Outsourcing is the business or management practice of having an external organization provide a needed function or service through some form of contractual arrangement. If an existing function or service is outsourced, the contractor may hire some or all of the incumbent staff. In some arrangements, the contractor is required to work with incumbent staff—at least for a period of time.

Outsourcing has been practiced by the government and corporate sectors for decades and has evolved through three distinct stages. Michael F. Corbett identifies these stages as tactical, strategic, and transformational.

Stage 1: Tactical Outsourcing

Early outsourcing efforts tend to be tactical in nature, aimed at solving specific organizational problems. These could include a one-time, fixed term need; peak activity loads; a troubled department or division; inadequate ...

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