"The Impact of Information Technology Outsourcing on Firm Profitability" by G. Dwayne Whitten, T Selwyn Ellis et al.

Journal of International Information Management

Article Title

The Impact of Information Technology Outsourcing on Firm Profitability Measures

Authors

G. Dwayne Whitten, Baylor University
T Selwyn Ellis, Louisiana Tech University
K. Michael Casey, Henderson State University

Abstract

Some researchers have concluded that outsourcing of information technology (IT) provides benefits to firms including cost advantages, economies of scale and allowing more of a focus on core competencies. This paper attempts to determine if these benefits actually exist by comparing three financial measures, return on equity (ROE), return on assets (ROA) and profit margin, affirms that have varying levels of outsourcing. To empirically test for the existence of a difference between firms that outsource differing amounts of IT spending, data from 104 companies was gathered. Analysis of variance was selected as the primary statistical tool to test the relationship between the level of outsourcing and the profitability measures. The results of this study lead to the conclusion that there is not a significant difference between the amounts of IT outsourcing companies perform and any of the profitability measures used during the sample period. Further discussion continues related to the implications of the results.

Recommended Citation

Whitten, G. Dwayne; Ellis, T Selwyn; and Casey, K. Michael (2002) "The Impact of Information Technology Outsourcing on Firm Profitability Measures," Journal of International Information Management: Vol. 11: Iss. 2, Article 2.
Available at: https://scholarworks.lib.csusb.edu/jiim/vol11/iss2/2

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