What Is Outsourcing?

Outsourcing is a commercial technique in which a company hires a third party to execute services and produce items that were previously conducted in-house by the firm’s own workers and personnel. Outsourcing is a cost-cutting strategy used by businesses to reduce costs. As a result, it has the potential to influence a wide range of professions, from customer service to manufacturing to the back office.
In 1989, outsourcing was recognized as a corporate strategy, and during the 1990s, it became an important component of company economics. In many nations, the practice of outsourcing is fraught with controversy. Opponents claim that it has resulted in the loss of employment in the United States, notably in the industrial sector. Supporters argue that outsourcing encourages enterprises and corporations to spend resources where they are most productive, and that it contributes to the worldwide preservation of free-market economies.

Outsourcing at its core, means getting someone else/some other company to fulfil a role in your production chain that you would otherwise find

  • too expensive to set-up
  • too difficult to do that job yourself at a competitive price
  • comparatively cheaper to get someone else to do it

An example. John wants to sell these t-shit designs that he created. However John is an online t-shirt graphics designer, not a clothing manufacturer. Thus he outsources the actual production to a clothing manufacturing company.