The Value of Outsourcing: A Field Study

Abstract

This article examines the effects of information systems outsourcing on the business processes of organizations. Rather than simply comparing outsourcing and not outsourcing, the study also addresses a third and increasingly common strategy, that of using software purchased “off-the-shelf.” An extensive survey was distributed to business process managers over a cross-section of financial services processes and companies. Results show that outsourcing information systems can create lower overall process costs and may lead to superior overall process performance compared to processes that used software purchased off-the-shelf. Further, information systems built in house lead to superior overall process performance compared to processes that used software purchased off-the-shelf. These results should assist business managers in gauging the possible effects of outsourcing information systems (or not) on their core processes.