The practice of eliminating parts of organizations that focus on noncore sectors of the business and hiring outside forms to perform these functions instead is called:

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Quizplus · Accepted Answer

The practice described in the question is outsourcing. Outsourcing involves hiring outside firms to perform functions that are not considered core to the business, in order to increase efficiency and reduce costs. Work restructuring, rightsizing, and reducing may all involve making changes to an organization's operations, but do not specifically involve outsourcing.

The Practice of Eliminating Parts of Organizations That Focus on Noncore