Outsourcing is one of the marvels of the "new economy," and it is interesting to speculate what the father of the "old economy" would think of it. The principles underlying Adam Smith's work, The Wealth of Nations, were based on gains from the trade that exists in dynamic, free markets. Companies and countries that overcame the barriers to trade would reap the rewards. Those that did not overcome the barriers would forever be beholden to those that did.
To paraphrase Smith, the main barriers to trade then-and now-involve information, negotiation, transportation and enforcement. Information about what another country or company has, and what we have that they might want, is fundamental but not always readily available. The cost of exchanging products or services, the form of exchange and the potential for profit from an exchange are subjects of negotiation. Transportation is part of the cost, and also affects the potential for profit if delivery is time-sensitive. Enforcement addresses how contracts are honored, altered and dissolved.