Even though some of patio11's post seems like opinion, he is correct on all points. Regarding item 3, another perspective is that a lot of the outsourcing/off-

Even though some of patio11's post seems like opinion, he is correct on all points. Regarding item 3, another perspective is that a lot of the outsourcing/off-shoring happens because it is something that is not a core competency of the company. Think any ERP system (SAP, Oracle, etc.) which is basically a CRUD app on steroids. If your company doesn't make ERP systems then you want the lowest skilled bidder doing the work. Is that the case for a tech startup? It also requires almost the same count of people to offshore the work as it does to do it yourself. You need someone who can interface with the offshore team, answer questions about requirements (if they are even asked), etc. And deal with turnover. You might be asking why any sane company would do this then? Simply cost but also accounting rules. When a company buys a service from another vendor (like buying bandwidth) I think it shows up differently on the books than when they have an entire department of people doing that work. That entire department needs to have retirement plans, benefits, vacation time, etc. and they show up in the employee count reported to shareholders. This nuance is probably why the counter-intuitive stock price increase happens after a massive layoff.