Who Really Benefits from IT Outsourcing? A Study of Market Reactions to IT Outsourcing Announcements from Client and Vendor Perspectives

• In Event: Emerging Research Discussion Session II

Abstract

Over the past 15 years there has been a steady increase in the number of announcements of information technology (IT) outsourcing contracts. Interestingly, prior research has yielded mixed results showing that these announcements typically have either a positive or no appreciable market response. We seek to clarify prior ambiguous results and extend the research on market reaction to IT outsourcing announcements in three ways. First, we examine market reactions over a longer time frame incorporating more observations as well as observing the potential additive or attenuating impact of multiple announcements. Second, we categorize IT outsourcing announcements according to the IT capabilities identified in the announcement to determine if certain categories or “clusters” are more positively accepted by the market. Finally, we compare market reactions to IT outsourcing announcements from both client and vendor perspectives to determine who really benefits from IT outsourcing and under what kinds of contracts and conditions does the market respond more positively.

Authors

• Manju Ahuja, University of Louisville

• Sarah B Clinton, The University of Tennessee–Knoxville

• Robert M. Fuller, The University of Tennessee