IT Outsourcing in Finnish Business

Mika Maliranta, Petri Rouvinen, Aarno Airaksinen

Research output: Book/ReportReport

Abstract

This paper reviews the characteristics and magnitude of information technology (IT) outsourcing as well as studies its labor productivity effects with a representative sample of Finnish businesses. Depending on the IT task in question, on average from one-third to two-thirds of IT has been outsourced; of the ten categories considered, the development of non-Internet business-to-business applications (e.g., EDI) is the leading activity in this respect. The various dimensions of IT outsourcing are all highly positively correlated. After controlling for industry and regional effects as well as characteristics of firms and their employees, it is found that an externally-supported computer user is about 20% more productive than an otherwise similar worker without a computer, which corresponds to about 5% output elasticity of outsourced IT; the effect of internally-supported computer use is not statistically significantly different for zero, and it is also several times smaller in magnitude. While the issues of causality, timing, self-selection, and unobserved firm heterogeneity are not fully addressed, the findings nevertheless suggest that IT outsourcing may have significant economic consequences.
Original languageEnglish
Place of PublicationHelsinki
Number of pages20
DOIs
Publication statusPublished - 2008
MoE publication typeD4 Published development or research report or study

Publication series

SeriesETLA Discussion Papers
Volume1140
ISSN0781-6847

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