Companies who want to take advantage of economies of scale must let the supplier make all the process decisions. If they do, they harness a powerful cost savings generator. I describe the advantages of scale in great depth in my book, Turning Lead Into Gold. The Demystification of Outsourcing . Scale is one of the most important aspects of outsourcing and the easiest to understand.
Buyers can benefit from economies of scale if they let the vendor make all the process decisions.
If they demand customization, they erode the advantages of scale. Vendors can afford to set up foreign offices, which can produce great savings on the labor side.