While the goals of each company may differ, the following principles generally apply. Outsourcing a function of your company is generally done to allow the firm to focus on its core competencies without distraction from non-core issues. For example, a financial firm may outsource portions of its HR department (e.g. benefits programs, initiating new employees) so that it may focus on its trading activities. Firms that specialize in this Business Process Outsourcing (BPO) expect to earn a profit by streamlining the company's inefficient processes.

Co-sourcing, or using a vendor to provide a percentage of your staff, is typically done for two reasons. The firm typically wants to have more flexibility in its staffing mix, whether it be to increase/decrease staff in reaction to market factors, or to quickly change the skill set of its human resources without the need for massive retraining efforts. The second popular reason is to take advantage of salary arbitrage opportunities in the geographic locations of its resources. This arbitrage is often, but not always, carried out through the use of offshoring a percentage of the labor pool. The exception can be found in companies that co-source a percentage of their resources from a lower wage cost area of the United States (e.g. A New York based firm co-sourcing via a Midwest-based firm).

Offshore sourcing of resources can be done through either a co-sourced or outsourced relationship. In all cases the firm is trying to take advantage of lower labor costs in foreign country. India, the Philippines, Russia, and China have traditionally been the most popular countries for establish offshore presences. More recently Spain, South America, and Eastern Europe have seen increasing interest in this area. Canada, a very convenient source for outsourced labor, continues to increase its number of professionals working for US firms. While more expensive than the other countries mentioned, the cultural and time zone benefits can make Canada a very compelling source of “Near-Shore” labor.