Outsourcing In Recession

I was in a conversation with a gentle man during my normal trip for work. An interesting topic was was outsourcing during recession. What interested me was the different view points we made and defensse for this from each perspective. Let me give a brief about the two perspectives we discussed.

Perspective 1
It is more feasible for business to opt for outsourcing since that will create higher margins with the same turnover so that the business can weather the recessionary period. This means that several functions that are not core for the business can be outsourced to a specialized provider who can provide tangible value to the customer.

Perspective 2
When the business opt for outsourcing, the first step they do is to cut the employment affecting the purchasing power of the local economy and hence the overall economy. This means that the recessionary process will exdend unless the employment picks up and people are willing to loosen their wallet.

Both perspectives had its merits and finally we managed to identify a common ground on cost optimization. This will include not just outsourcing for the sake of outsourcing but to optimize the existing resources, prioritize on what can be outsourced and then how to out source (A model we discussed was to have the existing employees to be part of the outsourcing process which may also result in creating new jobs on an optimized model).

I am not sure whether this model was tried out in any organization or community and the outcome of this.

Key in your comments & thoughts on this model as it seems to be an interesting area in this time of recession and reduced employment opportunities.