The effects of outsourcing of production activities to international partners have been widely discussed and especially the negative employment consequences have been emphasised in recommendations towards policy makers. This paper empirically identifies the main discriminators of international and domestic outsourcing of production. The data material was gathered in 2005 and consists of responses from 638 Danish small and medium sized (20-199 employees) firms, of which 174 firms have outsourced within the last three years. The paper identifies three main geographical destinations for outsourcing of production activities; outsourcing to sub-suppliers in the home country (Denmark), new European countries and Asia. The application of discriminant analysis provides the main discriminating factors that specify why some companies don’t leave home and why others seek international outsourcing opportunities as a solution to their manufacturing challenges. The paper demonstrates clear differences between those firms outsourcing domestically and those outsourcing to international firms. The firms seeking national outsourcing partnerships are different from others in having the goal to achieve access to resources and competencies and complement this goal by prioritising trust in the relationships with the supplier. For the companies outsourcing to the New EU countries as compared to Denmark and Asia, the proximity to the outsourcing party combined with an external pressure on price are key drivers of the outsourcing process. These results point towards important implications for managers of production activities that plan to outsource in the future.