Outsourcing is the process of utilizing a third party, either internally or externally, to perform a required task. For example, many companies use Kinko's to make all their copies instead of making them all internally. Similarly, companies can outsource a vast range of internal functions from their IS department to their accounting department or payroll functions. Outsourcing is often a less expensive alternative to performing the tasks in-house and allows the task to be completed by an individual or a company with more expertise. The end result is often a higher quality product and a cost savings for the outsourcing company.
Many companies can benefit from outsourcing one or multiple tasks.
However, there is a point at which the company needs to perform tasks internally. The size or the timing for pulling all functions in-house is different for all companies. The traditional argument for outsourcing is the one I have already mentioned. Outsourcing saves money and often improves the end product quality. Similarly, outsourcing allows management of the outsourcing company to focus their attention on the sales or products that drive their business, or on other more critical components of their business.