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Outsourcing refers to contracting out business processes or services to external providers rather than performing them in-house. It can involve entire functions or specific tasks, and is often accompanied by offshoring or nearshoring to different geographic locations. The term covers a broad range of activities, including manufacturing, information technology, customer service, and back-office operations.

Historically, outsourcing has roots in mid-20th century cost-reduction efforts and gained prominence in the 1980s and

Types of outsourcing include offshore outsourcing to a provider in a distant country, nearshore outsourcing to

Benefits often cited are lower costs, access to specialized skills, greater scalability, and faster time to

Risks and criticisms include potential declines in quality control, data security and intellectual property concerns, dependence

Effective outsourcing management relies on clear scope definitions, robust service level agreements (SLAs) and key performance

1990s
with
manufacturing
offshoring
and
later
information
technology
and
business
process
outsourcing.
Globalization
and
advances
in
communication
technologies
enabled
distributed
networks
of
suppliers
and
service
delivery
centers,
shaping
modern
global
operations.
a
nearby
country,
and
onshore
or
domestic
outsourcing
to
providers
within
the
same
country.
Service
models
commonly
cited
are
business
process
outsourcing
(BPO),
knowledge
process
outsourcing
(KPO),
and
information
technology
outsourcing
(ITO).
Some
arrangements
are
captive
offshoring,
where
the
outsourcing
provider
is
owned
by
the
contracting
company.
market.
Outsourcing
can
enable
organizations
to
focus
on
core
activities,
drive
innovation,
and
maintain
around-the-clock
operations
through
distributed
teams.
on
a
supplier,
and
political
or
regulatory
changes.
Hidden
costs
and
transition
challenges
can
also
erode
expected
savings,
as
can
cultural
or
communication
issues
across
geographies.
indicators
(KPIs),
strong
governance,
and
proactive
risk
management.
Trends
in
recent
years
emphasize
automation,
AI,
cloud-based
delivery,
and
hybrid
or
multi-sourcing
models,
alongside
heightened
emphasis
on
data
protection
and
ethical
considerations.