What is the goal of outsourcing?
A) To shift the firm's cost model to one that is comprised of more variable costs and less fixed costs
B) To increase gross margins
C) To reduce overall up-front fixed costs
D) To decrease labor costs
E) All of the above

Question

Quizplus · Accepted Answer

Outsourcing is a strategic decision made by companies to reduce costs and increase efficiency. It helps shift the firm's cost model to one that has more variable costs and less fixed costs (A), as it allows companies to pay for services only when needed instead of maintaining in-house capabilities. This strategy can increase gross margins (B) by reducing the cost of goods sold or operational expenses. It also helps reduce overall up-front fixed costs (C) by eliminating the need to invest in expensive infrastructure or technology. Additionally, outsourcing can decrease labor costs (D) by taking advantage of lower wage rates in other countries or by paying for labor on an as-needed basis, rather than maintaining a full-time workforce.

What Is the Goal of Outsourcing