Which of the following best defines the term "outsourcing"?

The term "outsourcing" is best defined as transferring business functions to a third-party service provider. This typically involves a company delegating specific tasks, processes, or entire functions to outside organizations in order to improve efficiency, reduce costs, or access specialized expertise. By outsourcing, businesses can focus on their core activities while leveraging the capabilities of external providers who may offer services more effectively or at a lower cost.

The other options present approaches related to business management but do not align with the concept of outsourcing. Hiring additional employees addresses workforce expansion rather than the delegation of tasks. Investing in new technologies focuses on internal improvements and innovations, while reducing the number of outsourced functions does not define outsourcing itself but rather describes a potential outcome or strategy of managing outsourcing relationships. Understanding outsourcing in its proper context allows for strategic decision-making regarding resource allocation and operational efficiency.