What Is Outsourcing?

Definition of Outsourcing?

A common definition for outsourcing is; The transferring of management and / or day-to-day execution of a business process to an external / third party. In any outsourcing agreement, there are at least two parties involved:

Client: The company that makes the decision to outsource a business process / task to an external party.

Provider: The company that executes the tasks on behalf of the client

This is the most basic form of an outsourcing agreement. In a larger more complex outsourcing situation, there may be brokers in between the client and provider and/or even multiple providers.

Outsourcing: Business Process

There are three main categories:

  • Information Technology Outsourcing
  • Voice Outsourcing
  • Non-Voice Outsourcing

Outsourcing: Geographical Distance

Again there are three types of main categories:

  • Inshoring / Onshoring: Both client and provider are located in the same country
  • Nearshoring: Client and provider are in different countries, but are a relatively shirt distance from each other. For example, the US and Canada
  • Offshoring: Client and provider are in different countries and are a distance. For example, US client outsourcing to a Philippines provider