What does an outsourcing strategy involve?

An outsourcing strategy specifically involves contracting third-party companies to handle services or functions that were previously managed internally by the organization. This approach allows businesses to focus on their core competencies while leveraging the expertise and efficiencies of external providers. By outsourcing, companies aim to reduce costs, improve service quality, and gain flexibility in operations, all of which can enhance overall competitiveness.

The other options describe different business strategies that do not align with the concept of outsourcing. Establishing internal teams for cost reduction pertains more to in-house restructuring and management, increasing production capacity focuses on enhancing internal resources rather than leveraging outside expertise, and developing new products in-house centers on internal innovation rather than utilizing external services. Each of these strategies serves a different purpose within a business framework, but they do not encapsulate the essence of outsourcing.