Final answer:
Outsourcing is the practice of contracting with third-party companies often abroad to perform tasks once done internally by a company's own staff, while offshoring involves moving operations to another country to access cheaper labor markets.
Step-by-step explanation:
The practice of contracting with third-party companies or vendors outside the organization to deliver products and services to customers or to produce products is known as outsourcing. This process often involves hiring outside contractors from abroad to carry out tasks that a company's own employees might have previously handled, like manufacturing, customer service, accounting, and payroll. On the other hand, offshoring refers to the movement of a company's operations to another country to take advantage of cheaper labor markets, without necessarily contracting the work to a third party. These practices have been driven by globalization, trade agreements like NAFTA, and more technically skilled labor available in other countries. While outsourcing and offshoring can help companies cut costs and stay competitive, they can also lead to polarization in the job market and structural unemployment, with the number of jobs in developed countries decreasing.