The transferring of certain business functions from internal staff to outside contractors. Outsourcing commonly is applied to non-core functions, such as accounting, information technology, human resources, facilities management, fleet management, parts manufacturing, payroll, press relations, and real estate management for reasons that include lowering costs, avoiding liabilities, and allowing management to focus on the core business. Outsourcing also is an excellent way for management to shift or even avoid responsibility. See also job security and offshoring.
- When a U.S. company hires an independently-operated call center in India to handle telephone customer service, this is an example of outsourcing customer service.
- When a company contracts out the development of a website, this is an example of outsourcing web design.
(1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management.
(2) Contracting with organizations outside your country for work that could otherwise be done by employees within your company. Contrast with insourcing.
outsourcing - Investment & Finance Definition
An increasingly popular process in which a company contracts with another company to manage services that it needs but that it doesn’t want to provide itself. Typically, outsourced services are non-core activities such as janitorial services, information technology, and food catering for the employee cafeteria. Sometimes companies outsource manufacturing and focus on sales and marketing. Outsourcing is popular because it allows companies to reduce short-term costs.