When a company hires regular service from external sources which was previously provided internally is known as ______.
Show answer & explanation
Correct answer: A
Explanation
Outsourcing -
When a business unit delegates tasks that were previously performed within the company to an external specialized agency or third party, it is called 'outsourcing'.
Key Benefits and Examples of Outsourcing:
Companies typically do this to reduce costs and focus on their core activities.
Example: A software company outsources the responsibility for catering, security, or customer care for its employees to another specialized company.
Types: Information Technology Outsourcing (ITO), Business Process Outsourcing, and Knowledge Process Outsourcing (KPO).
Meanings of Other Options:
Globalization: The integration of local or national economies, cultures, and languages on a global scale.
Subsidy: Financial assistance provided by the government to reduce the cost of a product or service (such as subsidies on fertilizer or LPG).
Cross-subsidization: Charging more from one group to lower the price for another (e.g., charging more taxes from the rich and providing free services to the poor).