Outsourcing is a great idea for small to medium enterprises where they don’t have sufficient work to keep various specialist fully employed. Even then, the calculations are not as clear cut as they might first seem. Outsourcing in larger organisations will ALWAYS result in reduced service or reduced pay for those delivering it (and thus probably reduced service) because outsourcing companies have a legal requirement to make a profit from the reduced costs they will be charging to have got the work in the first place. Why this is not clearly evident to all involved is beyond me.
<fx/ climbs off soapbox>
There is no legal requirement for a company to make a profit. In fact, there are such things as ‘not for profit’ companies.
In quoted companies there may be pressure from shareholders to create a profit - but it’s still not a legal requirement.
There are a number of outsourcing companies that are ‘not for profit’, particularly in health and social care.
Whether a company is legally required to make a profit or not wasn’t really the thrust of my rant and even a not for profit is going to lead to a reduction of service due to a reduction of revenue within a sub sector while duplicating overheads. Unless you are suggesting that some health organisations pay more than their internal costs to bring in not for profit outsourcing partners.
It used to be argued that specialist organisations could be more efficient due to economies of scale and less less waste because they understood their sub sectors better than others. This may have been true once, but my 40 years of watching outsources reduce service levels AND the pay and conditions of the TUPEd employees would suggest this has always been, at best, a false dream.