All else equal, you're right. But this is far from that. Outsourcing software (or anything) is not free. Usually there is a big quality cost. Sometimes it's ot

All else equal, you're right. But this is far from that. Outsourcing software (or anything) is not free. Usually there is a big quality cost. Sometimes it's other things. If you are saving 40% of your costs, you might want to "pay" these alternative costs. If (for example) Microsoft wanted to outsource their development for 5% savings, they would (presumably) end up paying a price in buggier software, poorer design, slower releases or whatever that amounts to more than 5% of costs. Similar could be said about customer service. If customer service is only 10% of your costs and has a substantial effect on how much your customers like you and you outsource at the expense of quality to save some small percent of your total costs, you are very likely to regret it.