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Concept
Outsourcing
Summary
Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity which otherwise is or could be carried out internally, i.e. in-house, and 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. The concept, which The Economist says has "made its presence felt since the time of the Second World War", 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, may also be described as outsourcing.
Outsourcing includes both foreign and domestic contracting, and sometimes includes offshoring (relocating a business function to a distant country) or nearshoring (transferring a business process to a nearby country). Offshoring and outsourcing are not mutually inclusive; one can exist without the other. They can be intertwined (offshore outsourcing), and can be individually or jointly, partially or completely reversed, in methods including those known as reshoring, inshoring, and insourcing.
Offshoring is moving the work to a distant country. If the distant workplace is a foreign subsidiary/owned by the company, then the offshore operation is a , sometimes referred to as in-house offshore.
is the practice of hiring an external organization to perform some business functions ('outsourcing') in a country other than the one where the products or services are actually performed, developed or manufactured ('offshore').
Insourcing entails bringing processes handled by third-party firms in-house, and is sometimes accomplished via vertical integration.
Nearshoring refers to outsource to a nearby country. Usually it takes place across national borders.
Official source
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