Companies out –source because it is cost effective and often much more effective in other ways too. The Unions all over Europe are very strong and that is why the is 12% to 15 % unemployment. Once someone has been with a company three years – it is almost impossible to fire or lay them off, and there are also more benefits to which they are entitled. So people are hired for short term contracts, and unless you work for a major corporation your job will never last more than a couple of years
. Small companies just cannot afford it, there are always lawsuits and the laws are written in such a way as the company can never win a labor dispute. Consequently, there is a huge underground economy which really is bad for everyone. But the laws make is necessary. Companies like Telefonica can handle this the just jack up their prices. But most other companies are not able to do that and remain competitive.
. American's call it the European disease.