What does outsourcing typically involve?

Outsourcing typically involves obtaining goods or services from external suppliers, which is the essence of the practice. Companies choose to outsource when they want to take advantage of the specialized skills, cost savings, or efficiency that external vendors can provide. By leveraging the capabilities of these suppliers, businesses can focus on their core competencies while effectively managing their production and service needs.

This choice reflects the broader strategic decision companies make to optimize operations and reduce costs instead of relying solely on their internal resources. The practice can apply to various functions, including manufacturing, customer service, and IT support, making it a versatile approach in international business.

In contrast, relying solely on domestic suppliers, manufacturing all products in-house, and reducing staff in the home country do not capture the fundamental nature of outsourcing, which is about external partnership and procurement.