The Customer Trap: How to Avoid the Biggest Mistake in Business

CHAPTER 5

Living the Outsourcing Compulsion

I don’t pay good wages because I have a lot of money; I have a lot of money because I pay good wages.

—Robert Bosch

The conventional wisdom in government, business schools, and much of industry is that companies choose to close their costly domestic operations in favor of better prospects and profits in other countries. The ability to manufacture a product for 30 percent to 50 percent less than it would cost at home is widely considered to be the reason that American firms have flocked overseas in recent years. Thus far, the outsourcing (or, more properly, “offshoring”) conversation has pitted shrinking transaction costs, enhanced efficiencies, and fat profits against job loss, societal disruption, ...