Especially in the case small businesses and startups - which might not be as experienced with technology as larger enterprises- IT costs can significantly hobble an organization. That's especially true where growth is concerned; a business might find itself restricted from becoming larger because it simply cannot afford the cost required to expand its infrastructure. Factor in competition and pricing wars and the need for some sort of cost reduction is even more obvious.
Taking all of this into account, it should be fairly clear that in order to maintain any advantage worth noting - especially in hosting, which is typically an extremely competitive field - you need to cut costs wherever you can. But you need to do that without impacting the experience of your employees, customers, and clients. Outsourcing is one of the best ways to do that.