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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: LLCF who wrote (30900)10/24/2000 8:51:50 PM
From: Don Lloyd  Read Replies (1) of 436258
 
DAK -

<With no improvement in individual output per hour, the overall productivity measurement is increased due to the elimination of two entire jobs without loss of output.>
But wouldn't you think the companys still pay the new company and therefore productivity relatively unchanged?? And if they pay him less than before, there are real gains no?

Before the change, the three companies pay a total of 36 man-months of salary per year for an output of 12 manuals. After the change, the same output of 12 manuals is produced for 12 man-months of contract labor. The outsourcing has produced an increase in overall productivity by eliminating the structural labor slack inherent in each company having an entire full time employee that it can only provide 1/3 of a full time job for.

Regards, Don
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