The Economist – Outsourcing is sometimes more hassle than it is worth

by Sabrina I. Pacifici on September 3, 2011

Schumpeter: “When Ford’s River Rouge Plant was completed in 1928 it boasted everything it needed to turn raw materials into finished cars: 100,000 workers, 16m square feet of factory floor, 100 miles of railway track and its own docks and furnaces. Today it is still Ford’s largest plant, but only a shadow of its former glory. Most of the parts are made by sub-contractors and merely fitted together by the plant’s 6,000 workers. The local steel mill is run by a Russian company, Severstal. Outsourcing has transformed global business. Over the past few decades companies have contracted out everything from mopping the floors to spotting the flaws in their internet security. TPI, a company that specialises in the sector, estimates that $100 billion-worth of new contracts are signed every year. Oxford Economics reckons that in Britain, one of the world’s most mature economies, 10% of workers toil away in “outsourced” jobs and companies spend $200 billion a year on outsourcing. Even war is being outsourced: America employs more contract workers in Afghanistan than regular troops.”

Previous post:

Next post: