What does the term "outsourcing" refer to?

The term "outsourcing" specifically refers to the practice of contracting with third-party vendors to provide services or perform tasks that could be done in-house. This strategy is commonly employed by organizations to increase efficiency, reduce costs, or access specialized skills and expertise that may not be available within the company. By utilizing external resources, businesses can focus on their core functions while relying on external partners to handle non-core or specialized operations.

For instance, a company might outsource its payroll processing to a specialized firm, allowing its internal staff to concentrate on more strategic tasks. This practice can help in managing operational costs and improving service quality, making outsourcing a strategic choice for many organizations.