Many service organisations have out-sourced operations in the belief that this will lower costs. Most amazingly, many do so without first knowing the cost of current operations, so they can never know of the promise of lower costs was delivered.
When contractual terms for out-sourced service operations are based on transaction volumes, costs generally go up.
Managers believe they are controlling out-source suppliers with service-level agreements and the like. Little do they know these will also drive costs up.
When work is out-sourced, it should still be treated as being part of the system of service delivery and measured and controlled that way.