In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.
So any outsourcer telling you to use Trados (for example) will be responsible for:
* Withholding Federal income tax,
* Withholding and paying the employer social security and Medicare tax,
* Paying Federal unemployment tax (FUTA)
* Issuing Form W-2, Wage and Tax Statement, annually,
* Reporting wages on Form 941, Employer’s Quarterly Federal Tax Return.
[Edited at 2008-05-13 06:08]