Outsourcing in its simplist form means a company is going to another country to take advantage of lower labor wages. If the labor wages are low enough to offset the higher transportation costs then a business may decide to take a portion of its business to this new place. For investors, outsourcing can mean the difference between a business being profitable or a business going under due to competition and pricing stuctures. Companies that outsource make decisions based on costs, and normally the money saved from outsourcing direcly impacts the bottom line. This increased dollar amount can lead to higher sales, higher profits, higer dividends, or higher research and development for the next quarter.
Today it is common to see manufacturing jobs outsourced to China, Malaysia, India, and Mexico. Service jobs, such as telemarketing and customer care centers are being outsourced to India due to similarities in language and the ablitly for Americans to easily understand them.