A common practice among webmasters nowadays is to secure hosting for their websites on foreign servers, often in third world countries. A variety of reasons exist for this trend and they vary from niche to niche.
One general reason would be economic benefit. Web hosting, and pretty much everything, is cheaper in third world countries. Companies in countries such as the US, UK, or other European Countries undergo significantly greater overhead than their third world counterparts. They pay higher taxes, higher wages (due to a higher cost of living, and consequently minimum wage, in these countries), and must generate higher income to remain profitable. In contrast, companies in smaller countries can offer their services much cheaper due to their more favourable economic situation. They can pay their employees very little, evade taxes and therefore claim more profit. The cheaper rates they are able to offer make them the preferred choice by webmasters looking to save money.
For webmasters involved in somewhat shady businesses(hosting of illegal files/torrents etc) overseas hosting is a must, specifically in countries with no laws governing software piracy, If these webmasters ran their sites on servers in their own countries they would run the risk of heavy fines, and even criminal prosecution, depending on their jurisdiction.
A similar scenario exists for those involved in adult-oriented websites. Even if their content is legal, many prefer to store their content overseas to escape possible legal complications associated with such a carefully regulated industry.
Probably the most sensible reason to host overseas, however, is to increase quality to the site’s visitors. The closer the servers are (geographically) the site visitors, the faster the pages will load. A greater distance means there are probably many nodes for data to pass through, each adding its own delay, before the data finally reaches a user.
Say, for example, a company in the United States has a website targeting users in China. Hosting their site in their home country might seem logical at first but their customers in China may experience great delays due to their distance – and so it can be an important factor to look for in a web hosting location. Internet users are notoriously impatient and such a, seemingly simple, mistake could cost a company valuable customers. Some, therefore, would purchase hosting from a company in their target country, or somewhere close to it, in an effort to minimize delays and maximize user satisfaction. Websites that utilize a lot of bandwidth such as online games, chat rooms etc. would see exceptional gains from smarter location selection.
These are the most common of numerous reasons for webmasters to host overseas. While it is certainly a viable option in many cases, care should be taken with such an investment as some overseas hosts (particularly in Asian countries) can be shady and unreliable. Webmasters should confirm that the overseas company they intend to use has been around for some time with no negative press before entrusting their sites to them.