Beyond the Outsourcing Angst: Making America More Productive
FRB of Dallas, Economic Letter, Vol. 1, No. 2, February 2006
8 Pages Posted: 2 Mar 2006
Outsourcing is not new. For years, American companies have focused on core competencies and contracted out activities that could be accomplished better, faster and cheaper by outside, specialized providers. These vendors may be across town, elsewhere in the country or on the far side of the world.
The motive has always been to remain competitive. In today's business environment, profit and even survival depend on making constant improvements throughout supply chains by lowering costs and improving quality, designs, cycle times and processes. Through specialization and trade, businesses develop important competitive advantages that help them become more flexible and innovative in rapidly changing markets.
Indeed, the best companies keep costs low and boost productivity by doing what they do best and outsourcing the rest.
Keywords: outsourcing, productivity, competitiveness, globalization, innovation
JEL Classification: A20, L00, O30
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