What is the practice called when a business uses another company to perform a function instead of employing its own staff?

The practice of using another company to perform a function instead of employing its own staff is known as outsourcing. This strategy allows businesses to focus on their core competencies while delegating non-core activities to external specialists. By doing so, companies can achieve cost savings, access specialized expertise, and increase efficiency. Outsourcing can apply to various functions, including customer service, IT support, and manufacturing.

While contracting and subcontracting both involve agreements with third parties, they typically refer to more specific arrangements where one company engages another to complete a particular project or task under defined conditions. Franchising, on the other hand, is a licensing agreement that allows individuals to operate a business under the name and system of an established brand, which is quite different from outsourcing. Thus, outsourcing is the most accurate term for the practice described in the question.