Final answer:
Outsourcing is the practice of a company contracting third-party vendors to perform services or activities, which may also involve offshoring to utilize cheaper labor markets overseas. This business approach has reshaped global labor demand and contributed to economic changes.
Step-by-step explanation:
The process described in the student's question refers to outsourcing, which is when a company contracts with outside third-party vendors to provide certain services or activities rather than employing full-time staff internally. Outsourcing can include hiring vendors from within the same country or contracting out to firms abroad, sometimes referred to as offshoring. Offshoring involves moving parts of a company's operations overseas to benefit from cheaper labor markets.
Outsourcing is not only limited to manufacturing but also extends to services such as customer support, accounting, and payroll. This business strategy has transformed global labor markets and contributed to economic polarization. This practice accelerated with globalization and was further fueled by trade agreements, which made transnational operations more feasible. The impact of outsourcing has led to significant changes in employment patterns, including structural unemployment and shifts in worker demand across various industries.