IT outsourcing and firm's characteristics: Empirical evidence from Luxembourg

IT outsourcing is a very important approach for firms, in particular, to reduce costs and/or to focus on its core business. To deepen the literature focused on the analysis of the adoption process of IT outsourcing, this paper seeks to identify the characteristics of firms that choose to transfer all at least a part of the production of their IT needs to an outside party. We focus both on outsourcing and offshoring. Outsourcing occurs when firms choose to 'buy' rather than 'make' in-house. Offshoring occurs when firms move production overseas, either its own foreign affiliates or outsourced suppliers. With a large and nationally representative dataset at the firm unit level, we determine the main important profiles of firms that resort to outsourcing and/or offshoring of their ICT services. The interest of such an approach is to, a priori, identify the firms that are likely to outsource their IT functions only with the knowledge of their economic and organizational characteristics.