This refers to paying a supplier for work which the organisation could do with internal employees.
Outsourcing is usually used to reduce the costs of specialist or low value activities. Some organisations have encountered difficulties with outsourcing where they have lost control of critical business activities, for example engagement with their customers when outsourcing customer services. It can also be used where the organisation does not have the level of work required to support a specialist in-house team, for example legal services. If work is outsourced, the responsibility for its quality and performance still ultimately rests with the management of the organisation commissioning the work.
Outsourcing is a term normally found in business and strategic management. Explore our learning zone to discover more