Determinants of Information Technology Outsourcing: A Cross-Sectional Analysis

Abstract

This paper develops and tests a model of the determinants of information technology (IT) outsourcing by integrating both business and IT perspectives. Specifically, we attempt to explain the degree of IT outsourcing using business and IT competences as represented by their cost structures and economic performances. In addition, we posit that outsourcing is dependent on business governance, particularly financial leverage. Based on factor analyses and multiple regressions using data from fIfty-five major U.S. corporations, we observed that the degree of IT outsourcing is positively related to both business and IT cost structures. We also established that the degree ofIT outsourcing is negatively related to IT performance. Finally, we conclude with implications and future research directions.