Journal of International Information Management


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.