Outsourcing is the shifting of business operations from within an organization to a person or group outside the organization. It occurs when an organization hires a person or business to take over specific activities that the organization would otherwise perform itself. Outsourcing can help businesses by increasing specialization—that is, by allowing businesses to focus primarily on the activities they are best suited to perform.
Organizations of all types outsource. Manufacturing businesses, for instance, might pay other companies to provide the basic parts and materials they need. Many businesses also outsource their accounting processes, computer operations, legal services, advertising, human resources management, and customer service. Governments may hire private contractors for such functions as garbage collection, prison management, and the operation of social programs. Many families outsource their housecleaning, yard work, and other duties to specialized businesses.
Some companies outsource jobs to other countries where the work can be performed at a lower cost. This practice is sometimes called offshoring. Many people oppose offshoring because they believe it causes a loss of jobs in the company’s home country. Supporters of offshoring, however, argue that it leads to cheaper goods and services, increased efficiency, and other economic benefits.
