Outsourcing can lower costs but increases reliance on what?

Outsourcing can lower costs but increases reliance on what?

• A. In-house production only
• B. External vendors
• C. Government subsidies
• D. None of the above

Answer: (B)

Outsourcing lowers costs but increases reliance on external vendors. When you outsource, you hand over work to firms outside your organization, so your ability to deliver depends on those partners’ performance, pricing, and timing. If an external vendor faces problems—delays, quality issues, or price changes—you’re exposed because you don’t control that part of the process. Keeping work in-house would reduce this external dependence, and government subsidies don’t directly create the dependency that outsourcing introduces. None of the above isn’t correct because the typical consequence of outsourcing is greater reliance on external vendors.

Outsourcing lowers costs but increases reliance on external vendors. When you outsource, you hand over work to firms outside your organization, so your ability to deliver depends on those partners’ performance, pricing, and timing. If an external vendor faces problems—delays, quality issues, or price changes—you’re exposed because you don’t control that part of the process. Keeping work in-house would reduce this external dependence, and government subsidies don’t directly create the dependency that outsourcing introduces. None of the above isn’t correct because the typical consequence of outsourcing is greater reliance on external vendors.