How does outsourcing IT services cap financial exposure?

It removes the need for dedicated personnel to be hired to perform IT related tasks.

Contracts are used to gain a fixed cost for a service and unexpected costs are absorbed by the vendor.

It allows companies to obtain Third$-$Party IT$-$Risk $($TPIR$)$ insurance, which limits their exposure and risk in the case of technological malfunctions.

If limits corporate liability because any mishandling of sensitive data will result in the vendor being sued, not the company outsourcing IT$.$