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Reasons for outsourcing

 

 

According to  Wikipedia, Companies primarily outsourcing to reduce certain costs — such as peripheral or "non-core" business expenses, high taxes, high energy costs, excessive government regulation/mandates, production and/or labor costs. The incentive to outsourcing may be greater for U.S. companies due to unusually high corporate taxes and mandated benefits, like social security, Medicare, and safety protection (OSHA regulations). At the same time, it appears U.S. companies do not outsourcing to reduce executive or managerial costs. For instance, executive pay in the United Statesin 2007 was more than 400 times more than average workers—a gap 20 times bigger than it was in 1965. In 2011, twenty-six of the largest US corporations paid more to CEO's than they paid in federal taxes. Such statistics imply that the reason companies outsource is not to avoid costs in general but to avoid specific types of costs.

 

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