What is outsourcing?

Outsourcing refers to the practice of hiring external organizations to perform services or produce goods that were traditionally done in-house. This approach allows companies to focus on their core competencies, improve efficiency, and potentially reduce costs. By leveraging the expertise and resources of third-party suppliers, businesses can access specialized services, enhance operational flexibility, and meet changing demands without the need to expand their own workforce or capabilities.

Outsourcing can take many forms, such as contracting out IT services, customer support, manufacturing, or even administrative tasks. This strategic decision also enables businesses to tap into global talent and take advantage of lower labor costs in certain regions.

The other options, such as promoting goods and services internally or investing solely in domestic manufacturing, do not align with the fundamental concept of outsourcing. Similarly, while reducing a workforce for budget management may be a tactic some companies use, it does not encapsulate the essence of outsourcing, which involves shifting tasks to external providers.