I supported hosting for a while. It basically comes down to that support. I can set up and run a website in my home. Anyone could. Can you support it 24/7/365? Now for a small site that might not be a big deal. If it's small and isn't a for profit, its not a big deal if your site is down for an hour. What happens when there are ten thousand visitors and you're making money on that site? Every minute of downtime is important. If you have a hosting company you can have people onsite doing 1st level support round the clock while you sleep through an outage. There's also just the upfront cost of servers. Which again if you're small may not be a huge deal. Start scaling up for real traffic and HW and SW cost both start escalating. Sometimes it comes down to a business is say a law firm. They have scads of money. They can afford all the gear and even the support to run that inhouse. But in the end they aren't an IT firm. They don't want to fuck w an email server that crashed. And its long run cheaper to farm that work out to someone who is an IT company.