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Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally,[1][2] and sometimes involves transferring employees and assets from one firm to another.

The term outsourcing, which came from the phrase outside resourcing, originated no later than 1981.[3][4][5] The concept, which The Economist says has "made its presence felt since the time of the Second World War",[6] often involves the contracting of a business process (e.g., payroll processing, claims processing), operational, and/or non-core functions, such as manufacturing, facility management, call center/call centre support).

Outsourcing is also the practice of handing over control of public services to private enterprises, even if on a short-term limited basis,[7] may also be described as "outsourcing".[8]

Outsourcing includes both foreign and domestic contracting,[9] and sometimes includes offshoring (relocating a business function to a distant country)[10] or nearshoring (transferring a business process to a nearby country).

Offshoring and outsourcing are not mutually inclusive: there can be one without the other. They can be intertwined (offshore outsourcing), and can be individually or jointly, partially or completely reversed,[11] involving terms such as reshoring, inshoring, and insourcing.