Take tuition management as an example. A quality third party can handle the monthly cash collections using their expertise that they have gained by working with hundreds of institutions just like yours. You don't have to reinvent the wheel. Third party companies specialize in what they do and they are constantly working to improve their services. You benefit as a result.
Every organization is limited in the resources it can devote to any given task.
When you outsource some of the peripheral tasks you can redirect your staff and often budget allocations to those all important core operations at your institution, a third reason for outsourcing. This redirecting of human resources allows you to divert staff back to those activities that have greater value. By doing that you improve your quality and service. Fourth on the list is the reduction of operating costs. If your food service is handled by an outside contractor, it no longer is an expenditure item in your budget.