Unit 4

Outsourcing
Outsourcing is an agreement in which one company hires another company to be responsible for a planned
or existing activity that is or could be done internally, and sometimes involves transferring employees and
assets from one firm to another.
Outsourcing is also the practice of handing over control of public services to private enterprises.
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: there can be one without the other. They can be
intertwined (Offshore outsourcing), and can be individually or jointly, partially or completely reversed,
involving terms such 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 captive, sometimes referred to
as in-house offshore.
 Insourcing entails bringing processes handled by third-party firms in-house, and is sometimes
accomplished via vertical integration.
 Offshore outsourcing 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").[12]
 An Intermediary is when a business provides a contract service to another organization while
contracting out that same service.[13][14]