And socialism improves the quality of products and services how?
Capitalism is about efficiency, when the Berlin wall fell and Germany was reunited many of the East German factories went bankrupt. They could not compete against the efficiency and quality of the west side. The East Germans finally could obtain products of quality at much lower prices. It took up to 10 years to get a car after you ordered it in East Germany, and you got a trabant. A color TV cost 5x as much and was a worse product than what you could purchase in the west side. What was cheaper in East Germany? Stamps, milk, potatoes.
What exactly would those people being hired by the outsourcers be doing instead? They are not forced to work for them, so obviously they choose to work for them as the best option they can see.
It probably is the only option, and they are treated not too good, I am from Honduras, we have dozens if not hundreds of plants that belong to foreign companies who take advantage of how the rules are set, and they have a minimum wage that is lower than the rest of the country's, the working conditions are not so great, so I don't see were the riches are trickling down to the poor.
Also, let's get it straight and not pretend something, no country behind the iron curtain was ever a socialist country they were all totalitarian dictatorships, besides I already told you I am not so keen on socialism either, even though Europe apparently has a political mixture which is not working that bad, except to the good people of the UK.
The kibbutz are mainly socialist and they work just fine, of course they are quite small, I don't think that would work on a large scale.