Definition: (Webopedia)
Contracting out a company's non core, nonrevenue-producing activities to specialists.

• Differing from contracting in its use as a strategic management tool.
• Helps an orgaization to restructure around what it does best - its core competencies.
• Two common types of outsourcing: Information Technology (IT) outsourcing and Business Process Outsourcing (BPO).
• BPO includes outsourcing related to accounting, HR, benefits, payroll, and finance functions and activities.