Outsourcing

Outsourcing is a business practice in which <a href="/facts/Company/psBVz9jr">companies</a> use external providers to carry out <a href="/facts/Business_process/fYH2eREc">business processes</a> that would otherwise be handled internally. Outsourcing sometimes involves transferring employees and assets from one firm to another.
The term outsourcing, which came from the phrase outside resourcing, originated no later than 1981 at a time when industrial jobs in the United States were being moved overseas, contributing to the economic and cultural collapse of small, industrial towns. In some contexts, the term smartsourcing is also used.
The concept, which <a href="/facts/The_Economist/KNjzFCVU">The Economist</a> says has "made its presence felt since the time of the <a href="/facts/Second_World_War/2efV5L1U">Second World War</a>", often involves the contracting out of a <a href="/facts/Business_process/fYH2eREc">business process</a> (e.g., <a href="/facts/Payroll/NLDBySWS">payroll</a> processing, claims processing), operational, and/or non-core functions, such as manufacturing, <a href="/facts/Facility_management/7aN9tDQ1">facility management</a>, <a href="/facts/Call_center/jxKon6G8">call center</a>/call center support.
The practice of handing over control of public services to private enterprises (<a href="/facts/Privatization/TAtreKqK">privatization</a>), even if conducted on a limited, short-term basis, may also be described as outsourcing.
Outsourcing includes both foreign and domestic contracting, and therefore should not be confused with <a href="/facts/Offshoring/pfSe1r7e">offshoring</a> which is relocating a business process to another country but does not imply or preclude another company. In practice, the concepts can be intertwined, i.e. offshore outsourcing, and can be individually or jointly, partially or completely reversed, as described by terms such as reshoring, inshoring, and insourcing.

Outsourcing open-in-new

Outsourcing