There are different theories for why companies seek to outsource production. It's commonly accepted that cost reductions and increased efficiencies are primary motives for firms to outsource production. McIvor (2010) examines the Resource-based Theory explaining firms motifs to outsource production. Proponents of this theory argue unique capabilities and resources for firms create competitive advantage in their respective markets. Firms geographically move their operations to these locations where they can capitalize on regional capabilities and resources. Thus they are able to secure and maintain competitive advantage. I think geographic resources and capabilities are some of the easier factors and metrics to consider when outsourcing operations. Reece & Antosiak (2014) also note capabilities should be considered in terms of "leaness" and the importance of identifying waste.

Other factors would be the economics (cost-advantage) and political factors of the host country. The U.S. Army operational variables also come to my mind for consideration in outsourcing arrangements; Political, Military, Economic, Social, Information, Infrastructure, Physical, Environment, Time (PMESII-PT). However, not all of these factors are easily quantifiable or measured. Identification of risks along each of variables could help with risk analysis and contingency planning.

Are there other theories that explain why firms outsource operations? What metrics do are used to support the theory?