Crowdsourcing is a newly-coined term for delegating tasks to the open user community, and optionally rewarding results. Typical tasks include testing, verification, development, promotion and evaluation. Free-lancers in IT and contributors on the web, believed to be a key constituent of the Web 2.0 mass collaboration ideology, are central to this process. The ethical, social, and economic implications of crowdsourcing are subject to wide debate.
By definition, it is the act of taking a task traditionally performed by an employee or contractor, and outsourcing it to an undefined, generally large group of people or community in the form of an open call.
Companies that need help with problems broadcast it online, which the online community or crowd is expected to solve. Posted solutions are vetted by other community members before the company rewards, owns & uses it.
Wikipedia itself is a great example of this concept. Several Google products like Gmail & Wave that are available by spreading invitations to evaluators evovlve with community support.