What is the practice of using third-party specialist businesses to reduce labor costs called?

The practice of using third-party specialist businesses to reduce labor costs is known as outsourcing. This concept allows companies to delegate specific tasks or business processes to external vendors rather than managing them in-house. By outsourcing, businesses can benefit from the expertise of specialized firms that may operate at lower costs due to factors such as economies of scale or regional wage differences, ultimately enhancing efficiency and focusing on core competencies.

In contrast, other options do not accurately capture this practice. Internships refer to temporary positions within a company for students or recent graduates to gain practical experience, while offshoring involves relocating business processes to another country, often to access cheaper labor or materials, but it does not specifically denote the use of third-party specialists. Contracting, on the other hand, can involve hiring independent contractors but doesn't necessarily imply the same level of specialization as outsourcing.