What is outsourcing?

It is the act of assigning part of a business process to a third party on a repeated basis.

When a company, a business, or an individual “subcontracts or hires” a third party to do some of the business processes on a continuous or a frequent basis, it is called outsourcing. It is often confused with “proper employment” and “out-tasking.” It will be much clearer if we define the latter two to be able to fully understand the definition of outsourcing.

Proper employment means you will be giving him/her a regular job based upon his/her capability, skills, and expertise. He/she will, in return, do the job on a regular basis to gain income. In this process, both you and the employee are bounded by the “labor laws” of your country in which both of you should abide.

The employee must perform his/her assigned tasks and meet the standards set by you, the employer. In the event he/she is unable to perform such assigned tasks and meet the standards, then you may terminate the employment contract. You, however, in return are liable to your employee. You must provide him/her with the proper compensation, benefits, and due process (in the event of termination) as determined the existing laws on labor/employment in your country.

Out-tasking means you will be assigning a specific task to someone based on his/her capability, skills, expertise. He/she will, in return, do that assigned task to gain income. This is a one time event, and neither you nor that person is liable by any laws.

The employee may or may not perform the assigned task and/or meet the standards set by you. You, on the other hand, may or may not pay him/her upon completion of the assigned task. This way whichever action you and/or that person do will have an effect to both your reputations as an employer and employee respectively. However, neither you nor the employee is bounded by the “labor laws,” so no lawsuits can be made by either party.

So, what then is outsourcing?