Outsourcing is a name for the old practice of contracting out, which means having some service or activity performed by persons or organizations that are not part of a organization. “Outsourcing,” “privatization,” and “contracting out” are often used interchangeably because each term reflects an organization’s interaction with vendors in different aspects. A variety of definitions associated with these terms are available in business literature; however, the important difference between outsourcing and privatization is that in privatization complete control over a service is transferred to a vendor, whereas in outsourcing the delivery of a service is transferred, but control, including governance and policy setting, is not transferred.
Paul Hoffert described outsourcing as:
. . . having created a new mindset that focuses on talent-for-hire, reminiscent of the middle
ages. In those days, trader people travelled from town to town, selling their crafts and
services to a variety of clients. Today the talent-for-hire is just as likely to travel to the job
virtually, as to travel physically, but the concept is still the same (Hoffert, 1998).