Question

A company decides to lower payroll costs by hiring an organization to assume full responsibility for its IT department. What is this process called?

Managed services
Temp-to-lease
Payrolling
Professional employer organization

Answer 1

The process of hiring an external organization to handle a company's entire IT department is called outsourcing. It is a strategic move to cut costs and allows a company to concentrate on its primary business functions.

Step-by-step explanation:

The process of hiring an organization to take full responsibility for a company's IT department is known as outsourcing. This stratagem is leveraged by businesses seeking to reduce payroll costs and can involve both domestic and international companies.

Outsourcing allows a company to focus on its core competencies by delegating secondary tasks or operations to external specialists. It is different from offshoring, which specifically refers to moving operations overseas to access cheaper labor markets. When a company uses outsourcing, it doesn't necessarily have to send work abroad. Instead, it contracts another organization to handle certain tasks or departments internally.

While options such as Managed services, Temp-to-lease, Payrolling, and Professional employer organization might seem related, they do not encapsulate the full transfer of departmental responsibility in the way that outsourcing does.