Abstract We investigate the impact of international outsourcing on productivity using plant level data for Irish manufacturing. Specifically, we distinguish the effect of outsourcing of materials from services inputs. Moreover, we examine whether the impact on productivity is different for plants being more embedded in international markets through exporting or being part of a multinational. Our results show that productivity benefits only accrue to affiliates of foreignowned multinationals and exporters. In particular, for foreign-owned exporting plants increased international outsourcing of both services and materials is associated with higher productivity, whereas this link only exists for domestic exporters’ outsourcing of materials. Keywords: International outsourcing, productivity, exporting, multinational production