What does outsourcing mean?
Outsourcing describes the practice of paying an outside company, organization, or individual to perform work that would otherwise be handled internally. The term is especially common in business and technology, where functions such as customer support, software development, manufacturing, accounting, and logistics can be transferred to specialist providers. Outsourcing can enable organizations to focus on their central activities, access specialist skills, and reduce some operating costs. It may also raise questions about control, service quality, confidentiality, and the effect on workers. The word is related to “out” and “source,” and it can be used as a noun for the practice or as a verb for the act of transferring work. Although off-shoring is sometimes used loosely as a synonym, the two ideas are not identical: outsourcing identifies the external provider, whereas off-shoring identifies the provider’s location.
The practice of contracting work, services, or business functions to an external organization or individual.
"The company’s decision to outsource payroll resulted in lower administrative costs."
Common in business, government, and technology contexts; it may suggest either efficiency or concerns about loss of direct control.
To transfer a work activity, business function, or service to an outside provider.
"The retailer outsourced delivery and warehouse operations to a logistics specialist."
Often used with “to” or “to someone”: “outsource a task to a contractor.”
The plural is uncommon in ordinary use; “outsourcing” is normally treated as an uncountable noun.
"The report compares different outsourcings of production across the industry."
Outsourcing turns a business decision into a global one: the work may be done by a company that shares no building, language, or time zone with the organization that commissioned it.
Reviewed by Deb Chak, Editor. AI-assisted content curated by RJS Tech Solutions LLP.
Where does outsourcing come from?
The verb “outsource” was formed in the 20th century from “out” and the older word “source,” meaning a person or place from which something is obtained. Its earliest documented uses were associated with business and industrial organization, especially the practice of obtaining supplies or services from outside organizations. The noun “outsourcing” developed from the verb and came into common general use in the late 20th century as companies increasingly contracted with external specialists. The underlying word “source” comes through Old French from Latin “surgere,” meaning “to rise” or “to spring from.”
Related word forms
How outsourcing is actually used
The term is widely used in business, technology, government, and public services. It can imply efficiency and specialization, but it may also carry concerns about job losses, oversight, quality control, or data security. The related verb is commonly used in the form “outsource something” or “outsource something to someone.”
Easily confused with outsourcing
Off-shoring generally means moving work to another country or region, while outsourcing means assigning work to an external provider regardless of where that provider is located.