Outsourcing is the transfer or delegation to an external service provider the operation and day-to-day management of a business process. The customer receives a service that performs a distinct business function that fits into the customer’s overall business operations.
There are two principal types: “traditional” outsourcing and “greenfield” outsourcing.
In “traditional” outsourcing, employees of an enterprise cease to perform the same jobs to the enterprise. Rather, tasks are identified that need to be performed, and the employees are normally hired by the service provider. For example, an information technology outsourcing may include a transfer of responsibility for management of data centers and networks (LAN, WAN, and telecommunications). In the field of facilities management, individuals acting as property managers might become employees of a facilities management company.
In “greenfield” outsourcing, the enterprise changes its business processes without any hiring of personnel by the service provider. For example, the enterprise might hire a startup company to provide a new service, such as wireless remote computing, that was not previously managed internally.