Employees are not the only ones seriously affected by outsourcing. Large banks have outsourced customer accounts to third parties. There has been at least one instance of call-center employees making fraudulent transactions. Examples of poor service abound. Investments in branding are wasted, apart from the crippling loss of customer goodwill.
This kind of outsourcing may be to a foreign national who was previously employed by the bank. That is why employees move swiftly to brush outsourcing dirt under the carpet. Presidential candidates speak of national employment effects of sending jobs abroad, but the effects on stocks have been hidden from the views of most investors.
The chemical lead in toys, and quality issues with life-saving medicines, are extreme examples of serious business lapses due to outsourcing. It is up to stock investors to ask relevant questions of executives and directors at quarterly conferences. Window-dressing of quarterly results through this route may dump crippling liabilities on stocks at any time.
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