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Operations · business glossary

What is Outsourcing?

By Shivam Bhandari · Reviewed 31 October 2026 · How we write

definition

Paying an external specialist to handle a function instead of doing it in-house.

Outsourcing explained

Outsourcing is paying an outside company to do work you could do in-house, such as accounting, delivery or manufacturing.

example

A D2C brand outsourcing warehousing and delivery to a logistics partner.

why it matters

It turns fixed costs into variable ones and lets you focus on what you do best.

common mistake

Outsourcing the capability that gives you your competitive advantage.

Frequently asked questions

What is Outsourcing?

Paying an external specialist to handle a function instead of doing it in-house. Outsourcing is paying an outside company to do work you could do in-house, such as accounting, delivery or manufacturing.

Why does Outsourcing matter?

It turns fixed costs into variable ones and lets you focus on what you do best.

What is a common mistake with Outsourcing?

Outsourcing the capability that gives you your competitive advantage.

Related terms

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