This study examined the benefits and risk involved in outsourcing logistic function among manufacturing firms in South West, Nigeria. The study was guided by two research objectives which include to; determine the organisational efficiency gained through outsourcing the logistics functions by manufacturing firms in South-West Nigeria, and to identify the challenges faced by manufacturing firms through outsourcing logistic function in South-West Nigeria. The study randomly 154 top management members from total 257 in three purposively sampled manufacturing industries in south-west Nigeria. The study used a structured questionnaire for data collection. The data were analysed using simple percentage, and the weighted average for research question while linear regression was used for hypotheses. The results of the analysis show that there is a significant influence of outsourcing on a reduction in operational and project management cost. Also, it leads to competitive advantages, the flexibility of operation, and sufficient time for process planning. Also, it was revealed that the manufacturing firms are facing associated risks during outsourcing logistics function, most especially when monitoring from manufacturing end is reduced, the challenges include; chances for losing control of product management, conflict of culture and hidden cost, chances for poor improvement in the aspect technological development and adoption of modern techniques. The study concluded that all the negativities that trail logistic outsourcing are avoidable with adequate planning and organisation monitoring. The study recommends that the management of manufacturing firms should ensure proper monitoring of the activity of sub-contractor firms handling their firms’ logistics functions to ensure the quality of the products and sustain their customers nationwide. Also, manufacturing firms in south-west Nigeria should also improve on their technological application through liaising with other firms in advance nations and affording to contract all their logistics services outside the firms

Keywords : Logistic functions, Outsourcing, Manufacturing firm, Merit and Business Risks