This paper discusses the main theoretic arguments that sustain the subcontracting decision by firms. It also reports a fieldwork conducted in Rio Grande do Sul, Brazil, that tries to verify how such theoretical concepts work in practice. Secondary data were collected on business magazines and scientific journals. These data reinforce the author's argument that subcontracting should not be considered as a general tendency, because in some cases it may be unprofitable, raising costs, reducing quality, increasing uncertainty concerning products and delivery schedules. Moreover, when the technology is the advantage of a company, subcontracting may reduce its competitive power.
outsourcing; subcontracting; technology; competitivity; automotive industry