Final answer:
Firms engaged in outsourcing hire outside firms to perform tasks previously done internally, often to reduce costs. Outsourcing can contribute to polarization and structural unemployment in the job market. The practice became more prevalent in the 1990s with globalization and trade agreements like NAFTA making it easier to relocate operations abroad.
Step-by-step explanation:
The student's question pertains to a practice known as outsourcing, defined as firms engaging in the act of hiring outside firms who are specialists to perform operations that were formally handled by the company's own employees. This can occur both domestically and internationally, with the latter sometimes leading to polarization in the job market and contributing to structural unemployment. Outsourcing often involves contracting out various services like accounting, payroll, and customer support, whereas offshoring refers to moving a company's operations entirely to another country to take advantage of lower labor costs.
By the start of the 1990s, amidst rising costs in developed nations, companies began to employ these practices more regularly as part of globalization efforts and trade agreements such as NAFTA, which facilitated the relocation of operations abroad. The globalization era marked a significant increase in the use of both outsourcing and offshoring as a means to reduce operational costs for companies.