3][4] Outsourcing sometimes involves transferring employees and assets from one firm to another.

Outsourcing is also the practice of handing over control of public services to private enterprises.[5]

Outsourcing includes both foreign and domestic contracting,[6] and sometimes includes offshoring (relocating a business function to a distant country)[7] or nearshoring (transferring a business process to a nearby country).

Offshoring and outsourcing are not mutually exclusive: there can be one without the other.

Terminology

  • Offshoring is moving the work to a distant country. If the distance workplace is owned by the company, then the offshore operation is a captive.
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