Earlier quoted context omitted.
A significant potion of this is an end run around immigration law. Cleaning companies need to compete with companies willing to employ illegal immigrants for very low wages which drives down the costs below what companies like IBM would pay people. Change some of these loopholes and the outsourcing overhead becomes far more significant. Though employing large numbers of part time workers works better at scale so the…
I have heard variants on this as well but haven't seen any actual data or research that supports this notion. If you come across any I'd be interested in reading that. There is a tremendous exposure to legal risk both for the contracting company and the company that hires the contracting company if they employ workers who do not have the right to work in the US. Having worked with IBM's legal department I'm pretty su…
In practice that's very rarely an issue. One recent case had Target using a cleaning service that way paying illegal immigrants below minimum wage. The government did not care and the only impact was being forced to pay actual wages. And remember that's the worst case, which means sticking with minimum wage is safe.
Now, IBM/Apple/whatever may take steps to avoid illegal immigrants. But, the market clearing price does not have a simple illegal vs. non separation for jobs. So, companies bidding on work are faced with some hard choices.
PS: Now, if you can find examples of penalties for the big company side of things outside of the most blatant violations I would be curious.