Question

The purchase of a good or service that was previously provided internally, or that could be provided internally, is called:

a) Insourcing
b) Outsourcing
c) Offshoring
d) Crowdsourcing

Answer 1

Outsourcing refers to the purchase of a good or service that was previously provided internally, by hiring an outside firm instead. This practice is common in the business world and can help companies save costs and focus on their core competencies. Option B is correct.

Step-by-step explanation:

The purchase of a good or service that was previously provided internally, or that could be provided internally, is called outsourcing.

Outsourcing occurs when a company hires an outside firm, sometimes abroad, to perform tasks it used to perform internally, like accounting, payroll, human resources, and data processing services. It is a major cost-savings option for large companies, especially with globalization and trade agreements like NAFTA.

For example, companies might outsource customer service to call centers in other countries where labor is cheaper. This allows them to focus on their core competencies and save costs.