What is the business practice called, where companies reduce their permanent workforce and assign work to smaller firms or individual workers at home?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Outsourcing
Option (1) Liberalisation — Incorrect. Liberalisation is a policy of the government: since 1991 the state has removed many rules that controlled trade, industry and finance, and opened the economy to the world market. It changes the rules for the whole economy; it is not a way in which a company organises its own work.
Option (2) Outsourcing — Correct. In outsourcing, a company reduces its permanent employees and gives the work to smaller firms or to people working from home. The big company saves on wages, while the small firms, competing for its orders, keep wages low.
Option (3) Disinvestment — Incorrect. Disinvestment is the government selling its share in public sector companies, that is, privatising them. Workers may lose jobs after it, but it is a change of ownership, not a way of handing work out to small firms.
Option (4) Mechanisation — Incorrect. Mechanisation is the use of machinery in place of human labour to raise production. Machines may replace workers, but the work stays inside the company; it is not passed on to smaller firms or homes.
NCERT (2025-26): “Globalisation, Liberalisation and Changes in Indian Industry … More and more companies are reducing the number of permanent employees and outsourcing their work to smaller companies or even to homes. For multinational companies, this outsourcing is done across the globe, with developing countries like India providing cheap labour.…” |