What does outsourcing refer to?

Outsourcing refers to the practice of hiring external firms to provide services or produce goods that could be done internally. This approach allows organizations to focus on their core competencies while leveraging the expertise and efficiency of specialized third-party providers. By outsourcing certain functions, businesses can often access greater flexibility, reduce costs, and improve service quality.

The other choices do not accurately capture the essence of outsourcing. While internal project completion and in-house training pertain to tasks managed within the organization, they do not involve external parties. Reducing payroll expenses can be a consequence of outsourcing, but it is not the definition of outsourcing itself. Thus, the accurate definition of outsourcing is the engagement of external firms for production or services, making the correct choice clear.