Abstract: In the increasingly competitive market, the advantages of outsourcing become more and more prominent. Through outsourcing, many companies have got benefits in quality, cost, time and flexibility etc.. The theories of transaction cost and core competency are thought of as the generic bases of outsourcing. This paper has designed a structural model of outsourcing based on the integration of transaction cost theory and core competency concept so as to provide references for managers to make outsourcing decisions. Specially, as the foreign companies turn into de-materialized company, it is the tendency that China's enterprises explode the autarky operation mode and strengthen the core competency as well as utilize outside resources to raise their competitive position.