savings may allow the irm to hire more production workers.
When a firm outsources its customer-service operation to India, the 10 customer-service workers lose their jobs. However, outsourcing can have a net effect of creating additional jobs within the firm. Here's why:
1. Outsourcing the customer-service operation to India can result in cost savings for the firm. This is because labor costs in India are generally lower than in other countries.
2. The cost savings obtained from outsourcing can be used to invest in other areas of the business, such as hiring more production workers. By expanding the production team, the firm can increase its manufacturing capacity and potentially meet the growing demand for bicycles.
3. The increased production capacity can lead to an increase in sales and revenue for the firm. As a result, the company may need to hire more workers to keep up with the higher production levels and ensure customer satisfaction.
It's important to note that the other options listed (a, c, and d) may not directly address the net effect of outsourcing on job loss or creation within the firm. For example, while it is possible that the savings may allow the firm to hire more customer-service workers (option a), this is not the most direct answer to the question.
In summary, outsourcing the customer-service operation can lead to cost savings for the firm, which may then be used to hire more production workers, potentially offsetting the job loss from outsourcing.