Outsourcing is the practice of using outside firms to perform tasks that might be done within the organization. Firms take on the practice of outsourcing for many reasons. They might not have the skill set to perform the task in house for example, or the function itself may be an operational burden to the organization. 
Too much outsourcing can have negative impacts on the business, for example loss of skilled workers, particularly if investment has been made in training the areas that are being outsourced. Outsourcing should be planned carefully in your business and be part of your reviewed business plan. Ask yourself the following questions as
part of your decision making process to outsource:
Will Outsourcing give me the ability to focus on my core business?
Depending on what you are outsourcing, most businesses do find that they only have to manage key indicators and service level agreements with the new business. An important point is to put the company to the test if this is possible. If not, get real world examples of how the business has assisted other companies/clients
achieve higher standards.
Will Outsourcing help me achieve a competitive advantage?
Outsourcing generally helps business to take a step up that they would not be able to take on their own. We get calls all the time from practices who have no company formation function but are suddenly in demand in this area. Ensure your provider can set you up quickly, and that you can see where they are in processing operational work at any time.
I need a quick turnaround in the area I am outsourcing, how will it help our business?
We all know that clients want delivery immediately. On ordering a service every buyer is thinking, when, where, how much, how good will it be etc. Remember, that an experienced outsourcing specialist will have systems in place to fulfil your requirements. Ensure there is a Service Level Agreement (SLA) in place. When you are buying a core service for your business, a company should do what they say they are going to do!
Will it ultimately save me money?
Look at the cost of setting up the facility in your business, or calculate the current cost of the operation within your business. You just might get a shock as to the cost of service versus outsourcing. Talk to your accountant about this. Outsourcing should have a number of primary objectives, and cost saving is one of them.
Will we become more efficient?
This is the goal. Keep a close eye on the amount of time you are spending on the area now versus prior to outsourcing. If you are delivering a better service to your clients in the area then it is working. Review these questions once a month.
Will it help control capital costs?
Outsourcing converts fixed costs into variable costs. It also prevents large capital outlay early in your business. Cost saving may not be the only factor to consider when outsourcing, but it is an important factor. Outsourcing gives you the ability to put more capital into revenue producing activities, which can make you attractive to investment.