All Company C employees are now unemployed. One employee each from Company A and B are unemployed. Company A and B have cut gross revenues in half (assuming the lower price for a similar commodity didn't expand the market). There is a net decrease in GDP from Companies A, B and C. There is also less money paid to employees in the local economy.
Outsourcing is wonderful as a means to reduce consumer prices. At the same time consumer prices are being reduced, the number of consumers with disposable income is also being reduced.
I live in a small town where many large companies with high salary jobs have opted to close. The housing market is depressed with over 600 large homes on the market. Small businesses are closing at the rate of about 25 each month...no customers. I saw a small clock shop at the mall this evening. They were packing up inventory. The rent of $1170/month was too high for the available traffic. The floor space was about 50 ft across the front by 60 ft deep.
I still have a viable job in the software industry because I know how to take my skill set and devise methods to save a business lots of money. I do this only on condition of an NDA that prevents the business from stealing my concept and passing it to some offshore shop. The idea is the money saver for the business. In exchange, I expect to be paid for the value of the savings realized by that exchange of intellectual property. In general, that means I get the implementation business. The current practice seems to be oriented to stealing the intellectual property that provides the cost savings, then farming out the implementation to offshore workers. That is theft. The offshore workers don't have the advantage of a first hand presence to spot the cost savings. W.C. Fields had it right, "Never give a sucker an even break and never smarten up a chump." You must guard your intellectual property and ensure that you are paid for it.