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Sat 2006-04-29

A Question on Outsourcing

Filed under: — josh @ 03:03

I think I’m a little stupid.

Given:

  1. Outsourcing is basically an attempt to cut costs by moving work to a lower-wage environment
  2. Management is paid more than the IT staff

What is the logical conclusion?

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3 Responses to “A Question on Outsourcing”

  1. glen Says:
    April 29th, 2006 at 07:30

    A couple of important points to my overall point:
    - People generally act according to self-interest.
    - Management of a company are the only people who have the power to make strategic decisions.
    - All the people in a manager’s MonkeySphere are other managers.

    Given all of those points, a manager is only ever going to fire a) other people and b) people they don’t know and therefore don’t care about. So that’s going to lead to the grunts.

    I mean, have you ever heard of a board of directors voting to give themselves a pay cut? The parliamentarians voting to reduce their benefits? There is simply no incentive for them to reduce their salaries/benefits.

  2. daniel Says:
    April 30th, 2006 at 11:54

    Your point 1 is not necessarily true. In many cases, outsourcing is an attempt to reduce the total number of fulltime employees, not to save money.

  3. Peter Says:
    April 30th, 2006 at 19:13

    Wouldn’t an outsourced environment:

    1. Reduce the amount of liabilities (eg long-service leave, redundancy
    payouts, etc),

    2. Reduce the amount of fixed costs (full-time wages) and increase
    the amount of variable costs?

    Liabilities & fixed costs are evil while variable costs are good,
    since the latter are easier to alter, giving managers more ‘flexibility’.

    Peter

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