Lists: Why Companies Outsource

When a company outsources a function or operation (e.g. eliminates that function or operation from its corporate hierarchy and relies on outside vendors to perform the task), they often have 1 or more of the following considerations in mind:

10. Whatever it is, someone in the Third World can always build it cheaper.

9. The company ends up with fewer employees to worry about, negotiate with, and pay benefits for.

8. Any cost containment activity is view positively by the market.

7. It keeps employees on their toes. Employees often willingly train their outside successors in the hopes of going with the function or at least securing a few months more of paydays.

6. The company hopes that if the headcount goes away, the expense will go away too.

5. Even if the expense does not go away, it will show up on some other part of the operating statement under more ambiguous terminology, such as “Outside Services,” and won’t be as noticeable.

4. Any term that includes “out,” as in “out the back door,” must be a good idea.

3. They know it can be done. Their sister-in-law runs a wedding planning service from her home.

2. Having an outsider around is a good idea in case the whole program goes down the chute and a responsible culprit must be identified and dealt with firmly.

1. They want to believe that “outsource” is a Latin word meaning “at no cost.”


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