Question

What is the term used for the act of moving some of a company’s internal activities and decision-making processes to outside providers?

Short answer

Outsourcing is the act of moving some of a company's internal activities and decision-making processes to outside providers.

Step-by-step solution

Outsourcing

Outsourcing is the process in which an outside party is hired by the company to perform some specific activities or services andmanufacture some goods earlier produced in the organization. This process is used as a cost-cutting tool and to keep a keen focus on core areas in which the business operates.

Outsourcing is a contract in which one business hires some other firm to be liable for a planned and a current operation that is or might be performed internally. It may also include the movement of workers and resources from one organization to the other.

Reasons for outsourcing

1. Controlling cost: When the same work is outsourced from outside allows companies to reduce extra expenses like overhead expense headcount, office space, software, licensing phone cost, and several other costs
2. Efficiency increases: If the same task is done by outside experts, the work is done faster and efficiently
3. Time-saving: when the task is done by outsiders, it will allow you to save time that would take you twice as long.
4. Flexibility: It allows you to adjust more production without changing any further internal resources
5. Expertise: It helps gain expert knowledge from outside subject matter experts who are hired.