outsourcing
OUT-sor-sing
/ˈaʊtˌsɔːrsɪŋ/
The business practice of hiring a party outside a company to perform services or create goods that were traditionally performed in-house.
Often used to reduce costs or focus on 'core competencies'.
The story behind the word. A modern business term coined in the late 20th century. It literally means looking 'outside' the company for the 'source' of labor or materials.
Word relationships
- contracting out: Contracting out is a more general term; outsourcing is the specific business strategy of using external providers.
- insourcing: Bringing a process that was previously outsourced back into the company.
Commonly confused with
- offshoring: Offshoring is about where the work is done (abroad); outsourcing is about who does the work (an external company).
Word family
- outsource (verb): To obtain goods or services from an outside supplier.
Collocations
- business process outsourcing
- outsourcing strategy
- IT outsourcing
Example sentences
- "By outsourcing their customer service to a specialized firm, the tech company was able to focus on product development." Business Strategy
- "Outsourcing is often a way for companies to convert fixed costs into variable costs." Economic Theory
Memory hook
You go 'Out' to find the 'Source' of your help. Getting help from outside.
When not to use
Don't confuse with 'offshoring', which specifically means moving work to another country. Outsourcing can happen locally.
Fun facts
- The term 'outsourcing' was first recognized as a formal business strategy in 1989.
Explore more words
offshoring, manufacturing, Divestiture, competency, expense, production
Also appears in
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