Outsourcing Strategy

Appleton Greene
In business, outsourcing is the contracting out of a business process to a third-party. Outsourcing sometimes involves transferring employees and assets from one firm to another, but not always. Outsourcing is also used to describe the practice of handing over control of public services to for-profit corporations. Outsourcing includes both foreign and domestic contracting, and sometimes includes off-shoring or relocating a business function to another country. Financial savings from lower international labor rates is a big motivation for outsourcing/off-shoring. The opposite of outsourcing is called in-sourcing, which entails bringing processes handled by third-party firms in-house, and is sometimes accomplished via vertical integration. However, a business can provide a contract service to another business without necessarily in-sourcing that business process.