Outsourcing — The Dark Side

When a company reduces costs, it's logical to expect that it will be better able to compete in a marketplace and against companies offering similar products. When a company successfully reduces costs and maintains quality, the net gain in profits after the costs of efficiencies and even layoffs have been accounted for, usually accrues to the company owners and sometimes the shareholders if the company is publicly traded. For a 5% reduction in costs, consumers can't expect to see much at the cashier. Maybe a small rebate incentive? For a 10% reduction in manufacturing or development or infrastructure costs, you can also expect fatter executive salaries and a bump in the stock price. But faithful consumers, loyal to a particular product, are still unlikely to see any reductions in retail prices of the company's products. More . . .