Outsourcing refers to the process by which companies use external providers to manage or maintain certain aspects of their company's business.
Typically, IT outsourcing has been one of the main areas that businesses have relied on external vendors. More recently, other areas of the company have begun to be outsourced, including payroll, human resources and other functional areas that are determined to not be part of the company's main business. Outsourcing now also refers to the increasingly common practice of using vendors outside of the country - there have been many media reports of the recent wave out IT jobs outsourced to places like Dubai.
For companies, there are often many advantages to outsourcing, including possible reduction in cost, improved efficiency, and the additional of outside expertise that a company may not have, or be able to build, internally. Outsourcing things like IT to foreign locations, although often criticized in the media, often allows the company to save significant costs that can then be reinvested in other areas like sales and marketing - often creating new jobs. There can also be disadvantages to outsourcing, including the creation of possible communication problems, loss of direct knowledge within a company, and difficulties managing the outsourcing process. As always, if you are considering outsourcing for your company, be sure to research the various outsourcing vendors available to make sure you find one that fits your needs.