A more thorough explanation:

An outsourcing agreement is a contract between a company and a service provider. The service provider agrees to provide specific services, such as data processing or information management, using their own staff and equipment. These services are usually provided at the service provider's facilities.

For example, a company may outsource their customer service department to a third-party service provider. The service provider would then handle all customer inquiries and support using their own staff and equipment.

Another example could be a company outsourcing their IT department to a service provider. The service provider would then handle all IT-related tasks, such as network maintenance and software updates, using their own staff and equipment.

These examples illustrate how outsourcing agreements work. By outsourcing certain tasks or departments, companies can focus on their core business while the service provider handles the outsourced tasks. This can lead to cost savings and increased efficiency for the company.