Outsourcing

Outsourcing is a business practice in which companies use external providers to carry out business processes, that would otherwise be handled internally.^[1][2][3] 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.^[4][5][6] In some contexts, the term smartsourcing is also used.^[7]

The concept, which The Economist says has "made its presence felt since the time of the Second World War",^[8] often involves the contracting out of a business process (e.g., payroll processing, claims processing), operational, and/or non-core functions, such as manufacturing, facility management, call center/call center support.

The practice of handing over control of public services to private enterprises (privatization), even if conducted on a limited, short-term basis,^[9] may also be described as outsourcing.^[10]

Outsourcing includes both foreign and domestic contracting, ^[11] and therefore should not be confused with offshoring which is relocating a business process to another country but does not imply or preclude another company.^[12] In practice, the concepts can be intertwined, i.e. offshore outsourcing, and can be individually or jointly, partially or completely reversed,^[13] as described by terms such as reshoring, inshoring, and insourcing.