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I disagree - sort of. Done properly and with adequate consideration to the decision, outsourcing can be a benefit to the company, to customers, and, believe it or not, to some local workers. Of course it can be a major problem if management just jumps on the outsourcing bandwagon without considering pros, cons, and how to make it effective. This is one tool in the toolbox and like any tool is not a magic wand. Outsourcing can provide value to companies, customers, and even employees under the right circumstances.

In considering a decision to outsource, management should concentrate on the goals and objectives - all of them. Consider value to your customers, stockholders, and the community. What benefits accrue to each? What negatives? What can you do to mitigate the negatives while increasing the benefits? Would some other course of action meet the goals and objectives better?

The general goal of course is to provide your customers with what they need at a price they will pay and which generates a profit for your company. At times it makes sense to outsource aspects of your production. In fact essentially *all* companies outsource parts of their production, though they might not think of it as outsourcing.

Surely your company does not grow or mine all the raw materials it uses, manufacture all the components, and hire clerks to sell the finished product to the ultimate customer. Instead you purchase much of your materials and (unless you are in the retail business) probably sell your product to some other company that either wholesales it or sells it to the retail customer. Whether we call it outsourcing or not, that means you are outsourcing important parts of your supply/manufacturing/delivery chain.

There is of course nothing wrong with this arrangement. It allows each entity to do what it does most effectively. You don't have to understand iron mining to manufacture cast parts, nor does the mining engineer have to understand metal casting. Each functions in his own area and as a result the economy is more efficient. (For an example, see Leonard Read's delightful essay, "I Pencil" available at http://www.econlib.org/Library /Essays/rdPncl1.html.)

The benefits of outsourcing are simply the benefits of allowing different people to do what they can do effectively. We need not require every company, or every facility of any company, to do everything. If a factory in Thailand can assemble shoes more cost-effectively than one in Oregon, it makes sense to do the assembly

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