Final answer:
Outsourcing is a business practice where tasks are contracted out to an external organization, possibly in another country, to reduce costs. This has broadened from manufacturing to services and can lead to global job shifts and impacts on the domestic labor market.
Step-by-step explanation:
What is Outsourcing?
Outsourcing is a business practice where a company contracts with an external party to perform services or create goods that were traditionally performed in-house by the company's own employees and staff. In some cases, these services or manufacturing processes are outsourced to companies in other countries, a practice also known as offshoring.
This is done to capitalize on lower labor costs and increased global efficiency. The concept of outsourcing has evolved over the years with globalization and advances in international trade agreements and technology. Initially associated with manufacturing, outsourcing has expanded to include a wide array of services, such as customer support, accounting, and information technology.
As consumer demand for lower prices has increased, many companies have turned to outsourcing as a means of cutting operational costs. This shift has had significant impacts on job markets, often resulting in the polarization of the labor force and structural unemployment. Business Process Outsourcing (BPO), where specific business operations such as customer service or data processing are outsourced, is a significant element of the global economy.