Which of the following is a primary reason why companies choose to outsource work?

• A. To eliminate all competition in the market
• B. To avoid paying any taxes
• C. To ensure all employees work remotely
• D. To reduce production costs and increase efficiency

Answer: (D)

Verified step by step guidance

1. Understand the concept of outsourcing: Outsourcing occurs when a company hires an external firm or individual to perform certain business functions or production tasks instead of doing them internally.
2. Identify common reasons companies outsource work, such as reducing production costs, accessing specialized skills, improving efficiency, and focusing on core business activities.
3. Evaluate the given options by comparing them to typical outsourcing motivations. For example, eliminating competition or avoiding taxes are not primary reasons for outsourcing.
4. Recognize that reducing production costs and increasing efficiency are well-established and primary reasons why companies outsource work.
5. Conclude that the correct answer aligns with the economic rationale behind outsourcing, which is to reduce costs and improve operational efficiency.