What is outsourcing?

Outsourcing refers to the practice of contracting with external suppliers or companies to carry out tasks, services, or processes that were previously conducted internally within an organization. This approach allows organizations to focus on their core competencies while leveraging the expertise and efficiencies of specialized vendors. By outsourcing, businesses can often achieve cost savings, access to advanced technology, and improved service quality.

The choice that aligns with this definition is the one that describes contracting an external supplier for work that was done in-house. This encompasses the fundamental aspect of outsourcing, where organizations delegate specific activities to third-party service providers rather than handling them with their own staff.

The other options do not reflect the concept of outsourcing. Hiring internal staff pertains to expanding the internal workforce, while expanding operations focuses on internal growth rather than subcontracting work. Reducing the workforce typically involves downsizing and does not relate to the outsourcing process, which is about allocating tasks to external entities rather than reducing internal capacity. This distinct focus on external contracting clearly defines the essence of outsourcing.