Lower cost is one of the primary reasons for outsourcing. The cost savings are commonly based on the wage difference between the Western world and offshore destinations. Other factors such as economies of scale and specialization could also have a considerable impact.
Outsourcing gives you access to knowledge pools that you might not have inside your own company. Outsourcing also enables you to focus on your company's core business and competencies.
Outsourcing agreements can be structured in a way that the responsibility to produce a certain quantity/quality of output is placed at the outsourcing provider, facilitating better risk management and tracking. The responsibility of the provider can be defined in Service Level Agreements (SLAs).
Outsourcing gives you a tool to manage your output or production capacity in a flexible way.
By using external resources, you can overcome possible shortages in the job market. This is especially the case for highly specialized roles (e.g., information technology).
BUsing external providers, clients can cover time-zones that are not covered by domestic operations or capitalize on a 24 hour operations cycle to increase production and improve time to market.