The difference between machinery and software in this example is that one is outsourcing manufacturing and the other design. When you outsource manufacturing y

The difference between machinery and software in this example is that one is outsourcing manufacturing and the other design. When you outsource manufacturing you're asking the other party to create exact replicas according to very specific specs your own engineers created. With software the outsourcing usually includes outsourcing a large part of the design, which is inevitable, as there is no significant manufacturing you can outsource. Writing the software is creating the detailed specs. In software there is only product design, you don't really have to put a lot of effort into creating exact copies of the original design.