- It's attractive to management to displace accountability. As a CIO, you pay a vendor for an SLA, and have an entity to blame when you have a problem who isn't in your scope of responsibility, whom you can fire or otherwise penalize.
- You get to put the budget for maintaining the existing services in a box. Instead of keeping stuff running, you invest your time, energy and money on project work that is perceived to deliver new value.
- There may be undisclosed labor issues that you can't fix without firing everyone.
- "Cheaper" doesn't necessarily mean lowest cost. No C level type wants a smaller budget.
Think about why you pay Amazon for S3 vs. going out and renting a cage and buying a SAN. It's a similar thought process, with a similar affect on employment.