"It works best for a company that has standardized products they are making, that has stable demand and where their labor costs are high maybe 50 or 60 percent of their total cost," says Dr. Walden, an economist with the North Carolina Cooperative Extension Service and professor in the Department of Agricultural and Resource Economics.

"It doesn't work as well for products that are unique, that have unique features; where demand is unstable so you have to be in close contact with your customers; and where labor costs are low -- maybe 25 percent or less," he adds.

"Other factors to consider that may work against outsourcing: the instability of a foreign country's political system, inadequate laws and inadequate infrastructure."