Government outsourcing, the transfer of traditionally government-provided products and services to non-government entities, has become a prevalent strategy worldwide. This theoretical paper explores the impacts of government outsourcing on service quality, employees, and cost savings. Despite the widespread adoption of outsourcing, there are significant gaps in understanding its mechanics and implications. The paper reviews existing literature, drawing on economic theories such as property rights, public choice, and transaction costs to provide a theoretical framework for analyzing outsourcing impacts. The findings synthesize theoretical insights, emphasizing the need for empirical research to validate propositions and guide effective government outsourcing strategies. This paper contributes to the ongoing discourse on outsourcing, providing a foundation for further exploration and practical implementation.