After outsourcing, what type of costs might still remain?

When a company outsources certain functions, it typically focuses on reducing specific costs associated with its internal operations. However, certain types of costs may still persist even after the outsourcing process. In this context, fixed overhead costs refer to expenses that remain constant regardless of the production volume or operational changes. These may include costs such as salaries for permanent staff, rent for facilities, utilities, and other administrative expenses that do not vary with production levels.

These costs can still be present in the company’s budget after outsourcing because outsourcing does not entirely eliminate the need for some level of in-house operations or support functions. For instance, the company may still need to maintain an office space, cover corporate overheads, or retain certain staff to manage outsourced suppliers and coordinate operations.

While variable plant costs and materials costs may decrease significantly after outsourcing—since production processes might be handled externally—fixed overhead costs are often unavoidable unless a company completely restructures its operations or eliminates certain facilities and staff. Thus, it is clear that fixed overhead costs remain a consistent burden that a company must manage, even with outsourcing strategies in place.