This study assessed the implementation of outsourcing policy in Federal University Teaching Hospitals in Southwestern Nigeria. It investigated the factors influencing outsourcing in the Teaching Hospitals. Primary data were collected through questionnaire administration. The three Federal University Teaching Hospitals in Southwestern Nigeria used for this study are: Lagos University Teaching Hospital (LUTH), Lagos; Obafemi Awolowo University Teaching Hospitals Complex (OAUTHC), Ile-Ife; and University College Hospital (UCH), Ibadan. The findings revealed that factors influencing outsourcing decision include efficiency and effectiveness (63.4%), cost reduction (60.6%), concentration on core competencies (59.9%), performance enhancement (64.6%), service quality/delivery enhancement (62.9%), access to latest technology (52.3%), acquisition of specialist expertise (59.9%), risk sharing (55.8%), flexibility (59.4%) and better accountability/management (59.4%). The study concludes with the thesis that outsourcing is inevitable and a child of necessity in contemporary public organizations in Nigeria.