A critical rule of outsourcing is that a firm should not outsource "core functions." While this rule is almost universally agreed to by outsourcing experts, the definition of "core" varies considerably between outsourcing experts. In the widest sense, core functions are the most essential functions in your firm, those that are the most critical to revenue. In some cases, core functions may be defined by law, but in most cases it is up to individual firms to define what is core. Likewise, non-core functions are those that are of the lowest value and are the most generic. While there are different definitions in different industries, the translation of this simple statement into a business plan is a very complex process. Few firms, even those that are very superficially similar, will fully agree on the list of core or non-core functions.
To better understand the practical differences between core and non-core, consider how this rule is applied in Legal outsourcing (LPO). LPO is unique because it is a licensed and regulated profession. The functions that are considered to be the practice of law, are illegal for anyone other than a lawyer to perform. These are the functions that are generally considered to be the core functions of a law firm. However, a law firm may even choose to outsource very specific, specialty areas of legal practice (that are to major sources of income, and require specialist lawyers). Generally, though, the outsourcing discussion is about the functions that fall outside of the specific legal definition the "practice of law."
Core legal functions... the practice of law... is generally considered to be the set of functions that occur in the representation of clients, for a fee, in the courts. However, the majority of work within a law firm or legal department is not time spent in court. Answering phones, filing away emails, filling out general office paperwork... the same sort of administrative work performed in any firm... is generally agreed to be non-core. Even creating a very basic contract by filling out a template, generally does not require a lawyer (except for review of the final product). However, every firm has a slightly different definition of when a contract can be built from a template by a non-lawyer and when it should be hand-crafted by a lawyer. The difference in definition greatly impacts how much work is core and non-core.