NARRATOR: Outsourcing is the practice of being an entity outside your company for a task which used to-- or could be-- performed by a person or team from your own organization. For example, perhaps you used to have a full-time accountant as an employee, but nowadays, you just outsource to an accounting company.

Many believe outsourcing has to involve hiring foreign companies, but that is incorrect. One can outsource to domestic as well as foreign entities. The term you should be using to describe the delegation of certain tasks abroad is "offshoring," whereas the term you can use to describe delegation within the same country is "onshoring."

To be even more specific, you can use the term "near-shoring" when referring to offshoring to a nearby country, or "far-shoring" if the country in question is, well, far away. To keep it simple, A, outsourcing equals offshoring plus onshoring, and B, offshoring equals near-shoring plus far-shoring. Or, in other words, one, a US company delegating tasks to another US company is onshoring.

Two, a US company delegating tasks to a Mexican company is offshoring. And since Mexico is nearby, the even more precise term would be "nearshoring." Three, a US company delegating tasks to a Chinese company is also offshoring, but since China is far away, the more precise term would be "far-shoring." And of course, the US company is outsourcing in all three cases.