Cost Savings. The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost re-structuring. Access to lower cost economies through offshoring called "labor arbitrage" generated by the wage gap between industrialized and developing nations.

Cost Restructuring. Operating leverage is a measure that compares fixed costs to variable costs outsourcing changes the balance of this ratio by offering a move from variable to fixed cost and also by making variable costs more predictable.

Quality Improvement. Achieve a step change in quality through contracting out the service with a new Service Level Agreement.

Knowledge. Access to intellectual property and wider experience and knowledge.

Contract. Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services.

Operational Expertise. Access to operational best practice that would be to difficult or time consuming to develop in-house.

Staffing Issues. Access to a larger talent pool and a sustainable source of skills.

Capacity Management. An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier.

Catalyst For Change. An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change Agent in the process.

Reduce Time to Market. The acceleration of the development or production of a product through the additional capability brought by the supplier.

Commodification. The trend of standardising business processes, IT Services and application services enabling businesses to intelligently buy at the right price. Allows a wide range of business access to services available previously only to large corporations.

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