Outsourcing means engaging the services of an external vendor or agency to manage, deliver or operate certain business activities which could otherwise be provided within the organization. In an outsourcing agreement there are two parties-the client company which wants to outsource a business process, and the vendor or external provider which designs, manages, controls and provides the service to the company on a recurring business. For example, a manufacturer may outsource the advertisement of his products to an ‘ad agency’. It is the ad agency which would plan and execute the advertisement campaign in consultation with the client. Similarly after activities may also be outsourced for better quality and to achieve economy.

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