I'm not sure I would call that an externality. The newly-unemployed worker whose job was just outsourced is part of the transaction. I understand "externality"

I'm not sure I would call that an externality. The newly-unemployed worker whose job was just outsourced is part of the transaction. I understand "externality" to refer to economic consequences to uninvolved parties, like when a company sells gas to an automobile owner which causes pollution which affects everyone else.