Outsourcing
contracting out of an internal business process to a third-party organization
Outsourcing is a business practice in which companies use external providers to carry out business processes that would otherwise be handled internally. Outsourcing sometimes involves transferring employees and assets from one firm to another, or forming a separate legal entity that acts as a management service organization (MSO).
The term outsourcing, which came from the phrase outside resourcing, originated no later than 1981 at a time when industrial jobs in the United States were being moved overseas, contributing to the economic and cultural collapse of small, industrial towns. In some contexts, the term smartsourcing is also used.
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 should not be confused with offshoring which refers to relocating a business process to another country and may or may not involve a third-party provider. In practice, the concepts can be intertwined, i.e. offshore outsourcing, and can be individually or jointly, partially or completely reversed, as described by terms such as reshoring, inshoring, and insourcing.
Motivation
Theoretical frameworks
Global labor arbitrage can provide major financial savings from lower international labor rates, which could be a major motivation for offshoring.
“Outsourcing” enters the record as contracting out of an internal business process to a third-party organization. Crown Archives preserves that source wording while asking what Outsourcing, contracting and internal can confirm, complicate or overturn.
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“Outsourcing” is worth following because a concise public description often conceals a longer documentary argument. Here, Outsourcing, contracting and internal provides the most credible route into that argument.
Chronology, provenance and viewpoint should be read together before a broad social or political interpretation is accepted. The source revision retrieved here is dated Sep 15, 2026. The linked authority identifier is Q61515. The Library of Congress control number is sh85031614. 1 of 1 selected statements include explicit references; 1 carry qualifiers and 0 use preferred rank. The first chronological checks are 1981.
Official terminology may obscure informal participation, dissent or communities documented only indirectly. The source lead contains qualifying language; that uncertainty should survive quotation, summary and reuse. Authority statements aid reconciliation but still require their own references, qualifiers and ranks to be checked.
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This entry incorporates text from “Outsourcing” on English Wikipedia. Contributors are listed in the page history. Text is available under the Creative Commons Attribution-ShareAlike 4.0 License. Selected authority identifiers and statements are retrieved from Wikidata under CC0; their references and qualifiers remain part of the verification path.