CSEET · Business Communication · Common Business Terminologies
A company's board decides to 'outsource' its payroll processing to an external agency. What does outsourcing mean here?
Outsourcing means handing over a business function, such as payroll processing, to an outside agency that performs it for the company under a contract. The company still needs the work done but no longer carries it out internally.
- ASelling the payroll department's assets to shareholders
- BClosing down the payroll function permanently without replacement
- CAssigning a business function to an outside party to perform on the company's behalfCorrect
- DMerging with the agency to form a new company
Explanation
Outsourcing means contracting an internal function or process to an external service provider. The company continues to need the work done but does not perform it in-house. Merging is a different concept involving combination of two entities.
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