In addition to the space as mentioned by Barnes, If you are using your boat off shore then if using outboard engines they do need to be fully water tight. These engines, such as are used by off shore racing power boats, are expensive.
You also have to consider what you do if you break down and require to carry our running repairs. Much easier and safer to work on an inboard engine that try working on an outboard with a sea running.
Most outboards are petrol engines, inboard diesel engines dominate. Diesel is much safer than petrol. It does not catch fire and or explode with the ease of petrol. Marine diesel engines are simpler that petro; engines and routine maintenance is also simple to undertake.

I have to make the point re inboard engines, what type of drive do you want to use, a "Z" drive or a propeller shaft . The "Z" drive operates in the same manner as an out board, whilst with the shaft you have a rudder.. With the "Z" drive you need to have your engine turning over and steer by vectoring the water flow. With a rudder you steer by altering the water flow across the rudder and you engines do not need to be engaged. There are proponents of both systems, for me I prefer to have a rudder.

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