What are outsourcings advantages and disadvantages to the economy?

Answer 1

Outsourcing is just a form of increased specialization. Instead of one company doing all the anciliary tasks involved in making it's product, it focuses on making it's product, and hires other companies to do those other tasks. In theory, this benefits the economy by increasing efficiency. However, that theory doesn't always work out in practice.


You may be thinking of 'offshoring,' however, which is a different phenomenon, since it involves labor forces in sepparate nations, and the global economy.