Outsourcing means:

Answer & explanation

Correct answer: option 2

The correct answer is Option (2) → Giving work to an outside agency to improve efficiency and to reduce costs.

Option (1) To provide source for data. — Incorrect. Outsourcing means sending work out of the firm, not supplying data.

Option (2) Giving work to an outside agency to improve efficiency and to reduce costs. — Correct. Outsourcing, or contracting out, is giving work to an outside agency to improve efficiency and to reduce costs. When the work goes to overseas locations, it is also called off-shoring.

Option (3) Emerging opportunities due to technological advancement. — Incorrect. New technology makes outsourcing possible; it is not what the word means.

Option (4) Purchasing technology from other countries — Incorrect. Buying technology is an import; outsourcing hands over a task to an outside agency.

NCERT (2025-26): “Outsourcing … Outsourcing or contracting out is giving work to an outside agency to improve efficiency and to reduce costs. When outsourcing involves transferring work to overseas locations, it is described by the term off shoring, although both off - shoring and outsourcing are used together. Business activities that are outsourced include information technology (IT), human resources, customer support and call centre services and at times also manufacturing and engineering.”