The costs of being an employer became painfully evident in the 1980s, when retirees began cashing in on insurance policies and pension agreements negotiated decades earlier. To reduce costs and appease shareholders, companies began outsourcing, sending back-office and other administrative tasks to lower-cost contractors.
In the 1990s, companies began outsourcing not only peripheral tasks but also pieces of their core business, a trend Davis dubs “Nikefication,” after the shoe marketer known for delegating shoe manufacturing to independently owned factories in Asia. Rapid advances in information technology let companies easily transmit information to offshore facilities. Companies quickly saw they could function with fewer hard assets, such as factories, and with fewer workers expecting benefits.