Earlier quoted context omitted.
> [...] what they outsourced were their bottom tier workers, the unproductive people. That might be true to some extent, but I think there's a problem with that line of thought. People are a "moving target". What may be a bottom-tier worker now, could very well be a valuable employee in 5-10 years. Many folks have built their career by starting at a low level and then getting promoted and upskilled over time through…
An additional problem MBAs sometimes miss is that when you export jobs to contract orgs is that this accumulated institutional knowledge is lost—it’s no longer held in-house. Conversely it contributes to the expertise of the contract org. But not all orgs think long term. Or they get enthralled by “core competency”.
Look what happened to G.E. They outsourced everything they possibly could and had a decade or two of unparalleled profitability. But, over time the well of ideas and competencies for products and services dried up and they went from being a powerhouse to a cautionary tale.
Don't export knowledge or know-how to save a few bucks. It always comes back to bite you.