According toNicholas Bcaumont and Amrik Sohal (2004) outsourcing is a fashionablewayrnof solving some business problems and there arc numerous reports of its increasing use.rnHowever. the us of outsourcing in Ethiopia is very low with the exception of outsourcingrnsome non-core functions like Security service and Janitorial service. Thus. this variationrnattracts the researcher to undertake a research with the objective of evaluating the currentrnpractice and future potential of outsourcing in the country. This research assessed the currentrnpractice of out sourcing. identified those business functions that Ethiopian organizations arcrnwilling to outsource and pointed out the reasons for outsourcing and not outsourcing.rnAccordingly. the use of outsourcing in Ethiopia has been low and highly dominated by non-rncore business functions such as maintenance and janitorial services. security services andrninformation techno log services. The findings also confirm that Ethiopian organizations arernwilling to outsource non-core business functions, such as maintenance and janitorial services.rnsecurity services and information technology services. Conversely, the research found out thatrnAccounting and Administration outsourcing service providers will face great challenges formrnEthiopian organization to de liver their services. This is mainly due the fact that Ethiopianrnorganizations fear the risk of loss of confidential information and loss of control inrnoutsourcing these business functions. In addition, the organizations assume that the externalrnservice providers arc not loyal to them in providing such business functions. The mostrnc:prcsscd reasons It)1" outsourcing in ascending order are: allowing more locus on corernbusiness. improving service level, acquiring innovative ideas and cost savings. On the otherrnhand. the most strong: expressed reasons for not outsourcing g, in ascending order. are: loss ofrncontrol. having no loyalty to company and possible loss of confidentiality