Outsourcing - Are we crazy?

It's no big surprise that outsourcing goes on, I mean when you have an abundance of staff in 3rd world countries that are gagging for the work and their economic situation allows the cost of labour to be so low that it feels like they are giving it away, but really are we crazy to be giving it to them?
Lets take some examples from our everyday lives to see where we are going right and where we are going wrong. If I owned a dry cleaners I've invested over time the money, resource and my time in growing my business. My business plan should have dictated my payback on my investments and my growth projections should ensure that I take a tidy income.

But what happens when the income slows down like now where people have money they are just more reluctant to spend the money..... Should you outsource your clients work to the remove the operational overheads or re-evaluate your service offering to get more business at a lower profit margin. Should you also then look at new service offerings to the clients.

I for one would want to stay true to my customers and continue to offer them the services I set out to provide when I started my business, if I was doing really well then I'd sit back and live off the benefits of others working for me, maybe open another outlet or diversify my business, but to just give the work to someone else for me to then only take a slice of the profit seems to me a crazy way to go, just because someone else as done their sums better than you!

Wake up and charge your business model if you think it is cheaper for someone else to produce... heck if your giving the work away then no wonder your doing so badly!