For pretty much the same reasons why many other services - such as traditional business processes such as accounting and software development - are outsourced. The benefits of outsourcing of course are variable, dependent upon the nature and situation of the organization. However, the following is a list of common reasons why outsourcing is undertaken:

• Lower costs due to economies of scale
• Ability to concentrate on core functions
• Greater flexility and ability to define the requisite service more readily
• Specific supplier benefits. For example, better security, continuity, etc.
• Higher quality service due to focus of the supplier
• Improved internal management disciplines resulting from the exercise itself
• Less dependency upon internal resources
• Control of budget
• Faster setup of the function or service
• Lower ongoing investment required in internal infrastructure
• Greater ability to control delivery dates (eg: via penalty clauses)
• Lack of internal expertise
• Increase flexibility to meet changing business conditions
• Purchase of industry best practice
• Improve risk management
• Acquire innovative ideas
• Increase commitment and energy in non core areas
• Improve credibility and image by associating with superior providers
• Generate cash by transferring assets to the provider
• Gain market access and business opportunities through the supplier’s network
• Turn fixed costs into variable costs

While cost was perhaps the most important aspect in business process outsourcing, in the case of engineering services outsourcing, the ability to get better quality from a domain focused vendor is an equally important driving factor.

But ESO is much more complex than BPO because of the complex nature of engineering design. Engineering services delivery revolves around technical skills, domain expertise and good engineering judgment. Engineering design work centres on product IPs of manufacturing companies. Most of the services outsourced are related to design services around patented products, design specifications or customised interiors of a total engineering solution.