What drives netsourcing decisions? An empirical analysis

Netsourcing, a rather innovative form of web-enabled value creation, describes outsourcing of selected software applications to external service providers via the Internet. It promises flexibility and cost advantages over operating software applications in-house. However, it also raises the question which software applications corporate users should netsource and which they should keep in-house. To answer these questions, we develop a research framework with seven independent variables derived from the literature on full information technology outsourcing. On data collected in a 2004 survey among the 500 largest German companies, we apply a logistic regression analysis. As a result, we find significant statistical support for strategic management variables and no support for transaction cost economics variables as being relevant to the netsourcing decision. We conclude the paper with some lessons learned and suggestions for further research.