(1) Outsourcing is a process of allocation of specific business processes or functions to a specialist external service provider or agency for certain monetary consideration. In outsourcing, the service provider or contractor enters into an agreement or formal contract with the company or the firm for providing services against certain monetary charges. After this the service provider, will take the responsibility of carrying out the tasks as per the expectation of the company.

(2) When services such as security, canteen, sanitation, etc. are outsourced by a company, then the security guards, waiters, cooks, sanitation scavangers, etc. are not the employees of the company although they work inside the company premises. They directly work under the control of service provider or contractor. Many organisations, companies, corporate houses, establishments, hospitals, shops, malls, housing societies, offices, etc. outsource their non-core (less important) areas of business such as canteen, sanitation, security services, etc. to outside agencies.