What great new ideas can an outsider bring in that you shouldn’t be able to do internally. There are only two circumstances that I can think of where I can see outsourcing PM as a good long-term idea.
I agree with Lipkin on this: outsourcing product management is outsourcing a distinctive competence. Surely no one outside your organization can understand your business and market domain better than one inside. But of course, some companies feel that product management is more janitorial work than leadership work. And sure, janitorial work can be outsourced. But shouldn't product management be more?
I've written about the strategic role of product management. In your organization, is product management about markets and problems or is it only prioritizing the feature list? If the latter, then sure, you can outsource it. But if product management is about understanding markets and problems, and arming the company with these market facts--in requirements, positioning, and sales tools--then you must keep product management inside.
The 2010 product management survey shows that product managers and product marketing managers are becoming more strategic and working more closely with senior management. Are yours?